Bryah processing deal to unlock Tumblegum South gold deposit potential
Link copied to
Special Report: Bryah Resources has secured an agreement over its prospective Tumblegum South gold deposit near Meekatharra, which could enable it to begin mining of the resource.
The conditional agreement gives Bryah Resources (ASX:BYH) access to Adaman Resources’ processing facility at the Kirkalocka gold mine to treat material mined at Tumblegum South.
Under the terms of the agreement, the two parties will enter a binding 50/50 profit share agreement which will see gold-bearing material mined at Tumblegum South and transported by road to Kirkalocka near Mt Magnet.
It helps Bryah to unlock the value at Tumblegum South, where it has an inferred mineral resource of 600,000 tonnes at 2.2 grams per tonne gold for 42,500 ounces.
The agreement is subject to conditions precedent, with a binding arrangement expected in the new year.
Bryah Resources managing director Neil Marston said the deal would be a step closer to production for the company.
“One of the challenges facing any company with gold mineral resources not large enough to support the construction of a standalone plant is securing access to facilities to process their material,” he said.
“With the granting of the Tumblegum South Mining Lease in November 2020, we were able to advance negotiations with the team at Adaman Resources to this point.
“The Adaman Group’s expertise in mining, processing and road haulage can provide the full suite of capabilities needed to bring Tumblegum South into production.
“Obtaining access to the Kirkalocka gold processing facility brings Bryah another step closer to realising the value of its gold resources at Tumblegum South.”
Terms of the deal
Under the deal, Bryah will need to sufficiently drill the deposit to report a minimum of 50% of the resource in the indicated category, with an optimised pit shell, at an agreed gold price.
Bryah must also undertake a program of metallurgical testwork on the deposit which satisfactorily demonstrates the material produced will be suitable for treatment at Kirkalocka.
Bryah is also required to obtain mining approvals from relevant regulators and secure funding for its financial obligations.
For its part, Adaman must complete a study to determine the economic potential of the deposit and provide the study to Bryah for consideration.
The deal is the latest in a series of news around Tumblegum South, where three diamond drill holes were completed in late November.
Portions of this core will be used for the metallurgical testwork required under the conditions precedent.
Assays for these holes are expected in January, and a follow-up reverse circulation program is planned for 2021.
This article was developed in collaboration with Bryah Resources, 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.