Auctus Resources plans to begin production next month at its Chillagoe project in north Queensland.

Auctus Resources managing director Steve Murdoch said the rehabilitated Mungana underground mine was well into development, with first production ore expected during May.

Surface infrastructure was basically complete at the nearby greenfield zinc project – King Vol, where work was progressing on the decline, he said.

Mr Murdoch said Auctus expected to be producing ore from King Vol in second half of this calendar year.

“Concentrator dry commissioning is under way with wet commissioning scheduled before end of April. Production starts in May,” Mr Murdoch said.

The site is abuzz with activity, with about 300 people including construction and production contractors working on the project.

Mr Murdoch said this was expected to plateau back to a workforce of 170-180 when the project reached steady state operations in the next few months.

“We are very pleased with the progress and high level of local content and locals we are employing,” he said.

Pybar Mining has secured a five-year contract for mining operations at the Chillagoe project, which is centred on former assets of failed miner Kagara. Auctus, backed by Denham Capital, is investing about $100 million to bring the operations online after securing the assets in a takeover of Atherton Resources in late 2015.

The project will produce gold-silver dore as well as a range of copper, lead and zinc concentrates.