PERTH (miningweekly.com) – The board of gold miner Evolution Mining has approved the A$380-million development of the Cowal underground mine, in New South Wales, subject to the receipt of final regulatory approval.

“Cowal is undoubtedly a world class asset and a key asset in the Evolution portfolio. Today, the board has approved the development of an underground mine that contributes to our goal of Cowal producing 350 000 oz of low-cost gold a year and extend its mine life out beyond 17 years, while at the same time injecting significant economic benefit for all stakeholders,” said executive chairperson Jake Klein.

Capital required to reach commercial production of A$380-million will be invested during the 2022 and 2023 financial years with A$240-million for surface infrastructure, paste plant, process plant modifications and accommodation village, and A$140-million of initial mine development costs.

During the ramp-up phase, the underground mine would produce between 0.04-million to 1.1-million tonnes of ore between 2022 and 2024, increasing to between 1.6-million and 1.9-million tonnes during its peak operation between 2025 and 2031, winding down to between 0.9-million and 1.25-million tonnes between 2032 and 2038.

Evolution on Friday said that the regulatory approval process is progressing well with draft consent conditions received, while primary approvals are expected in the current quarter.

Meanwhile, Evolution on Friday also unveiled a clear plan of attack to take production at its Red Lake project, in Canada, to 350 000 oz/y by 2026.

“The board has also approved a plan that accelerates the restoration of Red Lake to a premier Canadian gold mine producing low-cost gold in excess of 350 000 oz/y. This will also deliver significant benefit for all stakeholders of the Red Lake asset,” said Klein.

“Both operations demonstrate the outstanding organic growth opportunities within Evolution’s portfolio that will grow production by 35% to over 900 000 oz of low-cost gold over the next three years.”

Evolution told shareholders that the Stage One transformation to produce 200 000 oz/y at an all-in sustaining cost of less than $1 000/oz remains on track with the operation successfully achieving production and cost guidance in the 2021 financial year.

Red Lake’s growth plans to deliver value from its 11-million-ounce mineral resource have now been accelerated with the completion of the Battle North acquisition in May 2021. Investment in the operation in the coming years is appropriate to extend Red Lake’s mine life to beyond 15 years and enable production to ramp up, targeting 350 000 oz/y by 2026, the miner said.

Mining activities are focused on achieving a consistent underground development rate of 1 200 m a month in the lower areas of the mine to enable the operation to produce around 850 000 t/y of ore from the existing operations.

The development of the Campbell Young Dickenson decline is progressing well and is planned to enable some 750 000 t/y of ore to be mined from Upper Campbell in 2024, which will ramp up to over 1-million tonnes a year by 2026.

Development work at McFinley will take place in 2022 to support a bulk sample.

Campbell mill expansion studies have started, aimed at increasing total milling capacity at the Red Lake Operations to over 1.5-million tonnes a year within the next three years. Beyond 2024, an expansion of the Bateman mill to some 900 000 t/y is expected to increase the combined long-term milling capacity of the operation to over 2-million tonnes a year.

Evolution told shareholders that investment in upgrading and consolidating tailings storage facilities will start in 2022 to support the mill upgrades.

The ASX-listed miner on Friday said that group production would increase by at least 30% to over 900 000 oz during the three-year period to 2024, with the growth to be largely driven by the ramp-up of the Cowal underground mine and an increasing production profile at Red Lake.

Costs are expected to remain relatively stable over the three-year period as the growth strategy continues to focus on producing high margin ounces, Evolution said.

Investment in sustaining capital is forecast to be between A$120-million and A$150-million in 2022, between A$115-million and A$155-million in 2023, and between A$120-million and A$160-million in 2024.

Meanwhile, Evolution on Friday also reported a solid quarter of production for the three months to June, with gold production reaching 169 146 oz, up from the 161 316 oz delivered in the previous quarter.

The Cowal operation produced 52 323 oz during the quarter, while Red Lake contributed 30 182 oz.

At the Mungari mine, in Western Australia, Evolution produced 22 770  oz of gold during the quarter. In Queensland, the Ernest Henry operation delivered 20 947 oz, while Mt Rawdon delivered 20 745 oz and Mt Carlton produced 22 180 oz.

Group all-in sustaining costs for the quarter reached A$878/oz, down from the A$949/oz in the previous quarter.

Evolution sold 167 608 oz of gold during the three months under review, at an average price of A$2 286/oz, compared with the 160 115 oz sold in the March quarter, at an average price of A$2 227/oz.