Millennium Minerals (ASX: MOY) has produced its first gold from the recently commissioned sulphide ore circuit, which was part of the stage one $15 million expansion of its Nullagine plant in Western Australia’s Pilbara.
The initial gold production from sulphide ore has been four years in the making, including completing detailed development studies and optimisation programs, which have resulted in the upgraded plant.
During the commissioning phase, lower grade sulphide ore was used with the gold concentrate produced averaging 3 grams per tonne.
According to Millennium chief executive officer Peter Cash, the early results from the plant’s new sulphide circuit have been positive.
“The ability to cost-effectively process the high-grade sulphide ore sources at Nullagine has been a core component of Millennium’s growth plan over the past four years, and we are absolutely delighted to have successfully achieved this milestone,” Mr Cash said.
Loan facility pushes share price down
Mr Cash explained the company had made “significant investment” in the project’s long-term growth over the last 14 months including the sulphide plant expansion.
The period of intensive capital outlay impacted Millennium’s production and cash flow over the past six months resulting in the company announcing it had secured a $20 million loan facility in late May to see it through until cash flow returns positive.
Following the loan announcement, Millennium’s share price fell more than 46% from a closing price of $0.105 on the 31 May to finish at $0.056 on 18 June.
Mr Cash said the company was now moving into a period where it anticipated a “strong increase” in production and cash flow – with cash flow expected to return to positive by the end of July.
“It is also important to note that the stage one upgrade to the processing plant is expected to have a positive impact on gold recoveries across both oxide and sulphide ore sources.”
“We also expect to close out a large percentage of our gold hedging contracts by the end of this month. This will reduce the company’s hedge book to just 39,000 ounces at an average price of A$1,796/oz, meaning it can take further advantage of the current high spot bullion price,” Mr Cash explained.
Nullagine production guidance
Throughout the remainder of 2019, Millennium’s plans to source half of its ore feed from sulphide sources.
Production for the second half of this year is expected to amount to between 46,000-54,000, compared to 34,000-36,000oz in the first half, which was a result of stockpiling, high production costs and ramp up delays to the new sulphide circuit.
As part of its long-term growth strategy, Millennium has planned a further two upgrades to the project under two stages.
The company noted the upgrades will be timed to maximise cash flow from the operation.
Today’s news spurred Millennium’s share price up almost 28% to trade at $0.115 mid-afternoon.