Blackham Resources lives! Gold miner secures debt lifeline

Contractors and creditors will partially underwrite a $36 million capital raising for Blackham Resources in lieu of part-payment of their debts.

Financer Orion Fund and contractor Pybar Mining Services will take $2.5 million each, and contractor MACA will take $8 million. Hartleys to be lead underwriter, subject to the contract being signed this week.

“Any monies payable in relation to that sub-underwriting commitment will be satisfied by a corresponding reduction in the amount already owed by the Company to each of MACA, Orion and PYBAR,” Blackham said.

Orion’s portion of the underwriting will knock $2.5 million off a separate $23 million debt Blackham owes it.

It’s not clear how much Blackham already owes MACA and Pybar.

Blackham chairman Milan Jerkovic will sub-underwrite $500,000 worth.

The shares in the fundraising round will be issued at 4c. Blackham went into a trading halt in December at 10.5c.

MACA has also provided a $14.3 million loan, so Blackham can pay a loan to Orion due at the end of December.

The miner had been struggling to refinance that loan and raise capital, with a rights issue priced at 12c falling through just before Christmas.

The due date of the Orion loan was extended to January 15.

Blackham says it will have the remainder of the its debt to Orion paid by the end of the year, and start paying back MACA from March next year at a rate of $1 million a month.

Costs are coming down?

Stockhead calculated, based on Blackham’s first three quarterly reports in calendar 2017, that its All In Sustaining Cost (AISC) of the Wiluna-Matilda gold mine was about $2200/oz of gold.

On Monday it said the average AISC for October 2016 to December 2017 was $1962/oz. That figure was down to $1,359/oz in December.

The company is selling gold at about $1600/oz.

Blackham Resources says it produced 14,922 oz of gold in the last quarter, down 4.5 per cent on the prior period.

The average quarterly grade was 1.1 g/t, compared to 1.4 g/t in September and 1.3 g/t in June.

Blackham says waste stripping during calendar 2017 has given it access to “high grade ore zones” in its open pit areas.

It’s built stockpiles of 51,000 tonnes with a grade of 1.6 g/t, and drilling has produced results ranging between a 20 metre-long intercept with a grade of 1.85 g/t of gold, and a 6 metre intercept at 4.13 g/t. Most of the grades found were between 2g/t and 3 g/t.

Anything between 1.5 g/t and 5 g/t tends to be considered medium grade rather than high, but in Australia grades have tended to be lower as the better areas have been mined.

According to the Minerals Council of Australia, companies are increasingly focusing on brownfields sites – like Blackham’s Wiluna mine – and this has pushed average gold grades down to 1 g/t.