The transition has shaved cash costs by at least $17 per ounce of gold produced at the Kalgoorlie Consolidated Gold Mines-managed mine.
Improved scheduling and dispatch enabled the operation to mine an average 210,000 tonnes per day, which was ahead of budget. That result was aided by a record mill throughput (12.1Mtpa annualised) in the June quarter.
Equal joint venture partners Normandy Mining and Homestake Gold spent nearly $100 million last year on an owner-mining fleet to replace contractor Roche Mining.
However, Stephen Gillies, managing director of the Downer Group (which owns Roche Mining), was skeptical of the move to owner-mining sweeping the nation. He spoke out against the trend at a mining conference last November.
"If comparisons with contractors are going to be made they need to be based on a level playing field," he said. "The measure should be on the basis of total costs, and on net cash flows discounted by the cost of capital."
But KCGM general manager, John Shipp, said the cost of machinery would be recovered before the initial forecast of five years.
"At the rate of production we are looking at well before the five year mark," he said.
Since the introduction of owner-mining at the Super Pit in October 1999, production has been incrementally improving. Currently production of total material is up to a record 7.5Mtpm from a previous record of 6Mtpm under contract mining agreements. The unit cost of total material production currently sits at $1.30/t, a saving of 30c/t.
"We are seeing quite positive improvements with the new equipment and move to owner-mining," Shipp said. "The fleet is smaller but bigger [in size] which is improving production rates."
Overall higher throughput, lower unit costs, cessation of mine contractor monthly management charges and a non-recurring credit of $2.8 million (being paid to Roche Mining) led to an improved total cash cost of $312/oz at the mine.
Shipp said a new upgraded flotation circuit would improve levels of gold recovered by 0.2%.
"The decision to move to owner-mining was purely economic," Shipp said.
"It has worked out well, shaving off costs and improving profit margins."
Owner-mining has also cut out some of the fat at the Super Pit operation.
"In some cases we had issues of duplication on site, for example in surveying and supervision" Shipp said. "Occasionally we would employ somebody to supervise a project and Roche would also have a supervisor out there."
Although fresh blood has been pumped into the operation, many ex-Roche employees came on board at KCGM following the change over.
Normandy's June quarterly report has also confirmed that Mt Charlotte, one of Australia's longest serving underground gold mines, will be closed early next year.
"Mt Charlotte has simple run out of economically mineable ore," Shipp said.
"We will continue to mine the ore that is there but we expect mining to finish up in about March next year."
The Super Pit has an expected mine-life of 14 years.
