All systems go for Laneway’s next bite of Agate Creek
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Special Report: The final pieces have been put into place to allow Laneway Resources to begin a new mining campaign at its Agate Creek Gold Project in north Queensland in early October, with the exercise expected to generate substantial cashflow for the company.
Laneway (ASX: LNY), which is run by Brisbane-based dealmaker Stephen Bizzell, announced on Monday it had reached an agreement for ore from Agate Creek to be processed through the Lorena mill near Cloncurry, appointed Maas Group as mining contractor for the campaign and finalised pit designs and mine planning.
“We are very pleased to have finalised the mine plan and contractual arrangements to enable mining of high-grade gold at Agate Creek to commence shortly,” Bizzell, the company’s executive chairman, said.
“With the current high Australian dollar gold prices, we expect very healthy cash generation from this mining campaign beginning in the December 2020 Quarter to support the self-funded ongoing exploration and development of the Agate Creek Project.”
In August, Laneway reported that drilling success had expanded the high-grade zone of the Sherwood deposit at Agate Creek and that it anticipated being able to mine significantly more material than the 20,000-25,000 tonnes initially expected.
Based on the mine plan outlined on Monday, the upcoming campaign is expected to involve the extraction of 42,800 tonnes of material at a grade of 6.5 g/t Au for 8,950 ounces of contained gold at an overall stripping ratio of 11:1.
The company’s share of production from an initial campaign of mining conducted at Agate Creek between April and September last year – 5,242 ounces – delivered approximately $10.6 million in revenue at a time when the Australian dollar gold price was about $500 lower than it is currently.
Treatment of ore from Agate Creek through the Lorena plant, a conventional Carbon-in-Leach (CIL) set-up, is scheduled to commence in mid-November, with the first 18,000-tonne batch expected to take three weeks to process in full.
Laneway should receive payment for most of the gold recovered from the initial batch within 60 days of the start of mining.
The agreement with the owners of Lorena allows for the second batch of ore from Agate Creek – 25,000 tonnes – to be processed through their plant, but the company said it was also exploring “longer term” processing options.
If a suitable option was identified in time, it was possible the second batch of ore could be processed through that facility instead.
There is significant scope for additional high-grade mining campaigns at Agate Creek, with one pit optimisation exercise carried out recently generating a shell containing 120,000 tonnes at 5.7 g/t Au for 22,000 ounces of gold.
Mining of this larger pit would require amendments to the granted Environmental Authority conditions associated with the Agate Creek Mining Lease. Studies are currently underway to aid in securing those amendments.
Laneway also said that given the high gold price, more of Sherwood’s high grade 205,000 tonne resource may be able to be incorporated into economic pit shells for future mining and that it expected to identify further resources by targeting depth extensions of the known high-grade zones with more drilling.
The company’s strategy at Agate Creek is to have the mining campaigns self-fund exploration of the broader project, limiting shareholder dilution.
The project contains a global resource of 471,000 ounces that Laneway wants to grow beyond one million ounces, at which size it should be able to justify the development of a processing facility on site.
This story was developed in collaboration with Laneway Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.