Golden State Mining’s Yule South has the right ingredients at the right address
Special Report: Golden State Mining’s South Yule project sits in a region that has been propelled into the spotlight as a new gold exploration hotspot.
Golden State Mining’s (ASX:GSM) Yule South gold project lies just 13km north of Hemi, whose size and quality has stunned investors since its recent discovery back in December.
Yule South shares a number of similarities with the Hemi deposit, in terms of geology and ground cover, that Golden State Mining believes makes its project highly prospective.
Prior to the Hemi deposit’s discovery by De Grey (ASX:DEG), the Mallina basin region in the Pilbara was not considered prospective for gold and was effectively “off the radar” for explorers.
“The ground was never pursued. We had the iron ore boom in the 2000s and people were focused on quick wins in the iron ore space,” Moore said.
“It was very much considered to be blue sky exploration territory and elephant country in terms of deposit potential, and nobody was particularly interested in this part of the world.”
When originally pegged by well-known geologist Graham Hutton in 2005, the Mallina basin region was seen as prospective for base metals along with tin and lithium, rather than gold.
“Then lo-and-behold, the guys at De Grey came out with the news on Hemi and suddenly the whole world is looking at this particular region and thinking maybe it has some legitimate hard rock gold exploration potential,” Moore said.
It was Hemi’s unusual geophysics and ground cover that kept the Mallina basin’s gold deposit a secret for such a long time, Moore said.
“Predominately because of the 20 to 30m of cover there across the tenement, there was nothing for the wandering geologist to trip over,” he said.
“The cover was effectively masking the opportunities that were there.
“What we did have was a good data set in terms of geophysics and magnetics, and this gave us a snapshot or window to see under the cover.”
Despite this information, the company was still unsure about how drilling would progress through the ground cover.
To overcome the uncertainty, Golden State hired the same drilling company used by De Grey on its Hemi deposit. As a result, drilling went smoothly and the cover was not an issue.
“We are getting to grips with the geology and tying in the geology and the geophysics with what is actually seen from material logged from the drill holes,” Moore said.
“We are constantly refining our targeting technique and that will enable us to hone in on something that is meaningful in terms of scale and commercial potential.”
Golden State has reported results for two out of the five target drill holes and is planning its next aircore drilling program starting in the second half of September.
The next phase of drilling will focus on the Sholl Shear, which is prospective for base metals as well as gold, and will be double the size of Golden State’s maiden drilling campaign in terms of metres drilled.
“In the next phase we are very much targeting the northern part of our tenement holdings, the Sholl Shear zone, which is very prospective for copper and nickel as well as gold, in quite a large program,” Moore said.
“That particular region has delivered gold, base metals in terms of copper, and silver, but because of the cover it has not been seriously targeted. Therein lies the opportunity.”
Once the company has considered the results of its second drilling campaign it will plan out its next drill programs for 2021.
The sheer scale of the Hemi discovery makes a large mine in the area a strong probability, and the potential mine’s associated infrastructure will benefit explorers in the district.
“I don’t think there is any doubt that Hemi is going to be a mine, so there will be significant infrastructure and a substantial processing plant that will be a hungry mill,” Moore said.
That infrastructure will also reduce the capital cost of projects in the area and make modest gold discoveries in the region more economic in terms of processing.
Port Hedland is only 60km away from GSM’s Yule tenements, and the area has a good network of roads that can be used for moving drilling and other mining equipment.
Investors are looking for companies carrying out good quality gold exploration in areas like the Pilbara region, and Moore believes it will be an attractive destination for investment over the next few years.
“What you want is to discover a deposit that has a reasonable cost of production because that insulates you from the ups and downs of the gold price. You have got to look at developing something that is efficient,” Moore said.
“It looks like it may remain fairly strong for some time,” he said of gold prices.
Moore said it would be good for the industry to see more collaboration between junior explorers and larger mining companies that have the cash to fund exploration.
“If you get a big producer on board it de-risks the whole proposition of exploration and development, and that is important for a junior,” he said.
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.