Beta Hunt Gold Operations - FAO factRbestFirstly, let me prefix the following by stating that I am neither a geologist nor a mining engineer, but an investor experienced in investing in gold miners (and other natural resource companies). So, take what I say with an appropriate pinch of salt.
I've been thinking about the information the company has published and also the history of RNC at Beta Hunt (which is documented and factRBest has conveniently summarised for us). I have also started a conversation with Kevin Small via LinkedIn to check my understanding and to learn more about what the company is doing and he has kindly replied to my first questions.
First of all it appears that the company has so far mainly been using bulk/mechanised mining methods to extract nickel and gold ore. This is efficient for uniform ore with a consistent grade. However, the recent news releases and photos of the FDV discovery area suggest to me that the new discovery and the geoligical model the company is developing point to high grade gold lying in "narrow veins". I have some knowledge of narrow vein mining through past investments in Medusa Mining and, most pertiently, Norseman Gold. I say "most pertinently" because Norseman is in the same mining district as Kambalda, but Norseman is 130 clicks to the south:
Norseman was a highly successful mine in it's, day producing 5.5Moz of gold over 65 years of operations. See
https://en.wikipedia.org/wiki/Norseman_Gold_Mine Medusa (which is based in the Philippines) has a good description of narrow vein mining, for those not familiar with it:
https://www.medusamining.com.au/narrow-vein-mining/ Now, the key point about Norseman is that before it was taken over by Norseman Gold, Croesus Gold had been using mechanised mining and the mine was not profitable when mined that way and Croesus went bust. The mine became profitable again (until the ore ran out!) when Norseman gold took it over and reverted to narrow vein mining.
Kevin Small has confirmed the following about RNC at Beta Hunt:
We use two methods, bulk mining for the main zone and air leg (jack leg) in smaller narrow areas, such as with press releases early this month.
Now, the key difference between narrow vein and bulk mining is that bulk mining is much simpler and extracts large tonnages of material efficiently, but that means the large tonnages have to be extracted from the mine and processed by the mill. As costs are proportional to tonnes processed, if the grade is low this is expensive and hence, up to now Beta Hunt has not been profitable.
Narrow vein mining OTOH involes mining very selectively and only extracting the high grade material. A good narrow vein miner will maximise the volume of high grade ore extracted and minimise "dilution" from surrounding country rock, thus minimising volumes that need to be brought to surface and processed by the mill and hence keeping costs down.
The problem with narrow vein mining is that it is a highly skilled, labour intensive, specialised operation. So I've asked Kevin whether the company has sufficient expertise in this technique or whether it is recruiting that expertise (it's currently 3am in Perth, so I'm not expecting an answer yet!). The good news is that there should be quite a lot of experienced narrow vein miners in the Kambalda area, not least because Norseman has now shut down!
I was somewhat shocked when Mark Selby mentioned in the MidasLetter interview that they were bringing in an underground exploration rig next week, implying that they don't have one yet (but that's consistent with what factsRbest has said previously). Such rigs are essential in order to delineate the veins, so the miners know where to drill/blast. I've also asked Kevin if they have any more rigs on order, as I doubt one is enough to make rapid progress.
Finally, it occurs to me that the higher grade ore extracted from the veins (apart from the specimens which are sent direct to the Perth Mint) will be different to the ower grade material that RNC has sent to the mill previously. Hence I wonder whether the mill process needs to be changed to handle this higher grade ore and I've asked Kevin that too.
I'm actually quite excited by all of this as ISTM that RNC may have a real opportunity to turn Beta Hunt into a highly profitable mine. But, it isn't easy and management needs to get it right, as well as mother nature continuing to be on our side.
I think it would be over optimistic to expect a lot more of the gold specimens to be found in the short term (a bonus if they are!), but that doesn't matter if the company can use it's new exploration rig(s) to find enough high grade veins, as they expect from their new geological model.
In the short term I hope we'll hear good news about the Perth Mint sales and confirmation of exploration plans. But, we might have to wait a few more weeks to find out what the results of the exploration drilling have been, how they fit the new geological model and what quantities of higher grade ore have been successfully extracted.
Mark