Life after Martha

Q&M talks with Newmont Waihi manager Glen Grindlay about the company’s future once Martha mine is closed.

Due for closure, the rehabilitation of the open-cast Martha pit in Waihi started last year, about the same time as Newmont’s new Favona underground mining operation began.

Newmont has budgeted at least $11 million for further exploration in the region, including Waihi township area for extensions of the Martha and Union Hill veins and the Favona system. Aerial surveys have been undertaken  from Te Aroha to Thames for prospects in other areas of the company’s ‘backyard’.

After drilling in the 280-hectare permit immediately west and south of the Martha mine, the US-based company recently reported modest gold mineralised intercepts from three exploration holes.

New Zealander Glen Grindlay is the man in charge of the staged closing down of Martha and the running of the Favona underground project, which is expected to have a life span of between seven and 10 years. He has been with Newmont for 14 years, last working in Nevada before moving back here a few years ago as Newmont Waihi’s operations manager.

There are 350 people working for Newmont Waihi, the highest ever since it started mining here in 1988, and the mining company is obviously keen to continue mining around the town. While future operations will require a new consent process, says Grindlay, every opportunity is being explored with Martha’s existing consents.

“We are still saying three years to the layback and we are actively looking east and west of the system to get as much out of this deposit as we can before closure.”

Explorative drilling is concentrated on underground mining targets, he says, as it will be easier to consent in the future and is the company’s preferred operational mode (although not necessarily more profitable).

“We are currently taking out two grams of gold per tonne of ore from Martha and last year it was four per tonne - a good year. Underground is running at 12 to 14 grams per tonne,” says Grindlay.

Open cast mining requires a massive strip ratio involving five times as much waste as ore. “Say extraction costs are $10 a tonne, then it is actually costing $50 to get that ore out. The underground mining method is more selective, but comes at higher cost and is sitting around $70-$80 a tonne.”

Newmont’s investment in Waihi on top of exploration is ongoing. The underground Favona explorative tunnel cost $15 million, and the southern wall stability cover for Martha, a closure condition, is costing a further $25 million.

“To keep in business we still have to invest in a lot of infrastructure. It’s a big negative cashflow this year. And we have been saying to our crews – we really want to focus on keeping costs down and production up.”

Newmont is also investing a lot of resources in community goodwill. Few mines work as close to a township and the company has wisely involved the community as much as possible in the rehabilitation project (see page 16).

Most of the land above Favona is owned by the company to get around consent obligations. Although workings are 300 metres below the surface, noise limits of 55dba and diligent blast vibration monitoring requires wide buffer zones.

“To get workable boundaries in the past we have had to buy the land. We own about 180 properties – a church and all sorts of stuff. We are trying something new with the community called an ‘amenity effects programme’, where we compensate the owner for ‘effects’ felt instead of buying the land.”

The programme is rolling out this year and was co-ordinated with Green Party co-leader Jeanette Fitzsimons and much consultation with the Waihi community, says Grindlay.

“It’s not any more cost effective, but is less disruptive and more publicly acceptable. We don’t end up landlords and people are not relocated.”

Other challenges are more global: long lead times for replacement equipment and chronic industry skill shortages.

Equipment replacement delays can be crippling, he says, and the reason Newmont uses standard Komatsu 30 tonne quarry dump trucks, leased off Porter Hire, and not underground specific equipment that would be smaller with larger payloads. If we can align with the quarry industry – all the better for maintenance support, says Grindlay.

“The lead time on a lot of stuff is just amazing. If something breaks in the mill, for instance, it can take 18 months to replace because of huge global demand.”

Newmont has had to tie up a lot of capital in critical spares, he says. “A mill motor may cost us $200,000 to have sitting instore, but we get that back within three or five days if it is needed. It would otherwise take three weeks to get a new motor in. It’s a boom industry and we in New Zealand are far removed from it.”

Skill shortages worldwide have also resulted from that boom. Through Boart Long, Newmont is pulling drilling contractors and jumbo operators out of the Philippines, even relocating families to Waihi.

“Our staff turnover is sitting around 15 percent, which is quite good, but it used to  be five percent. The turnover at some Newmont sites in Australia hits 40 percent.”

With so much exploration going on around the world by start-up companies the industry is critically short of geologists.

“We have lost two explorative geologists in the last month – one to a project in Greenland and another to Australia, both to junior companies that can afford to pay way above industry standards. They don’t have to worry about setting [salary] precedents. Parity is so important for a larger company and we just can’t react that quickly.”