Barry FitzGerald: The kingmaker at the centre of Australia’s gold-rich Tanami Desert

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

Things are stirring in the seriously remote Tanami Desert,5 which straddles the Northern Territory and Western Australian border, with a handful of gold juniors set to benefit.

Despite a gold history stretching back to the late 1890s, the Tanami remains largely unexplored because of the extensive sand cover hiding its prospective rocks.

But since the 1980s, the desert location has nevertheless yielded more than 20Moz of gold, mostly from the NT side of the border at the Tanami operations of US gold giant Newmont.

It is Australia’s fourth biggest gold mine and is being expanded at a cost of a couple of billion dollars but gets little airplay locally because of its US ownership.

Newmont and other gold majors like South Africa’s Gold Fields and until recently, our own Northern Star, have been beavering away in the hunt for the Tanami’s next multi-million ounce discovery beneath the sand dunes.

So too have a bunch of juniors. None have cracked it just yet.

But because the Tanami has the right rocks and is so under explored, the expectation is that the next big one can’t be far off.

In the meantime, corporate interest in the Tanami has stepped up recently due to ownership changes in the two non-Newmont mills in the region and of course, the run up in the gold price to record levels which makes remote locations seem not that remote after all.

The step-up in corporate interest follows the exit from the region of Northern Star. Now a $35 billion company, Northern Star once had hopes of establishing a major new production hub in the Tanami.

But its $5.7 billion acquisition of Saracen in 2021 and this year’s $5bn acquisition of De Grey meant the Tanami has fallen down the totem pole.

Shuffling the decks

In 2022, Northern Star sold the Coyote gold project (650,000oz at 5.5g/t and an idled 300,000tpa mill) on the WA side of the border to Black Cat Syndicate (ASX:BC8) .

It followed that up recently with the sale of its 50% stake in the Central Tanami project (2.6Moz at 3.2g/t and an idled mill) on the NT side of the border to Mount Gibson Iron (ASX:MGX) , the iron ore producer plotting a future in gold as reserves at its Koolan island operation are near exhausted.

Black Cat has been busy at its Pilbara and Kalgoorlie East gold operations but has flagged it is working at getting Coyote into production while also tapping the regional exploration upside.

That’s good news for junior explorers in the WA side of the Tanami like Hamelin Gold (ASX:HMG) trading at 7.4c, and Killi Resources (ASX:KLI), trading at 5.8c, which has Gold Fields spending up big to earn an interest in its ground.

Mount Gibson has also said it is keen to get the Central Tanami project into production/exploration mode and as it has cash and shares (stakes in Fenix and AIC Mines) worth $484m at June 30, MGX has the capacity to make things happen.

Junior opportunities

Ownership of Coyote and half ownership of Central Tanami by Black Cat and Mount Gibson respectively is good news for the juniors in the broader Tanami because future treatment options are opening up for them.

Garimpeiro’s particular interest in the Tanami is what happens next on the NT side of the border.

That’s because both Mount Gibson andTanami Gold (ASX:TAM) , trading on Friday at 6.8c and the 50% partner in Central Tanami project have long sat under the umbrella of Hong Kong’s Allied Group, controlled by the billionaire Malaysian-Chinese Lee family.

Allied’s associate company APAC Resources is a 38.4% shareholder in Mount Gibson and 46.3% shareholder in Tanami Gold.

APAC also owns a 29% stake in Prodigy Gold (ASX:PRX), trading at 2c and the owner of about 1Moz of gold at projects to the north and south of Central Tanami.

Clearly APAC is the kingmaker in what happens next between the trio of companies. It is also clear that consolidating project ownership under the Mount Gibson banner would make for a much more appealing ASX gold offering. A serious value uplift at $US4000/oz gold awaits.

The views, information, or opinions expressed in this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.