The 320kt delivered to the ROM pad is close to the ramp up target that RSG set in the June 2018 quarterly of about 310kt for the March 2019 quarter and a bit less than the target set in early January 2019 for the March 2019 quarter of about 355kt, meaning that they are roughly one quarter behind previous ramp up projections which is good news IMO as mining rates are back on track.
Additional to this drilling and blasting rates for the quarter are expected to reach about 600kt which is the targeted steady state level for the mine. This seems to me to say that they have proved the drilling and blasting side of the operation, which was the first automated task to come on line. More good news potentially. Having said this the mine had a lot of advanced development coming into the June quarter so its hard to say if this result is a true measure of the drilling and blasting rates that are needed to mine ore and also maintain sufficient forward development for future mining.
The blasted ore that has been left on the first level to creat a blanket "against future hanging wall dilution" and which is said is going to be recovered from lower levels is a bit beyond my mining engineering pay scale. I'm not sure if this is standard practice in SLC mines or a consequence of the problems they reported having last quarter around the base of the open pit. If I had to guess I would guess the later as from what I understand in a fully automated SLC mine of this type the over break (dilution) from the hanging wall host rock is measured by rock weight sensors on the bucket of the bogger that collects ore from each drift, ie they would normally take partially diluted ore from the hanging wall contact and then call it a day for that drift, ie work to the limits of the ore body, not leave viable ore in the stopes to be mined from lower level. More research required here or input from an experienced mining engineer or a better explanation from the company itself is required. If I'm right that this may not be a normal procedure then it might have the consequence of placing some additional strain on this quarters cash flows which may or may not be an issue depending on how the other parts of their business has fared over the course of the quarter, ie Ravenswood, the oxides at Syama and the sulphide recoveries through the circuit.
From a long term perspective, ie from a proof of concept perspective, I think this announcement has de-risked the company and any issue experienced on the first level of the mine (if there is even any issue at all) seems overcome but from a short term perspective there might be a few lagging cashflow ripples that might have short term negative effects. The reality however IMO is that the proof of concept de-risking information will out weigh cashflow hiccups because the market knows what a great long term mine Syama is going to be once all the elements come together. I wouldn't be too worried about the automated hauling as this is far less critical than the blasting and rock breakage in the mine itself IMO. I'm sure that is a much easier problem to work out and get working and while it is being sorted out the machines still have optional manual operation if needed.
And just a disclosure. I am not buying back in yet because I'm quite happy with my reduced overall exposure to the gold sector and the overall market but at the same time I'm also upset that I'm not copming along for the ride as it's an exciting innovative company and mine development whether it starts working next quarter or the quarter after that. DCN has a lot to answer for beyond its own failing fortunes, causing me to throw in the towel for one. Esh
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