Lorena Gold part owners Malachite Resources have announced a net loss of $6.457 million for 2018-2019 amid low production numbers and an ongoing dispute with its joint venture partners.
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The company said they have written down the gold mine, about 15km east of Cloncurry, because gold production at the open cut was materially lower than forecast which has affected relations with the mine's other owners.
The Lorena gold mine is run by three JV partners Malachite Resources subsidiary Volga Elderberry (55%), Cloncurry Gold Recovery (30%) and Ore Processing Services (15%). CGR (70% owned by Chinova Resources, the rest by BIM Metals) are the manager of the JV.
After opening in 2018, the Lorena gold project was forecast to produce around 30,000 to 35,000 ounces of gold in the eighteen months of production from an open cut operation.
However Malachite said gold production was lower than forecast in Quarter 1 and again in Q2 "due to head grade, metallurgical recoveries and plant usage all being lower than forecast".
Gold recovery was also down on expectations due to "problems with the availability of cyanide (due to working capital constraints), differing ore mineralogy than expected and the presence of cyanide soluable copper in the ore".
After three drill holes failed to find continuous high-grade gold mineralisation, Chinova withdrew a working capital financing facility to fund ongoing operations.
In early 2019 Malachite slapped a dispute notice on the other JV partners which "principally relates to achieving a reconciliation of historical expenditure, the contributions obligation of each parties and the future conduct of the JV'.
Malachite recommended operations be suspended until resolution which was turned down by the other partners
Due to the dispute, Malachite said CGR had not provided any operation reports since early 2019 though operations have continued.
Lorena Gold Project had gold sales of 6927 ounces in the year which was also well down on expectations.
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Derek Barry
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
