Cadia East Underground Gold and Copper Mine, Australia

Cadia East Underground – a gold and copper mine – will be the first Australian panel cave and Australia's largest underground mine with significant ore reserves and a projected lifespan of over 30 years.

It is 100% owned by leading Australian gold producer Newcrest Mining, which also runs the Cadia East open pit as well as Ridgeway Deeps underground mines. All three sit within the so-called Cadia Valley Province in central New South Wales, Australia.

Initial exploration pointed to an underground mine similar to Ridgeway Deeps, however, more recent drilling has revealed that a much larger zone of mineralisation exists, likely to support both underground and open cut mines.

The Cadia Hill gold-copper porphyry deposit was discovered by Newcrest Mining Limited in 1992. Cadia East was then discovered in February 1994 following exploration east of the Cadia Hill prospect during the drillout of that deposit. The high-grade gold-copper (Cadia East Underground) mineralisation at depth was discovered in 1996 by drilling beneath previously outlined gold-copper mineralisation.

Drilling of the Cadia East System by Newcrest has been carried out in several phases since 1994 up to the present day, where underground access has now been established via an exploration decline.

Newcrest expects that Cadia East will sustain production in the Cadia Valley well beyond the life of the current Cadia Hill and Ridgeway underground operations.

A further 2,800m of decline development was planned to reach the proposed extraction level by late 2008.

Newcrest's 2007 annual report listed the pre-feasibility stage mineral resources of Cadia East Underground at 15.5 million ounces (oz) of gold and 2.24 million tons of copper.

The project's feasibility study was completed by the end of 2009. In January 2010, the New South Wales Government granted Newcrest Mining the approval to proceed with the construction of the A$1.91bn project.

Construction began in April 2010. Production is scheduled to commence in the second quarter of 2012; production levels are expected to be increased during 2013.

Geology and reserves

The Cadia East project is based on a porphyry zone of gold-copper mineralisation adjacent to the eastern edge of the Cadia Hill orebody and extending to up to 2.5km east.

Cadia East is a mineralised system located on the eastern edge of the Cadia Hill orebody, within the Cadia mineralised corridor. The deposit is a porphyry zone of gold-copper mineralisation extending up to 2.5km east of Cadia Hill. The system is up to 600m wide and extends to 1.9km below the surface.

Estimates for the Cadia East Underground project were revised in 2009 up to 2,347Mt, including 33.2Moz of gold and 6.59 Mt of copper.

By 2009, the mineral resources of Cadia East increased by 5.2Moz of gold and 1.02Mt of copper. The ore reserves are 18.7Moz of gold and 31.6Mt of copper.

The exploration activities resulted in increase of about 2.4 million ounces of gold and 0.40Mt of copper reserves. The total mineral resources as of 2009 are 2,347Mt (including measured, indicated and inferred) graded at 0.44g/t Au and 0.28% copper.

The underground component of the Cadia East indicated resource was recently upgraded to probable reserves. This was updated to indicate an increase of 101 million tons of ore containing around 1.7 million ounces of gold and 0.30 million tons of copper. The Cadia East deposit contains some molybdenum.

Cadia East Underground Mining

Cadia East Underground is the development of the underground zone of Mineral Resource which extends from 700m to 1,500m below the surface. The underground resource has a high-grade core and lower-grade halo. It is a massive deposit suited to the application of lower cost, bulk underground mining methods.

Newcrest has identified panel caving as likely to deliver the best technical and economic outcome. In October 2010, the company awarded a $20m contract to ABB to supply conveyer control systems for the six underground mines. The control system will comprise ACS 6000 multi-drives and motors.

Cadia East underground will be the first Australian panel cave and Australia's largest underground mine with world-class ore reserves and an expected mine life of over 30 years.

Ore processing

It is expected that ore will be processed using Flotation & Gravity utilising existing Cadia Valley processing plants. In late 2004, the Newcrest Board approved $100m for investigation and study work on the Cadia East deposit including: development of a 6.7km underground decline to access the orebody and 6km of underground horizontal development to provide access to the orebody for drilling and sampling; over 45km of resource drilling; and data collection and studies covering geotechnical, mining and metallurgical areas in order to assess the optimal mining and processing methods.

Production and costs

Newcrest's pre-feasibility study into Cadia East Underground was completed in the first half of 2009. The study identified more definitive data on throughput rates, production levels and the timing of initial production.

The project will produce 700,000-800,000oz/year of gold and 75,000-100,000t/year of copper for its first ten years.

The project is being funded by internal cash flows. The cost of production for the first ten years will be less than $100 per ounce. The average production cost during the life of the mine is expected to be less than $250 per ounce.