Dateline JV opens door to bank cash and revitalise Gold Links project in Colorado
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Dateline Resources could be able to swiftly revive its Gold Links mine in Colorado in a new joint venture which will reduce pressure on the underground mine as it looks to restart and stabilise production.
Dateline Resources (ASX:DTR) has announced a deal which will see the owners of the nearby London and Hock Hocking Mines in the US state utilise the Lucky Strike mill to process around 800,000t of ore stockpiles, 160km from the plant.
The combination of Gold Links and the London stockpiles, which contain a non-JORC estimate of 800,000t at 2g/t for 51,000oz in surface stockpiles, no mining required, will enable Dateline to assess the recommencement of underground mining at Gold Links after moving to care and maintenance in December.
As part of the deal MW Sorter, owner of the stockpiles previously tested in 1985 by Behre Dolbear and Company, will pay US$700,000 to complete the upgrade of the Lucky Strike processing plant and pay a monthly toll treatment fee of US$825,000 a month, which will be used to pay for processing costs, service existing debt and generate a modest return.
Ore sorting tests have also shown the stockpiles can be delivered at a 350% improvement in grade and 81.2% reduction in mass.
The Gold Links mine and 250tpd Lucky Strike mill will be combined into a new US company owned 50% by Dateline shareholders, 40% by MW and 10% by an unnamed Australian investor, with MW and the Australian investor also injecting US$440,000 capital into Dateline’s subsidiary Fossil Creek Mines and arranging a new US$5m working capital facility.
The funding to upgrade the mill will enable its commissioning to operate at nameplate capacity of 250t per day in all weather.
Dateline also owns the 813,000oz Colosseum gold mine, once part of the Barrick Gold stable, in California.
But the combination with MW will ensure the company can bring together two high quality assets in Colorado as well, DTR MD Stephen Baghdadi said.
“When we commenced the search for a joint venture partner for Gold Links, we sought a partner that had both financial capabilities as well as US operating experience,” he said.
“By partnering with MW, we bring together two quality assets that have the potential to generate better returns than if developed independently.
“Dateline shareholders were naturally disappointed with the suspension of mining at Gold Links, but the new joint venture will allow gold production to recommence, and the plant should operate at its full capacity, under a focussed management team.”
The deal will enable MW and Dateline to blend ore sources from the underground mine and surface stockpiles, with MW’s local knowledge and financial capacity to fund the development and commissioning of the mill a major bonus.
The London mine was previously a major primary gold producer in the heart of the Colorado Mineral Belt, directly adjacent to the historic Leadville mining district.
In its pomp the project delivered 650,000oz at 23g/t between 1875 and 1942 over more than 3km of strike, with production ending due to wartime metal prices and US Government restrictions under the War Powers Act.
In its final year after its reopening, 1988, a JV between Cobb Resources, Boulder Gold NL and Ben Wright returned 12,000oz at 15g/t.
The toll treatment fee is expected to be enough to fund operating costs at FCM, service debt and generate a modest surplus before gold sales of US$150,000 – US$200,000 a month.
First ore is expected to be transported to Lucky Strike by June 2023 should the transaction close as expected, with the new financing to be used to acquire an ore sorter, three 40t haulage trucks and complete remaining capital work on the plant.
The sorted product will be transported to Lucky Strike and processed at a rate of 220tpd for six days a week, with the new management team assessing the potential to displace London ore with high-grade underground ore from Gold Links to operate longer at a more stable output level.
This article was developed in collaboration with Dateline Resources (ASX:DTR), 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.