Regis to Spend $4.7 Million Repairing Australian Gold Mines

Regis Resources Ltd., an Australian gold producer, will spend as much as A$5.2 million ($4.7 million) to pump out water and repair two open pit mines flooded by heavy rainfall this month.

Garden Well mine was submerged under about 4.7 million cubic meters of water and the Rosemont North pit under 620,000 cubic meters, the Perth-based company said in a statement. The 165 millimeters of rain at its Duketon site in Western Australia from Feb. 11 to Feb. 13 was a once-in-a-150 years occurrence, it said.

“This is a tough time for Regis and its people and a setback for the company in the short term,” Managing Director Mark Clark said in the statement. Duketon, comprising another mine that was unaffected, will return to a “strong steady state in the second half of this calendar year,” he said.

Full mining activity won’t resume at Garden Well before July or before May at Rosemont, while it will be four to six weeks before some mining of ore and waste can begin in areas at the two sites untouched by the flooding, the company said.

Pumping water from Garden Well, where the rainwater has an average depth of 45 meters, will take three months and cost A$3 million to A$3.5 million, the company said in the statement. Work to remove water has begun at Rosemont and will take about one month at a cost of A$200,000. Repairing and upgrading damaged flood defenses at the mines will cost about A$1.5 million, the company said.

Flooding risks aren’t insurable under the company’s policies, Regis said in the statement. Macquarie Bank Ltd. agreed to extend the producer’s corporate loan facility from A$20 million to A$70 million, it said.

Gold production in April to June is expected to be 9,000 ounces to 11,000 ounces per month at Garden Well and 5,000 to 7,000 ounces at Rosemont, it said. Operations are continuing as normal at the Moolart Well mine in Duketon.

Regis has issued MACA Ltd. with a force majeure notice in respect to mining contracts at Garden Well and Rosemont, the contractor said in a separate statement.

Before it's here, it's on the Bloomberg Terminal.