Heron’s Woodlawn Zinc Project Steams into Operation

The Woodlawn zinc-copper project in New South Wales has taken another leap towards first production, with underground mining commencing earlier this week as zinc prices stay stubbornly low.

Owner Heron Resources (ASX:HRR) announced the news earlier this week, with the company stating that construction was progressing on track.

Managing Director of Heron Wayne Taylor said that underground activities getting underway was a sign of good progress as the operation headed towards commissioning by the end of 2018.

“Exploration over the last 4 years has defined a high-grade, high-quality resource and reserve position, and the access which has now commenced will enable us to deliver underground ore into the processing plant in 2019,” he said.

“Once underground, our geological team will focus on further expanding the known mineralized positions to build upon the excellent and cost-effective work they have undertaken to date.”

The Woodlawn project, which is 250km southwest of Sydney and near the national capital, Canberra, is backed by a feasibility study that envisages a 11.5-plus year mine life base on reserves “with significant exploration upside.”

The company says that the project has an annual production target of 40,000 tonnes of zinc in concentrate, 10,000 tonnes of copper in concentrate and 12,000 tonnes of lead in concentrate sources from underground operations and tailings reclamation.

Pybar Mining Services, which was awarded a four-year contract earlier in 2018, has commenced mining activities including the box cut walls and the first portal blast of the decline.

The other source of minerals, the tailings operations, has also seen progress, with hydraulic mining equipment infrastructure being installed next to the tailings dam.

Reclaimed material from the dam will provide the first ore for commissioning of the processing plant.

Taylor said that progress was being made in all aspects of the operation, with engineering, procurement and construction works for 73 percent complete as of the end of August.

The Woodlawn mine previously operated for 20 years between 1978 and 1998, when it was shuttered for ‘corporate issues’ experienced by its previous owner, Denehurst Limited.

In its release, Heron acknowledged the volatility of the base metals market in light of the trade war, but said that metals prices nevertheless remain significantly above those assumed in Heron’s 2019 feasibility study.

In the study, Heron assumed a base price deck of US$2,230 a tonne for zinc, US$2,000 for lead and US$6,610 for copper as well as US$17.8 an ounce for silver, and US$1,200 an ounce for gold.

As of Tuesday (September 25), zinc was trading at US$2,526 a tonne — well below where the metal started in 2018 at US$3,375 a tonne, but an improvement on its year-to-date low of US$2,285 hit in mid-September.

Zinc supply has been an issue of contention with prices low in light of trade ructions, but with a supply crunch creeping into the scene — something noted by the company, which said that a lower price would discourage other new projects.

Meanwhile, copper is trading below Heron’s base price deck, along with silver — but lead and gold are on par as of Wednesday.

“Heron considers that the long term outlook for zinc, copper and lead remains highly supportive for the company’s Woodlawn mine,” said the release.

On the ASX, Heron was trading at AU$0.6 at the close of trading in Sydney on Wednesday September 26, down 2.44 percent on the previous days close of AU$0.615.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.