Special Report: Blackham’s turnaround strategy is paying off early, with new drill results delivering shallow, high-grade gold that has the potential to not only grow the mining inventory at the Wiluna mine but also boost the head grade too.

After having delivered on its promise to strengthen the balance sheet, Blackham Resources (ASX:BLK) is now making good on its strategy of building an inventory of higher grade, higher confidence, longer dated resources at its Wiluna mine.

The junior gold producer told investors today drilling had come up trumps with hits like 14.45m at 17.16 grams per tonne (g/t) of gold from 18.95m, including 7.45m at 31.22g/t; and 12.4m at 7.93g/t from 31.4m.

Not only were the hits shallow, one intersection delivered a grade of as high as 283g/t.

Anything over about 5g/t is generally considered high-grade, and in the current high gold price environment shallow, high-grade gold means good profit margins for miners.

Executive chairman Milan Jerkovic told Stockhead these new results confirmed Blackham’s belief that there was still a lot of shallow high-grade ore left immediately surrounding an already operational mine.

“The grades are looking fantastic, and it it looks like we’re going to be able to transfer a lot of our inferred material into our mining inventory because we can upgrade the JORC classification and then it goes into the immediate mine plan,” he said.

Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured. By moving resources into the indicated or measured categories, it means a company has sufficient information on geology and grade continuity to support mine planning.

“Long-term you want to systematically exploit the whole orebody but what it does do is it gives you the ability to focus on your best high-grade areas first and pay your capital back,” Jerkovic explained.

“And if you’re processing 8 grams rather than 4.5 grams your mining costs obviously per ounce are going to be a lot lower.

“We’re targeting high-grade shoot discoveries because every 1g/t increase in the grade in the sulphides, could result in an additional 25,000ozpa of production in stage one and 50,000ozpa under our stage two scenario, so grade is obviously extremely important to project economics.”

Blackham’s goal is 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.

Wiluna is already a large gold system with over 10 million ounces of gold endowment including current resources and historical production.

Wiluna Mining Centre showing scale of the operation and latest drill hole locations (supplied)

It currently hosts a combined open pit and underground resource of 35.5 million tonnes at 3.9g/t for 4.45 million ounces of contained gold.

But these new drilling results prove there is still plenty of gold left to build up Blackham’s war chest at Wiluna.

“The Essex results in particular are positive because if you look at the cross section, that looks like it’s almost 200m strike length,” Jerkovic explained.

Essex high-grade results infilling inferred resource and new lode discovery. Note existing
underground access installed by previous operators to within 80m of the high-grade zone (supplied)

Jerkovic said the Essex lode had grades similar to the Bulletin lode, which was mined at 8g/t to produce 900,000oz, and it was totally ‘open’, meaning Blackham hasn’t found the edges of this very large system yet.

“It’s got a very shallow pit,” Jerkovic said. “So if you project that out to about 800m, this could be a very significant orebody sitting right under our nose, which we’ve got immediate access to.

“And even the Bulletin resources which are around the old area that was mined are showing significant extensions of mineralisation immediately next to what is an operating decline and access.

“So it gives us an immediate starting point that should make de-risking our mining operation to fill that concentrator by September next year a reasonably straight forward task.”

The preliminary mine plan developed for the stage one sulphide expansion includes Essex and Bulletin in the first two years, and in years three to four mining extends to include the Calvert and East Lode areas.

Blackham is undertaking aggressive infill and extensional drilling targeted at the inferred resources associated with the initial years of the preliminary mine plan.

The current stage one sulphide drilling program is on track for completion in June 2020 with seven drill rigs currently in operation at Wiluna.

An updated resource is due out in the September quarter.

Further drilling beyond June 2020 is planned to continue and further grow resources and reserves and build on the existing 10-million-ounce geological endowment at Wiluna.

Drilling is also ongoing at Golden Age to continue to extend free-milling cashflow ahead of the implementation of the sulphide concentrate production strategy, with results expected in coming weeks.

This story was developed in collaboration with Blackham 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.