Besra’s highway to gold commercialisation and growth secured by US$300m funding facility
Besra can now move development of the Jugan project into top gear after shareholders approved a transformational US$300m funding facility from major shareholder Quantum Metal Recovery.
Importantly, the US$300m ($443.4m) gold purchase agreement – essentially a pre-payment for future production of the precious metal – removes the need for the company to pursue the traditional pipeline of equity-based dilutive funding requirements that typically cap the share price of companies transitioning from exploration to production.
At least initially, this funding allows Besra Gold (ASX:BEZ) to accelerate the final feasibility studies for Jugan as well as resource delineation for the broader Bau Gold Field corridor.
Jugan is the most advanced prospect within Bau with current high confidence Measured and Indicated Resources of 870,000 ounces of gold at an average grade of 1.5 grams per tonne (g/t) as well as a further 90,000oz at 1.6g/t in the Inferred category.
The Bau Gold Field corridor has a global JORC Resource of 3.4Mt at 1.5g/t for 166,900oz of contained gold in the Measured category, 16.4Mt at 1.6g/t for 824,000oz in Indicated ounces and a hefty 47.9Mt at 1.3g/t for 1.99Moz in the Inferred category.
“We will also be able to accelerate our resource delineation studies and under the JORC code, we believe there is an additional 4.9Moz to 9.3Moz of exploration potential, which has been identified above and beyond what we currently hold in terms of our resource inventory at some 3Moz,” chief technical officer Dr Ray Shaw told shareholders at the special general meeting held to approve the funding agreement.
He added that the funding agreement allowed both core activities to be undertaken in parallel in order to maximise the full organic growth potential of the company’s Bau Gold Field corridor.
Drilling carried out in 2021-2022 had confirmed the standalone development potential for Jugan including higher grades.
The project features a well-defined, predictable, mineralised body that is bounded by upper and lower thrust faults.
Notably, this mineralisation starts from surface, meaning that any mining activity will benefit from a low strip ratio.
The project also has EIA approval for a pilot processing plant and test pit construction for scaled metallurgical optimisation studies.
“Behind the scenes, a lot of activity and coordination is already underway, and we are confident of our ability to reach the first gold concentrate requirements by the end of the year,” Shaw added.
“I’d like to emphasise the fact that at Jugan, the 1Moz that we have and the other 2Moz we have elsewhere on the Bau corridor, the vast majority of it is located at between 80m and 100m depth.
“Our studies recently, including a metal zonation study, highlighted that there are target areas sitting below the existing wireframes where we do have the potential for higher-grade gold endowment and the non-refractory gold we intersected at Bekajang in hole 27.”
More broadly, Besra will use the funding facility to accelerate resource drilling to upgrade its Inferred and Indicated Resource inventories as well as converting the Exploration Target into Resources.
Dr Shaw highlighted the work the company had done at Bekajang – located on the same mineral fairway as two historical mines that produced over 1Moz of gold of which quite a bit was non-refractory gold – as the future of delineation drilling that would deliver growth.
“As an example of where we see the future of delineation drilling, what we can get, the growth that we can potentially see as a parallel objective to our commercialisation of Jugan, it is illustrated by the work we have been doing at Bekajang,” he explained to shareholders.
“In an area where traditionally there had been mining, where it was thought it was understood where the occurrences were located, primarily at the Limestone Shale Contact, when we have come in with diamond drilling and being a bit more forensic in our approach, we have been able to identify a potential new target at depth.
“This just highlights the fact that the 3Moz we have along the Bau corridor at the moment, we believe is the tip of the iceberg. There is significantly more potential and the funding facility that we have now will allow us to pursue some of these targets.
“In the past few months, we have been concentrating on following up on the drillhole 27 results and we have been doing a number of drill holes to locate where the main trend of the hydrothermal alteration associated with mineralisation extends.
“At this stage we are awaiting the final assay results for the drilling we completed at the end of June and that will be incorporated into a revised geological model and then we will be able to put together an assessment of what that means in terms of a future development of a deeper bonanza grade mineralisation occurrence within the Bau limestone.
“We are also going to accelerate our activities at Sirenggok and Pejiru where the resource footprints are a priority for future delineation drilling.”
Bau is located just 30km from Kuching, Sarawak, at the western end of an arcuate metalliferous belt extending through Borneo that is associated with significant gold mining – including the 7Moz Kelian and 3Moz Mt Muro projects – in the Indonesian portion of the island.
The field itself is defined by a gold mineralisation system covering a 15km by 8km corridor
Under the terms of the funding facility, Quantum had provided an initial deposit of US$5m and may provide up to US$10m in funding per month, up to the amount of US$300m.
The first US$10m is expected to be received on or before the end of September.
Proceeds from the facility enable the company to fully fund production at the Bau corridor and can be put to a variety of uses such as exploration, feasibility studies, mine development purposes and working capital.
As consideration for this facility, Besra has agreed to deliver to Quantum up to 3Moz of future gold produced from its projects.
The company had previously noted that once production begins, it will receive 85% of the Reference Price – the five-day average of the London Metal Market gold price with a floor price of 117.5% of the all-in-sustaining cost at the time of delivery – for each ounce of gold covered by the facility delivered to Quantum.
This article was developed in collaboration with Besra Gold, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.