Is New Zealand Entering its Golden Era?
Miners impressed by the step change in permitting
The small South Pacific island nation of New Zealand is undergoing a mining renaissance.
The land of the long white cloud hasn’t been known as a mining destination, it’s now giving its larger neighbour Australia a run for its money in terms of investment attractiveness.
A coalition of the National Party, ACT Party and New Zealand First was elected to power in 2023 and has set its sights on attracting more mining investment.
Last year, the government released a draft minerals strategy with an aim to increase export earnings from NZ$1 billion a year to NZ$2 billion by 2035 and more than triple direct employment in the mining sector to 7000 by slashing red and green tape under the Fast-track Approvals Act.
Last month, Resources Minister Shane Jones was promoting the country’s minerals opportunities at the International Mining and Resources Conference in Sydney and the country’s energy sector at two conferences in the US.
NZ’s largest mining operation currently is OceanaGold Corp’s (TSX: OGC) flagship Macraes gold operation.
At the Mining Forum Americas in September, OceanaGold CEO Gerard Bond said permitting in NZ used to be unpredictable.
The company also operates the smaller Waihi operation but the discovery of the high-grade Wharekirauponga (WKP) deposit has the potential to transform the operation from early next decade.
The enlarged Waihi operation is set to produce 1.6 million ounces of gold over 15 years at all-in sustaining costs of US$994 an ounce, with the study returning a post-tax net present value of US$621 million and internal rate of return of 24%, based on a US$2400/oz gold price.
Bond said the approvals process was now clearly defined and the company hoped to be awarded a permit for WKP in December.
“It’s that clarity of the process that has been very helpful for everybody, and certainly us as a producer, and the whole intention of the fast-track process is, by its name, is to get things that have a benefit to the country approved, and this project would be the largest source of foreign direct investment in New Zealand, and so we’re excited about having a regulatory regime that is pro-investment and supportive of mining,” he said.
Milestone for Santana
On Thursday, Santana Minerals (ASX: SMI) was granted a 30-year mining permit for the Bendigo-Ophir gold project in Central Otago.
It’s one of the two main approvals required to begin construction, the other being the Fast-track Approvals Act consents, which was submitted for assessment on Monday.
The company will pay the government the higher of a 2% net smelter return or 10% of accounting profits.
Based on the project economics and a gold price of NZ$5410/oz, the royalty amounts to A$448 million over 14 years or A$32 million per year on average, being the windfall rate of 10% of accounting profits, representing an increase of 2.5 times mineral royalties received by the government in 2024 from all mining operations in the country.
An updated prefeasibility study, released in July, outlined capital costs of A$277 million for a 13.8-year open pit and underground operation to produce up to 120,000oz per annum at AISC of A$1660/oz and all-in costs of A$1950/oz.
Based on a gold price of A$3500/oz, the post-tax NPV (6.5% discount rate) is A$780 million and IRR is 39%, rising to A$1.52 billion and 65% when using a A$4950/oz gold price.
“It’s projects like Bendigo-Ophir that demonstrate the untapped potential of our minerals estate, even in areas thought to be exhausted by historical mining,” Jones said on Thursday.
Snowy River advancing
Also on Thursday, privately owned Endura Mining announced it had secured A$150 million of new equity funding to finance the development of the fully permitted Snowy River gold mine on NZ’s South Island.
AustralianSuper, the largest superannuation fund in Australia and Endura’s largest shareholder, supported the raising, while Orion Resource Partners was also introduced as a capital partner and 9.9% shareholder by providing an undrawn commitment.
Endura said it had received a long-form credit-approved term sheet from one of Australia’s largest commercial banks at competitive rates which would fully fund Snowy River to production once finalised, targeted by the end of the year.
Snowy River, a high-grade underground mine, is expected to produce around 60,000ozpa of gold over 10 years when production begins within the next 15 months.
Sydney-based Endura, which was previously known as Federation Mining, has recently undergone a rebranding and a board revamp.
Evolution Mining (ASX: EVN) founder Jake Klein stepped down from executive chairman to non-executive chairman in July, joining Endura as executive chair shortly after.
Endura’s board also features Genesis Minerals (ASX: GMD) chairman Tony Kiernan, Ramelius Resources (ASX: RMS) chairman Bob Vassie, Northern Star Resources (ASX: NST) director Sally Langer and Evolution director Tommy McKeith, while its management team includes several former Evolution senior executives.
The company describes itself as a “new growth platform in gold and copper mining with a strategic plan to build a portfolio of 3-5 cash-generative assets in tier one jurisdictions”.
It plans to eventually transition to becoming a public company.
“The strategy of Endura is to combine world class capital partners with an outstanding team,” Klein said.
“Both AustralianSuper and Orion have a great track record of successfully investing in resources and we are privileged to have them as supportive cornerstone shareholders.”
Jones welcomed Orion’s involvement in Endura.
“I am delighted to see New Zealand taking its rightful place at the forefront of new investment in mining,” he said.