Eastern Goldfields offers up early cashflow opportunities for junior explorers
Special Report: The Eastern Goldfields host a treasure trove of opportunities for a bunch of Aussie gold explorers, including Kingwest Resources, which is rapidly advancing towards potential early cashflow.
The Eastern Goldfields is a multi-million-ounce gold region, with majors in the area like Gold Fields, Regis Resources (ASX:RRL), Northern Star Resources (ASX:NST), Saracen Mineral Holdings (ASX:SAR) and St Barbara (ASX:SBM).
Just seven of the region’s biggest mines produce a collective 2 million ounces each year.
But for some it’s not all about starting with the discovery of a multi-million-ounce deposit. It can be quite a lucrative strategy to bring a smaller deposit into production, generate some early cashflow and build it up over time with additional satellite deposits.
And that is just what Menzies, 130km north of the gold-rich epicentre of Kalgoorlie, is offering up for Kingwest (ASX:KWR).
The area the company has put its foot on is rife with small, shallow, high-grade deposits.
These deposits sit on the Norseman-Wiluna Belt, a gold-rich structure with the same geological traits as the structures found in the extremely gold fertile Kalgoorlie region to the south.
Kingwest CEO Ed Turner says the company has a very good chance of proving up economic resources in the short-term like other companies are doing in the area to the north and south of Kingwest.
“It’s highly prospective ground and with the current gold price it makes it more likely that we can advance the project very rapidly into production,” he said.
In fact, Kingwest could be in production at its Menzies project as early as this year.
“We’re doing the optimisation and mining studies right now and we could get that into production this year assuming we get positive results, which I’m very confident we will,” Turner said.
“Then the numerous other deposits at Menzies, we would need to go through that process, but that won’t take us too long and at the same time we’ll be adding additional ounces.”
Kingwest has already defined over 250,000 ounces of near-surface resources at Menzies and the nearby Goongarrie project following a very recent resource upgrade.
The Menzies project hosts multiple prospects including Lady Irene, Selkirk, First Hit, Pericles, Lady Shenton, Lady Harriet and Yunndaga.
The project covers a contiguous land package over a strike length in excess of 15km.
And within it is a series of structurally controlled high-grade gold deposits that have been historically mined and display extensive exploration potential for high-grade extensions.
The Menzies project contains some of the highest-grade historic production in the Eastern Goldfields, with the five underground mines producing between 16 grams per tonne (g/t) and 32g/t gold over their respective life of mine for a total of 650,000oz at 22.5g/t.
The project also produced 145,000oz at 2.6g/t between 1995 and 1999 from the open pit mine.
Anything about 5g/t is generally considered high grade, but with the record high Aussie dollar gold price right now grades of as low as 1-2g/t can be profitable for a gold miner.
Modern exploration over the area though has been limited since mining ceased at Menzies over 20 years ago.
That has been to Kingwest’s advantage, with the numerous existing open pit and underground deposits providing a wealth of ‘walk-up’ drill targets, making fresh gold resources a lot easier to unearth using modern exploration methods.
Kingwest has developed deeper exploration targets at three mineralised systems that it is currently drilling at Menzies.
These targets are based on the predicted continuation of high-grade gold mineralisation below historic underground workings.
The extensions of the Yunndaga, Lady Shenton and First Hit systems have a collective exploration target of 388,800 tonnes to 716,050 tonnes grading between 13g/t and 23g/t gold.
“We’re over 250,000oz in near-surface resources and then with the current drilling for the deeper targets we should be able to prove up some more resources within the next few months,” Turner said.
“They will be only inferred resources, so we’d need to do some follow up drilling in the second half of the year, but we can advance it fairly quickly and be in a position to be doing scoping studies later in the year for the deeper, high-grade targets.”
The region is also not lacking for infrastructure, with Menzies located right next to the major Goldfields Highway and within trucking distance of four or five mills.
“So, if we prove something up, we won’t necessarily have to build our own mill,” Turner said. “That’s a huge advantage. It saves us lots of money.”
Kingwest is already investigating profit sharing arrangements with third parties to potentially mine the shallow resources while the company focuses on the higher-grade deeper targets.
There is also readily available power and water, and the project is just over an hour’s drive from Kalgoorlie, providing access to several major services.