PERTH (miningweekly.com) – ASX-listed Aurelia Metals on Monday announced plans to permanently cease commercial production at its Hera underground mine, in New South Wales, towards the end of March next year.

The company told shareholders that the cessation of mining would be earlier than previously planned, however, following two quarters of negative cashflow from the operation, it was necessary to implement the change to return the Hera mine to a forecast cashflow positive position for the remainder of its mine life.

A revised mining plan at Hera will now sequence the highest value ore within the remaining available ore sources to maximise cash generation.

“As outlined in our recent market updates, we are focussed on every operating asset in the portfolio generating positive cashflow as an absolute minimum. At Hera this has not been the case in recent quarters. I am confident our revised mine plan will return Hera to positively contributing to the cashflow of the company over its remaining operating life,” said Aurelia interim CEO Andrew Graham.

“We don’t make this change lightly. We understand this is challenging news for our employees, contractors and the local community, but a decision that has to be made in the interests of Aurelia’s shareholders.

“We are consulting with our workforce at Hera to explore options to redeploy as many of them as possible to our Peak operations, where vacancies exist because of our transition to owner-mining and the generally tight mining labour market. We are also looking to redeploy people further afield to our Dargues mine. Despite these redeployment activities, there will be some redundancies at the cessation of Hera’s operations.”

Hera’s surface facilities will transition to care-and-maintenance before being used for the Federation project. Aurealia on Monday said that the company intends to leverage the substantial installed infrastructure, including process plant, mine workers camp, tailings storage facility, workshops and core processing facility, for the capital efficient development of the Federation project. Longer term, this infrastructure could also support development of other deposits in the highly prospective exploration ground surrounding Hera.

A previously completed feasibility study into the Federal project estimated that over its eight-year mine life, the project could recover some 44 000 t/y of zinc, 25 000 t/y of lead, 11 000 oz/y of gold and 74 000 oz/y of silver. The study estimated that the project would require a capital investment of some A$108-million.

Aurelia on Monday said work is under way to optimise the Federation project, and with mining at Hera and Federation now not expected to occur concurrently, there was an opportunity to reduce the capital required to develop the Federation project by using existing assets from the Hera mine, subject to a thorough condition assessment.

With operations at Hera now expected to cease in March, Aurealia has adjusted its 2023 production expectations accordingly. Copper production is now targeted for 2 300 t, instead of the 2 500 t originally targeted, while gold production is estimated at 83 000 oz, instead of 87 000 oz. Zinc production is forecast to reach 21 000 t, instead of 29 000 t, while lead production is now targeted for 20 000 t, instead of 22 000 t.

All-in sustaining cost estimates for the full year have increased from A$1 900/oz of gold to A$2 300/oz of gold.