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Barry FitzGerald writes his legendary Garimpeiro resources column weekly for Stockhead

Karma arrived for Tolga Kumova in a big way this week.

The bustling mining magnate’s 12 per cent owned Bellevue Gold said its recent Viago lode discovery at its namesake project in Western Australia was good for 550,000 ozs at a spectacular grade of 22g/t gold.

Bellevue (ASX:BGL) only put its first hole into Viago in May. The company has made clear that what ranks as one of the highest-grade discoveries globally in recent times is only going to get bigger with more drilling.

The maiden resource at Viago carried the total resource position at Bellevue to 1.04m oz at 12.3 g/tonne — which means Bellevue can start planning for a mine development.

It has been remarkable stuff given Bellevue had pretty much been ignored for the last 20 years despite a recorded production history of 800,000 oz at a grade of 15g/t stretching back to 1890s.

As Garimpeiro mentioned here on January 25 when Bellevue was trading at 24c, old gold mines have a habit of having a second, third or fourth wind.

Even after 100 years of production.

Kumova first moved onto the Bellevue register in a number of placements last year, giving him an initial 9 per cent stake at 5c a share compared with the 36c they now fetch.

His original investment was as an act of planned vengeance against nickel producer Western Areas.

Bellevue Gold shares (ASX:BGL) have been climbing steadily over the past month
Bellevue Gold shares (ASX:BGL) have been climbing steadily over the past month

Kumova at the time was peeved at Western Areas for not following through on a deal to acquire some prized lithium ground in WA’s wheatbelt region.

Western Areas is looking to revive the old Cosmos nickel operation next door to Bellevue. When it was a producer under different ownership, Cosmos used an old pit on the Bellevue ground for de-watering purposes.

So by becoming a big Bellevue shareholder, Kumova was thinking about how he could make life difficult for Western Areas and its Cosmos revival plans.

But yesterday he told Garimpeiro he had moved on.

“Besides, karma has worked its way through,’’ Kumova said.

He said his interest now was on how much the high-grade gold deposit could grow.

“This is the type of stuff the old-timers mined in the gold rush era. It’s what makes a gold mine a real gold mine,’’ he said.

All smiles for Bellevue investor and mining magnate Tolga Kumova

It was only in August that Bellevue made a maiden resource estimate of 500,000 oz (1.9Mt at 8.2g/t gold). At the time, the hope was Viago could underpin a resource upgrade to 700,000-750,000oz by about now, and possibly 1m oz early in the New Year.

Canaccord reckons that based on the exceptional rate that Bellevue has grown the resource to date, there is good potential for the resource to grow to 1.5-2 million oz.

“As a reminder, the inferred Viago resource is premised on 21 diamond drill holes, with only three returning insignificant intersections and visible gold recorded in 90% of the holes.

“Bellevue is planning to test the eastern and western flanks of the current resource envelope with the next phase of drilling, as well as the southern extension which could increase the strike length by more than 500m,’’ Canaccord said.

Now that Bellevue has achieved “critical mass” with the establishment of the 1m oz-plus resource, Canaccord said it felt comfortable completing a first pass valuation based on a production scenario which underpins an initial 65c valuation of the stock.

The broker figured an $80 million development of a 500,000tpa operation could yield annual production of 150,000 oz from early 2021 and at an all-in sustaining cost of $A850 an oz for an initial 5.5 years.

Like others, Canaccord also ponders if Bellevue will be on the receiving end of a takeover bid before getting to develop a standalone mine.

There six or so operations owned by others within 200kms of Bellevue, all of which would welcome the boost that would come from blending Bellevue’s high-grade ore with their own.

Canaccord nominates Gold Fields and Saracen as the most likely acquirers.