Gold: Aussie battler Blackham has a shocker, but things are (hopefully) getting better

Perpetual battler Blackham Resources (ASX:BLK) has been trying to right the ship for years.

In 2016, Blackham celebrated first gold pour at the 6.7moz Matilda-Wiluna Gold operation in the Northern Goldfields of WA.

The aim was to ramp up to its Stage 1 production target of 100,000 ounces a year.

But since then, the oxide/free milling operations have been plagued by low gold grades, low throughput, high all in sustaining costs (AISC) and a pesky debt pile that just wouldn’t go away.

Blackham has worked exceptionally hard just to stay afloat.

In FY19, Blackham produced 65,406oz at an AISC of $1760/oz, which gives it some wriggle room at current +$2000/oz gold prices.

But the June quarter was a shocker – 12,045oz at an AISC of $2376/oz.

The market responded badly in morning trade, with the stock falling 16.7 per cent to 1c per share; a far cry from the late 2016 peak of 75c per share.

The company says it is also fielding a variety of funding and corporate transactions from unnamed parties, including a potential takeover.

While production guidance for FY20 isn’t available yet, fortunes are primed for a reversal during the September quarter, Blackham says.

And that debt pile is slowly evaporating.

The “face value” of debt decreased from $21.2m in the March quarter to $13.4m currently.

Blackham is keen to repay remaining debt facilities and transition to a low capex, low risk 100,000oz-120,000oz a year sulphide mining and tailings retreatment operation at Wiluna.

These underground sulphide resources are extensive, but more difficult to treat. Blackham wants to push the button on Stage 1 development in the December quarter.