Bigger isn’t always better when it comes to gold discoveries, says Matsa
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Gold explorer Matsa Resources is about to start mining a West Australian project that chairman Paul Poli describes as a “sweet little deposit”.
The Red Dog gold project — due to get underway in July — is definitely not the biggest project around with a resource of about 26,300 ounces.
But Mr Poli reckons its potentially very profitable.
“Most would scoff at something this size – but we have an excellent resource at no more than 12m below surface,” he told investors at the RIU Resource Round Up in Sydney on Thursday.
“We can mine this small stranded deposit and make ourselves roughly $500-$600 an ounce, which will bolster cash reserves for the rest of our portfolio.”
The potential of the Red Dog project is realised through a deal with AngloGold Ashanti (ASX:AGG) and its ore processing facilities just north of the site.
Last quarter, the partnership netted Matsa (ASX:MAT) $4.79 million from its Fortitude trial mine — but it’s hoping this shallow project alone could at least double that in just 12 weeks of work.
The chair says it’s the start of a three-pronged approach targeting small stranded, open cut and underground deposits.
“We believe there will be more sites like Red Dog on our ground – there will be numerous targets of 15,000 or 20,000 ounces that we can monetise and the reason we can do it and nobody else can is because of that ore purchase agreement with Anglo Ashanti.”
The company has secured significant ground in Lake Carrey – north of Kalgoorlie, WA, what he terms ‘elephant country’ for its resource potential – but it hasn’t come easy.
“We got into this Lake Carey area solidly two years ago and did deals with no less than seven companies to put this package together,” he told Stockhead.
“There has been $89 million spent on drilling in this area, that tells us where not to drill. So it saves us a lot of heartache and a lot of time and effort.”
Prospective targets lie under a salt lake – what 10 years ago was very expensive and difficult to drill.
With new exploration technology that means a whole lot of new potential in places that have not been thoroughly explored until now.
While a shallow target won’t have long lasting revenues – he says combined it makes for a steady balance sheet… what it brags has added to their positive $1.6 million balance in their last quarterly.