Gold miner Calidus Resources had some good news for the market this morning, in the wake of its recent drilling explorations.

The company says its wholly-owned Warrawoona Gold Project, in WA’s Pilbara region, has plenty of the precious metal.

Around 1.25 million ounces, Calidus reckons, based on a projected strike rate of 1.83 grams per tonne from a total ore deposit of 21.2 million tonnes.

That marks an increase of around 75% from the company’s last update in December 2017, where it announced a mineral deposit of 712,000 ounces.

Shares in the company rose back above 3 cents in early trade, a gain of almost 30%.

Treasure hunting

Calidus has carried out a steady exploration strategy since launching on the ASX in mid-2017; the result of a sale into an existing shell company of a defunct pharmaceutical manufacturer.

Business has been slow — the company lost almost $3 million in both the 2017 and 2018 financial years (June year-end).

But cashflows have remained plentiful, propped up by a number of capital raisings along the way.

The most recent of those was in the December quarter, via a strategic placement to Alkane Resources Limited (ASX:ALK) of 125m shares at 3 cents a share.

The deal left Calidus with another $3,687,500 in cash while allowing it to “leverage Alkane’s operational experience and cost base to assist in its upcoming studies”.

Next steps

Obviously Calidus likes the look of its gold resource at Warrawoona, but it will still be a little while before it actually gets the stuff out of the ground.

Managing Director David Reeves told Stockhead that production plans are in place, but it’s important to take a prudent approach.

“Especially if you want to do it property and not torch people’s money,” he said.

That latest discoveries will form part of the company’s pre-feasibility study, which it says will be completed sometime in the September quarter of this year.

The time-frame that Reeves outlined will see the production mine commence development in the second half of 2020.

Once significant deposits have been discovered, companies face “a lot of pressure” to move into the production phase, he told Stockhead.

But he could cite “a few notable examples” of companies who paid the price for trying to ramp up too fast.

Along with its production plans, Reeves said Calidus will also continue to conduct exploratory drilling on its Warrawoona site.

“The first explorations took place here in 1896, but since 1910 no one’s done anything. So we think there’s still plenty of opportunities for the discovery of high grade deposits”.