where did it all go wrong?..

Just copied and pasted article from Australian Business Journal
oh how Back then the sky was the limit, 10c a share seemed undervalued...
how our hopes and dreams got crushed on this one...
just goes to show management , and therefore the
DECISIONS which are made on EVERYTHING,
DIRECTLY AFFECT the outcome
crappy second hand equipment that kept breaking down, shoddy maintenance and amateurs on the ground sure made sure this one wasn't going to soar with the eagles but rather end up a cindered crisp of disappointment!

article below
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Going for gold in Australia’s junior mining sector

It goes without saying that having tripled in price since 2008 and recently rocketed up more than US$1,700 an ounce, these are good times for gold. Plenty of parties including miners and investors have looked to gain exposure to its bull run in the past year or two, be it by diversifying their portfolios and adding an attractive edge or (for the lucky few) taking up on a project of particular significance and potential. That being said, there aren’t many enjoying the gold surge who can compete with Perth-headquartered Kalgoorlie Mining Company (ASX: KMC) and its Bullant gold mine. Acquired from gold mining major Barrick (NYSE: ABX), the KMC team got to ground in March-April this year.

“We’ve been very fortunate to get a mine with all of these physical attributes—high grade, geotechnically stable, power, water, surface infrastructure… in a close location to the world-class Kalgoorlie mining service centre—in a time of rising gold prices,” executive director Chris Daws says.

“We’re an emerging group and I think that going forward we’ll be a surprise package in the junior gold sector.”

One packed with all of the necessary components for near-term production success, by the looks of Bullant.

The project is well-explored and proven for gold production whilst retaining exploration upside. It also comes supported by an ore purchase agreement that KMC penned with Barrick (with 18,000 tonnes predicted for production this month) and big plans unfurling to put in its own dedicated gold mill facilities, further economising the setup.

Going underground

Formally U.S. Nickel, KMC came upon Bullant while looking for an asset to provide cashflow. In its previous guise while focused on plays in North America, the company hadn’t been burning up exploration dollars and stood poised to kick off an aggressive drive for the right project. The team then assisted Argent Minerals by taking a significant placement during the Bullant sale process, later acquiring the project for $10.5 million.

“Being a production base we thought that we could grow the business from in the north Eastern Goldfields of Western Australia, and purely focus our efforts there, we chose to change our name to Kalgoorlie Mining,” Daws explains.

“It shows the market that we’re fully focused on creating a new gold business out of Kalgoorlie in the north Eastern Goldfields with the Bullant Gold Mine as our core project.”

Getting back underground and into the mine around May this year has had its hurdles; all of which have now been cleared. Facilities have been re-established including offices, mine change rooms, workshops, fuel storage, power, telecommunications, ore haulage roads and underground access to the mining areas and tunnels. Daws says that once the portal access was reopened and ventilation established, KMC moved quickly to dewater the mine.

“With the removal of the water pumps after Barrick shut down the operations in December 2009, the mine was closed up for some 12 months and there was some water ingress from numerous rain events,” he says.

“We immediately set about a pumping regime, introducing some significant dewatering pumps, and we have recently announced that the dewatering process has finished, and the lower levels of the mine have now been reached.”

Marking a major step towards recommencing production with the mine now ready for underground operations once more, KMC will work to re-establish services for lower levels in preparation for future deeper mining. The team has concurrently undertaken some targeted exploration in a known parallel lode to the Main Lode—Barrick’s past focus—by looking more closely at the East Lode. Comparatively little attention had been paid to this area, with Barrick electing to mine the Main Lode to 700 metres at depth.

“If you can imagine two parallel lodes, the decline development sits between and spirals down. The East Lode is very close to the decline development, only 10 to 15 metres off from the decline, and represents an excellent target that we can chase an access it fairly rapidly for ore production,” Daws explains.

“We’ve been successful in the drilling to date and announced some results of good gold grades, and we’ve since begun developing a number of mine headings out to the East lode. At the moment we’re mining three ore drives in the East lode to prepare for stoping of the high grade ore.”

Since May KMC has amassed around 18,000 tonnes of ore at surface ($3 million to $3.5 million dollars of gold at current prices) crushed and ready for transportation to the third party milling setup; Barrick’s Kanowna Belle processing facility.

“It’s a fairly significant contract that we’ve put in place with Barrick and they’ve been very helpful in that, and when that ore goes off over the next few weeks we expect to generate quite significant cashflow to then drive further development and exploration work at the mine,” Daws says.

However with the various exploration drives ongoing at Bullant, it mightn’t be long before KMC needs a little more room for its project to manoeuvre.

Prolific territory for a prime project

Daws’s comments about Barrick’s efforts to mine down to 700 metres aren’t surprising; located on the Zuelika Shear, Bullant’s ore body looks likely to make its way as much as (if not more than) 1,000 metres below surface. This is good news for KMC, as Daws says that the current exploration is focusing on three key areas: Firstly the East Lode (stage 1) where KMC is now mining; with stages 2 and 3 to follow, which are lower levels currently being drilled (assay results are expected be released to shareholders in the next few weeks). Surface drilling that recently delivered high grade intercepts from to the south of the main Bullant mine (“Bullant South”) will be the second key exploration target in the months to come. The third key area is the “Bullant Deeps” which is the area immediately below the current mine workings and extending to plus-1,000 metres below surface.

“It seems to be a high grade core or plunge to the Main Lode that we’re seeing, not only in the drilling that we’ve done but also in the mining and exploration that Barrick has done,” Daws says.

“We’ll concentrate on that high grade core zone that we believe sits further south of the mine then plunges back down to the lower reaches of the ore body mined by Barrick.”

Upon taking over Bullant, KMC received 110,000 ounces in mining inventory. The bulk of the JORC code material supplied by Barrick, as part of the purchase, stemmed from the next 70 metres of ore the predecessor drilled out in the lower reaches of the mine (from the 5715 level 700 metres below surface and approximately 60 to 70 metres below that again).

“We also saw from the data that Barrick drilled some very deep diamond drill holes from surface, they were 1,100 metre holes and there are three of them. They all intersected the main Bullant lode at approximately 1,000 metres below surface,” Daws explains.

“The Bullant Deeps is between the mine inventory, about 700 metres below surface, and through to the 1,000 metre level where we’ll concentrate on drilling from the lower levels of the mine into that zone to block out the ore body which we believe occurs over those 300 metres. That will occur in the next six to eight months and should generate a significant lift to our resource inventory.”

With another plus-200,000 tonnes estimated to sit within the Bullant Deeps, it is clear that the project offers more than simple near-term production potential.

Bring in the mill

Today’s gold prices present a pretty cushioned option for plenty of projects, but not satisfied by riding the crest of the wave, Daws explains that putting in a dedicated processing facility will eliminate tolling and transport costs incurred in Bullant’s production process, significantly reducing its cost per ounce produced.
“We’re looking at a facility of about $18 million to $20 million in cost, which will treat 700,000 tonnes of gold ore per annum. We purchased a number of key second-hand items for our gold processing facility, including a 1,500 kilowatt ball mill and primary, secondary, and tertiary crushers at well-below replacement cost. The equipment will be refurbished and relocated at the Bullant site in preparation for a three stage build schedule,” he explains.

“We’ll have the crushing facility initially built as stage 1 and it is expected construction will commence in the next six to eight weeks.”

Under its ore purchase deal with Barrick, Bullant ore needs crushing to sub 25 millimetres in diameter to allow for efficient sampling. The current toll crusher costs at the project are in the range of $13 to 15 per tonne plus fuel costs, and a dedicated crushing facility as stage one of KMC’s mill would drop costs dramatically, perhaps down to less than $5 per tonne given the grid power allocation the company carefully secured upon purchasing the mine.

“We’ve got it at a significantly cheap rate, about 7.9c per kilowatt per hour off-peak, and we intend to run our crushing circuit off-peak to keep those costs low and add value straight to the bottom line,” Daws says.

Approvals and designs for stages two and three are in the works; stage two being the actual ball mill and tanks, gravity circuit, electrical, and stage 3 being the tailings storage facility and gold room. KMC has targeted an in-pit tailings facility 800 metres south of the mine in an old disused gold paleo-channel open pit.

“We’re in the process of modelling that up and preparing plans to go through the approvals process. Having an in-pit tailings storage facility will save us significant amounts of money too—it’s likely to be about one third of the cost of a paddock tailings storage facility and the company is very fortunate to have that option available to it,” Daws explains.

“We are aiming to get the mill up and going over the next 12 months.”

When KMC became a Western Australian gold producer, it did so quickly, economically and mindfully of what future potential its entrance project may bring. Forward-thinking planning—from agreements with Barrick and power source safeguarding to cleverly-staged modelling—continues to bear fruit. A dynamic organisation that has proved it has the right team, plans and project to realise the ground’s full potential, the company exemplifies how a miner ought to make the most of rising gold prices, and how the most exciting projects are able to perform when captained by the right board. Staunchly committed to generating shareholder value through its practical and pragmatic approach, it looks like the sky’s the limit for one of Australia’s newest, most capable gold producers.