Yeah I'm wondering the same thing about lateral development falling short of target. When I first saw the title of this announcement it ticked all the panic station buttons for some, the dreaded words of 'strategic review', an underground base metals mine in WA which implies cost pressures and escalations and margins being crunched. On top of that, the orebody has demonstrated that it has surprises in store, but that is probably more of an interpretation and assumptions made in the resource grade model thing. They are there now and mining it and learning as they mine and look to have adjusted mining plans to allow for the unpleasant surprises in the orebody. Although it is weird and a bit concerning to see development ore grades running higher grade than stoped ore. Thankfully the mill is brand new and can run flat stick with lower grades than anticipated, so the mill is full, it's just a matter of filling it with better grade/quality ore.
I also wouldn't be surprised if there were some short-term workforce absences due to Covid at the moment plus a still relatively competitive labour market for experienced underground staff making it difficult and expensive to fill vacancies. Once a few more underground Ni mines go to the wall, that should free up that workforce for other underground operators to have a better chance at recruiting.
The other great unknown is Toho Zinc, who have absolutely had their arses handed to them in Australia recently with CBH in Broken Hill, so possibly they might be looking for an exit plan and/or a way to put this operation back on track so it doesn't consume money...
G1A Price at posting:
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