PERTH (miningweekly.com) – ASX-listed Red 5 will be forced to implement a revised operational strategy and openpit mine plan for its Siana gold mine, in the Philippines, after delays in obtaining regulatory approvals for amendments to its environmental compliance certificate (ECC).

The approved ECC is required for the construction of a long-term tailing storage facility (TSF) for the openpit operation.

Red 5, through its Philippine affiliated company, submitted an application for the amendments to the ECC in July; however, the company noted that over the past six months, the Philippines Department of Environment and Natural Resources’ focus has been on completing an audit of operating mining companies.

Earlier this month, the Philippines affiliate was informed that the Mines and Geosciences Bureau had recommended that the ECC amendments be progressed by the Environmental Management Bureau.

As a result of the delays in approvals, Red 5 has taken the decision to temporarily place the Siana processing plant on standby from the end of January.

The existing TSF can accommodate the operational needs of the openpit mine until the end of March, with Red 5 having hoped to start construction of the new long-term TSF by January, subject to the receipt of the required regulatory approvals.

Red 5 noted on Thursday that in light of the change in timing for the long-term TSF, commitments for major capital items for the underground development, such as the paste-fill plant and power plant upgrades, would also be deferred until early 2018.

However, underground development would continue throughout 2017, using the lower-cost hand-held air-leg mining techniques.

The miner told shareholders that this was an “appropriate measure” in the current circumstances to protect its balance sheet, with first underground ore planned for March 2018, and steady-state production starting around December 2018.

The deferment of major capital items would be progressively monitored, and might be brought forward, depending on the operational performance of the openpit, and all necessary regulatory approvals being in place.

Red 5 noted that based on the current gold price, and the receipt of approval for the construction of the long-term TSF within the coming months, the plan remained to fund the development of the underground operation from internally generated funding.

Meanwhile, a revised mining strategy for the Siana openpit will also be implemented, given the regulatory delay and pit wall stability concerns.

The revised strategy will see an extension of the East wall cut-back, which is designed to optimise remaining openpit gold production and cash flows, while minimising operational risks and regulatory uncertainties.

As a result of the new mine plan, and the temporary suspension of processing from later in January, Red 5 said that gold sales for the March quarter would be in the range of between 5 000 oz to 7 000 oz.

Subject to the receipt of the ECC amendment approval, and Red 5 gaining access to higher-grade ore from the Eastern section of the openpit, the Siana processing plant will restart processing ore in the June quarter, with a further 55 000 oz to 60 000 oz expected to be processed from the openpit to the end of the current calendar year, at a forecast all-in sustaining costs of between $700/oz and $760/oz.

Openpit mining will be completed in around November, in line with the original timetable.

Technical studies are under way to assess the potential to extract a portion of the remaining openpit mineral resource and ore reserves from the future underground mining operation.