Special Report: Cash flow could be on the cards for Golden State with mining of remnant tailings and stockpiles starting at its Cue gold project in Western Australia’s Murchison region.

Best of all, there is no capital or operating cost for the company as the mining is being carried out by privately-owned Adaman Resources under an equal profit share arrangement.

The start of mining at the historical Cue No.1 and Salisbury mines comes following the satisfactory mining of a 1,000t bulk sample.

Golden State Mining (ASX:GSM) managing director Michael Moore says the start of mining at Cue has the potential to provide a low-risk source of modest funding for the company as it plans further aggressive drilling campaigns at its Yule project in 2021.

“We continue to evaluate further low risk opportunities for shallow mining and remnant mine tailings reprocessing at Cue which we hope will provide further opportunities to monetise the Cue assets.”

The company expects to receive further results from the Phase 2 gold drilling at Yule this month before carrying out a target review and planning of Phase 3 drilling in January 2021.

This will be followed by a heritage survey ahead of reverse circulation and aircore drilling in March and April.

Cue gold mining agreement

Under the profit share agreement, Adaman will purchase, mine and process remnant mine tailings (battery sands) from the company’s Cue No.1 and Salisbury mines at its Kirkalocka Gold Mine processing plant.

Sale price for the battery sands will be driven by a formula based on the tonnes finally trucked/processed (adjusted for moisture), gold recovered, the gold price achieved and certain agreed costs.

Golden State noted the price is structured similar to a 50:50 profit share and cannot be negative, which means that any risk of direct financial loss on the sale of sands is minimal.

However, it added that there is no guarantee that the purchase, mining and processing of the entire battery sands will proceed, or that it will yield the agreed tonnes or any financial benefit.

Cue No.1 was one of the larger deposits in the immediate Cue area and produced 37,000oz of gold at an average grade of 31 grams per tonne (g/t) during the early 1900’s while Salisbury produced 5,902oz at 18.51g/t gold.

The company is currently evaluating options to further extract value for its Cue assets, which include several other historical mine tailings dumps, mine stockpiles and in ground opportunities within the Cue tenements that could also be mined.


This article was developed in collaboration with Golden State Mining, 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.