As it works toward a resource update at the Red Chris mine, Newcrest Mining (TSX: NCM, ASX: NCM) has begun construction of the box cut for a new exploration decline at the copper-gold project, 80 km south of Dease Lake, B.C.
The company has approved $135 million in spending to fund the decline, after receiving regulatory approval for the box cut. Work on the decline and associated infrastructure will start once the box cut is complete, and are subject to other regulatory approvals, which are in process.
An additional $12 million in spending was previously approved for the box-cut.
The resource will be the first under Newcrest since it acquired a 70% stake in the project in 2019, and is due out in March. The resource, focused on the high-grade East zone, will inform a prefeasibility study for a block cave operation at the mine starting in 2027 - a project that Newcrest believes could turn Red Chris into a Tier 1 asset.
"The commencement of construction of the box cut is a significant milestone in the objective of having a block cave in operation at Red Chris in the next five to six years," Sandeep Biswas, Newcrest's CEO and managing director, stated in a Feb. 11 news release. "Drilling activities have confirmed the presence of high grade pods in the upper sections of the macroblocks and we are evaluating a number of options to mine these pods with the aim of generating cash flows prior to the completion of the block cave. Together with the support of our stakeholders, we are excited by the potential to transform Red Chris into a Tier 1 asset through the application of our industry-leading block caving technology."
Imperial Metals (TSX: III) holds a 30% interest in Red Chris.
Newcrest reported record free cash flow of US$439 million in its half-year results and has adopted a new dividend policy to target a payout of 30-60% of cash flow to shareholders, up from 10-30%.
On revenue of US$2.2 billion, the Melbourne-based company reported a statutory and underlying profit of US$553 million. The gold and copper miner produced a total of 1 million oz. gold, 69,000 tonnes of copper and 445,000 oz. silver for the six month period to the end of December. All-in sustaining costs were US$974 per ounce.
At Red Chris, which is currently an open pit operation, production was 24,000 oz. gold, 13,000 tonnes copper and 57,000 oz. silver at an AISC of US$2,961 per oz. of gold.
In addition to Red Chris, Newcrest owns and operates the Cadia and Telfer mines in Australia and the Lihir mine in Papua New Guinea. It also has a gold prepay, streaming facility and offtake agreement on production from Lundin Gold's Fruta del Norte gold mine in Ecuador.
The company says it is managing a number of Covid-19 cases at both Red Chris and Lihir, but operations have not been affected.