Gold: Has Evolution uncovered something at Andromeda’s Drummond project?
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HPA-play Andromeda isn’t a gold explorer anymore, but a joint venture deal with $8 billion market cap miner Evolution Mining could prove a company changer regardless.
Evolution (ASX:EVN) announced today that it will sink another $4m into stage two exploration at Andromeda’s (ASX:ADN) early stage Drummond project in North Queensland.
A vestige of Andromeda’s pre kaolin-halloysite days, Drummond is about 50km from Evolution’s high-grade Mount Carlton gold operation.
The initial farm in deal was signed in September last year, after Andromeda uncovered the same style of mineralisation as the nearby 3 million-ounce Pajingo gold deposit.
Guys like Evolution are only looking for big deposits, and what’s interesting is the speed at which the major miner fulfilled its $2m stage one obligation – about one year ahead of schedule.
Andromeda says this “underlines the prospectivity of the Drummond gold project to host high‐grade epithermal gold deposits”.
Under Stage 1, Evolution launched a big diamond drilling program at the Bunyip and South West Limey Dam prospects, with best intercepts provided to Andromeda so far including 3m at 3.42 grams per tonne (g/t) gold and 6.7g/t silver, 7m from surface.
We say ‘so far’ because final drilling results from Bunyip and South West Limey Dam “are yet to be received by Andromeda”, the explorer says.
The plot (possibly) thickens.
Stage two will see Evolution spend another $4m over the next two years to acquire 80 per cent stake in the project.
This deal with Evolution is like (very rich) icing on the cake right now for Andromeda, which is riding a wave of its own making.
The explorer is investigating a simple business model – starting with shipping raw ore from its Poochera halloysite-kaolin project in South Australia to HPA producers in China.
This would reduce initial start-up costs because it doesn’t need to build a processing plant to start making cash.
With a bunch of offtake deals already signed, the Poochera project scoping study is due for completion by the end of September.
Alto Metals (ASX:AME) has hit more high-grade gold at its flagship 290,000oz Sandstone project in WA.
Highlights from a big (and ongoing) 10,000m drilling campaign include 2m grading 16.4g/t, 52m from surface. Alto – the subject of a lowball takeover offer from neighbour Middle Island Resources (ASX:MDI) — has a plan to delineate +1 million ounces in the near term at Sandstone, and +5 million ounces longer term.