One of Western Australia’s prominent mid-tier goldminers has told the market it could produce gold under the most severe of government fuel restrictions, as the sector monitors the supply squeeze.
Ramelius Resources and Capricorn Metals each confirmed to the market this morning that they had not been hit by the fuel crisis which has engulfed the state so far.
Fuel has been a major factor for some smaller miners in the state, but the protection of longer-term contracts has insulated many from the worst of the diesel malaise.
Ramelius said this morning that its fuel supply was firm.
“Mt Magnet operations are not currently impacted by diesel supply chain disruptions, with fuel sourced directly from a global oil major on a long-term contract,” the company said.
But Ramelius management has developed response plans for its activities should fuel supply restrictions increase in the months ahead.
The company said if the federal government increased restrictions from their current level two state to a level four designation, it would still be able to operate by processing existing stockpiles.
“Preliminary assessment based on level four impact shows the Mt Magnet mill will continue operations and process existing stockpiles due to 98 per cent of the power generation being sourced from solar and natural gas,” Ramelius said.
Level four would be the most severe tier under the National Fuel Emergency Plan, under which fuel supplies would be reserved for critical users nationally.
Ramelius’ current stockpile will last more than 12 months, according to the company.
The update came as Ramelius revealed it had produced 38,093 ounces of gold for the March quarter down from 45,610oz in the December quarter, with mining impacted by Cyclone Narelle and a planned six-day shutdown.
Ramelius remains on track to produce within its target range of between 185,000 and 205,000 ounces of gold for the full year.
Industry peer Capricorn said it too was yet to be impacted by diesel supply issues.
“However, this remains a key focus and a material risk for the Australian mining industry,” Capricorn wrote.
“The company will continue to monitor the situation and update the market if there are any material developments.”
Capricorn’s full-year cost guidance is currently $1,530-$1,630 per ounce, with a full-year production target of 115,000-125,000 ounces of gold.
The company generated 30,358oz in the March quarter.
Capricorn shares rose 1 per sent in early trade to $11.05, while Ramelius shares were up 1.9 per cent to $3.75.
