Blackham closer to realising a step change in its turnaround strategy
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Special Report: While Blackham is still dealing with some short-term issues at its Wiluna mine in Western Australia, it is making solid progress on its turnaround strategy.
Blackham Resources (ASX:BLK) now expects production for FY20 to be lower at 61,500 ounces at an all-in sustaining cost of A$1,975 per ounce.
However, the company remains steadfast in its resolve to increase the grade and production and significantly lower its costs.
The lower production and higher cost stems from the processing of low-grade ore and delays to mining the high-grade ore at the Williamson pit.
This has been due to a number of challenges, including legacy issues and the COVID-19 pandemic.
While equipment and manning issues constrained underground production at the Golden Age mine, Blackham says it is currently putting suitable resources in place to ensure equipment and manning issues are no longer a production issue.
And recent high-grade hits reported from drilling at Golden Age are expected to increase the mines production rate from 6,500 tonnes per month to 15,000 tonnes per month in the first quarter of FY21.
Blackham will provide production guidance for FY21 in its June quarter report.
The last round of drilling at Golden Age delivered grades of up to nearly 40 grams per tonne (g/t) and the ore is “free-milling”.
The Golden Age and Williamson deposits will be an important source of transitional cashflow for the next 18 months while the company transitions to sulphide production.
“The main thing we’re doing in the next two years, is use the current free milling cash flow to drill out longer dated resources, rather than doing small pits that are only mineable for four or five months,” executive chairman Milan Jerkovic said.
“We are also building enough stockpiles so when there is weather interruptions or other issues we have a three-month buffer.
“The intention is to drill out resources and convert them to reserves that go out four years or more ahead of our mining plan. ”
Blackham says the crushing and milling circuit is running consistently at 20 per cent above nameplate.
The new rod mill is working “very well” and will be an integral part of moving to treat the baseload rates of the harder Williamson ore.
Mining rates are also now meeting expectations and the new tailings dam has been completed. Blackham expects the Williamson deposit to reach steady-state production in July.
“The company remains confident that the current issues associated with the transition period at Williamson and Golden Age are nearing a point where steady-state production can be maintained enabling the company to focus on the delivery of the sulphides stage-one project,” Blackham told investors.
Blackham is working hard to build out its mining inventory to support a new sulphide concentrator, scheduled to start production in September next year to boost annual production to 110,000-120,000oz.
And the company has seven drill rigs spinning right now.
Blackham has already achieved its goal of strengthening the balance sheet, after raising $52m in equity funding from some heavy hitting international investors.
In addition to the $52m equity contribution, the company is continuing discussions with Swiss-based trading company Mercuria to lock in a $40m project loan facility.
Right now, Blackham has plenty of cash in the bank, no debt and a clear plan to leverage the Wiluna operation’s multi-million-ounce potential.