A new dawn in Australia’s most remote goldfield
Link copied to
Alice Queen has forged a unique mining partnership with the traditional owners of Horn Island in the Torres Strait, writes Barry Fitzgerald in his weekly Garimpeiro column.
It’s Australia’s most remote goldfield and hasn’t produced the yellow metal for 28 years.
But ASX-listed Alice Queen (ASX:AQX), in a unique partnership with the traditional owners, is out to bring the Horn Island goldfield back in to production.
Horn Island is part of the Kaurareg archipelago (also known as the Prince of Wales group of islands) in the Torres Strait, and sits just 20km off the tip of Cape York.
While gold production on the tiny 53sq km island by swashbuckling types dates back to the late 1800s, there was a short-lived revival between 1987 and 1989 when a company called Augold made a mess of things.
The Queensland government had to step in and taxpayers were left with a clean-up bill for the operation — the lasting legacy of which is a flooded pit which has doubled as a rubbish tip.
Because of the mess left by Augold, gold mining and exploration on Horn Island came to an end, with the whole affair being deeply disappointing to the traditional owners, the Kaurareg people. Deep mistrust of the mining industry became entrenched.
But Melbourne’s Andrew Buxton, Alice Queen’s managing director and a 14.5 per cent shareholder, found that with respect, patience and understanding through consultation, the trust of the traditional owners could be won back.
A new compact with the Kaurareg was the end result, sealed with them holding a 7.5 per cent free-carried interest in the gold project alongside Alice Queen.
Exploration in and around the old pit by Alice Queen in the last couple of years has been sufficiently encouraging for the company to be able to set an exploration target – it’s conceptual in nature – of 800,000 to 880,000 ounces of gold.
A new round of drilling is now underway and the hope is that Alice Queen will report a maiden resource estimate for the project under modern-day reporting requirements in September.
The current drilling program is designed to capture about one-third of the 800,000 to 880,000 ounces nominated in the exploration target, with further drilling to follow.
Given the market’s strong interest in near-term gold development opportunities, Alice Queen’s revival plan for Horn Island is in itself interesting stuff for a company with an enterprise value of $14 million at its current 4.7c share price (fully diluted for the 119m options that are exercisable at 3c by September 30, raising $3.6m).
But Alice Queen has recently added another leg to its story.
Much to the envy of fellow juniors, it secured an exploration joint venture on its Mendooran tenements in central New South Wales with Australia’s biggest gold producer, Newcrest.
Newcrest owns one of the biggest and best gold/copper mines at Cadia near Orange. The Mendooran tenements are believed to be a northern extension of the Molong Volcanic Belt which hosts the Cadia deposits, albeit under (geologically) younger cover.
Alice Queen pegged the tenements at the urging of its chief technical advisor John Holliday who was intimately involved in the discovery of the giant porphyry copper-gold Cadia deposits.
He believes Alice Queen has the best un-explored porphyry ground in Australia, with the thick cover leading to limited exploration in the past compared with the intense drilling efforts to the south.
Under the farm-in deal, Newcrest has the right to earn an 80 per cent interest in Alice Queen’s Mendooran tenements by spending $10m over nine years. At least $1 million is required to be spent in the first 12 months.
And as it is, target definition work is sufficiently advanced for a six-hole drilling program, testing to depths of about 600m, to kick off later this year.
While there are no guarantees in such exploration efforts, it makes for exciting times in the months ahead for Alice Queen.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.