Life on the Rollercoaster - Mining and Milling the Kencana K1 Orebody, Indonesia

Since commencement of underground production in March 2006 the Kencana K1 orebody has delivered over 0.9 Mt of ore containing 1.18 Moz Au until April 2009. The Kencana deposits are part of the Gosowong goldfield located on the island of Halmahera in eastern Indonesia. The district has produced over 2.3 Moz since mining commenced in 1999 with the first two deposits extracted by open pit methods. The K1 deposit is technically challenging being a vein style deposit with poor to very poor ground conditions and a relatively low overall dip of around 45 degrees to mine grid east. It is mined under geological control by underhand cut and fill methods utilising cemented paste backfill aiming for 100 per cent extraction. With these conditions the operation was mine limited in the initial two years of production resulting in low stockpile levels for mill feed blending and hand-to-mouth mine to mill production. Mill feed rates have increased from 30 t/h to 55 t/h over this period following business improvement projects while mine production has escalated to match this increase as deeper levels of the deposit are accessed. The operation has now become mill limited. Monthly mill gold production from Kencana has ranged up to 50 000 oz with head grades ranging between 8 g/t and 122 g/t Au on a daily basis. As individual grade control assays can extend into the per cent Au range there are challenges in sampling, modelling, mining, blending and milling the Kencana orebody. At the time of commencement of ore driving in K1 the national geology team had little prior experience in underground mining and systems were in early development. The variances in feed grade and tonnages have been reduced with time as the operation evolves and business improvement initiatives are undertaken to smooth peaks and troughs in ore supply. Two such initiatives in the geology department have added over US$20 M of additional revenue per annum.