Published: April 15, 2019 |

[Click image to enlarge]

Pogo Gold Mine.
[Click image to enlarge]

Since its 2018 acquisition of Pogo Gold Mine — a large underground mine near Delta Junction — Australia-based Northern Star Resources Ltd. is embarking on roughly $85 million of reinvestments.

The money has produced 46 new local jobs in the past six months, raising Pogo’s workforce to about 500 on-site.

The reinvestments are in addition to the $260 million price tag to purchase the mine from its previous owner, Japan-based Sumitomo Metal Mining Co. and Sumitomo Corp.

Shaun McLoughney, general manager at the mine, gave an update on Pogo’s future at a luncheon Tuesday hosted by the Greater Fairbanks Chamber of Commerce.

“It’s an outstanding piece of real estate, it’s a huge gold endowment and a magnificent piece of infrastructure,” McLoughney said of the roughly 322-acre mine, which is about 1.5 times larger than the overall footprint of Delta Junction’s airport.

He also said Northern Star Resources was “pretty gobsmacked” the previous owners walked away.

Pogo is the third gold mine in NSR’s portfolio. Except for location (the other two are in Australia), the three mines have major similarities: All three are underground and all were purchased to keep them viable.

“Pogo Mine would have closed in December of last year without some investment from us,” McLoughney said.

The investment is one major reason Pogo is not profitable. Another is that NSR faces an unfavorable exchange rate between Australia and U.S. dollars when financing the investments.

“Right now, we’re throwing cash from Australia into that mine and getting about 70 cents to the dollar. ... A pretty tough sort of gig,” McLoughney said.

In the long run, McLoughney said, he isn’t too concerned about losing money. NSR “is a business first and a mining company second,” he said.

To increase mineral inventory, NSR is dropping the cut-off grade for ore by about 50 percent, meaning there’s a lot more recoverable gold under the new operators.

Additionally, NSR’s investment in new equipment and technology will reduce extraction costs. A new style of remote loader is expected to be twice as fast, with twice the capacity as previous loaders, resulting in four times the production, McLoughney said.

He said the company hopes to target a 1.5 million-ounce reserve in July.

McLoughney said the mining industry in Australia is more technologically advanced than in North America.

“If we can get this right, Pogo will be a breeding ground for people with a much higher level of skill. ... mining engineers, geologists, operators, technical staff and tradespeople,” he said.

McLoughney also said the company will take a hard look at costs and work with vendors to identify and mitigate risks involved with large purchases, which he said hopefully will improve Pogo’s bottom line.

“You’ve got to be rigorous with costs,” he said.

And while McLoughney credited Pogo’s former owners for doing a good job staying on top of regulations, he said they were less than comprehensive in reporting injuries. “A lot of those were swept under the rug,” he said.

Because of that, McLoughney expects to see an increase of first aid injuries, such as cuts to the hand.

Pogo opened in 2006 and is the country’s eighth-largest gold mine, producing about 300,000 ounces of gold annually, for a total of more than 3.8 million ounces. Original estimates indicated Pogo would be viable through 2020, but the new owners hope to shoot far beyond.

“There’s no question going forward we’ll have a viable operation,” McLoughney said.

Source: Fairbanks Daily News-Miner

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