Kalgoorlie holds the promise of deep gold riches for those willing to ‘play detective’
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The Kalgoorlie region is almost synonymous with gold in Western Australia, thanks in no small part to its long history of gold exploration and production.
Nowhere is this more obvious than at the Super Pit, one of the largest open cut mines in the world with more than 50 million ounces produced to date and counting.
The region is dotted with major and minor gold mines including Kanowna Belle, Kundana and Raleigh.
Yet despite the amount of work that has been carried out to date in the region, there is still considerable interest in exploring for as yet undiscovered gold resources, especially with prices remaining at current high levels.
Lefroy Exploration (ASX:LEX) managing director Wade Johnson told Stockhead that while some parties believed that Kalgoorlie to the Wiluna belt is a mature terrain, it was more likely that the exploration to date had only found ore bodies that were close to the surface or had a noticeable surface expression.
He believes there are certainly more large ore bodies to find in proximity to Kalgoorlie, or upwards towards Wiluna that don’t have any surface expression or a very subtle surface expression.
“I think there are still opportunities out there to find big new discoveries,” he said.
“I think it just takes forensic geology, just picking over and reviewing things looking for those hints or signatures that could be very subtle that could indicate you are near to a large gold system.”
Johnson pointed to the Invincible discovery at Lake Lefroy as an example, noting that early drill holes at the project had found a very subtle gold anomaly but it wasn’t until Gold Fields came along and carried out follow-up drilling in 2010-11 that a major discovery was made.
“You just have to play detective,” he said.
The Kalgoorlie region also benefits hugely from the ready access to infrastructure, services and skills.
“The fact that there has been so much mining there in the past and currently means there’s just so much amazing infrastructure,” Moho Resources (ASX:MOH) commercial director Ralph Winter said.
“You got the skills that you need in the area, you have the infrastructure, the roads, the equipment providers, you have the drilling companies, they all live around there.
“So from the perspective of actually doing anything in that industry, you have everything you need. You are really spoilt for choice for people looking to find and mine for gold.”
An examination of who’s who in the small cap space clearly demonstrates that there is no shortage of junior explorers who believe in the prospectivity of the Kalgoorlie region.
Anglo Australian Resources (ASX:AAR) recently restarted drilling at its Mandilla gold project, 60km from Kalgoorlie, that will help it plan further exploration to enable the calculation of a maiden resource at the project.
The current drilling is focused on completing the three-hole diamond tail program that began in late 2019.
After these holes are completed, the company will then complete the 27 outstanding holes from its reverse circulation program.
Anglo Australian added that its Western Australia-based drilling contractors had mobilised on long roster cycles and would base themselves in an exploration camp at Mandilla to minimise their potential exposure to COVID-19.
In March, the company successfully completed a $5.3m capital raising to fund further exploration at Mandilla.
The explorer reckons that strong, coherent, and extensive gold anomalism — associated with the surface lateritic (weathered) nickel-cobalt mineralisation — could be a ‘signpost’ to gold systems in the untested fresh rock deeper down.
While the company is focused on developing the advanced Goongarrie project, locking in battery metals offtake and financing is always a slow process.
Which is why the gold prospectivity of Ardea’s wider Kalgoorlie landholding is important.
Meanwhile, Bardoc Gold (ASX:BDC) has completed a pre-feasibility study that indicates that its namesake project has robust economics even at a conservative gold price of $2,100 per ounce.
The study flagged that the 3.02-million-ounce project could deliver life of mine pre-tax cash flow of $551m, net present value (NPV) of $332m and internal rate of return (IRR) of 32 per cent.
Both the NPV and IRR are used to estimate potential profitability, and the higher above zero they are, the better the prospective economics of the project.
At a spot gold price of $2,530 per ounce, the project would deliver cash flow of $921m, NPV of $600m and an IRR of 55 per cent.
Bardoc is expected to deliver average gold sales of 135,000 ounces per annum over seven years at an all-in-sustaining cost of $1,220 per ounce. Pre-production capital costs have been estimated at $142.4m with a payback of 32 months.
Black Cat Syndicate (ASX:BC8) has upgraded resources at its Bulong project by 21 per cent to 3.5 million tonnes grading 2.6g/t, or 294,000 ounces of contained gold.
This follows the company upgrading resources at the existing Trump deposit and including the Anomaly 38 and Strathfield deposits.
The company says further growth is likely as resources in all three deposits are open in all directions.
Black Cat has also started regional drilling programs over multiple early stage targets that have already returned results of 1m at 20g/t gold from 24m east of the Boundary resource and 1m at 13.2g/t gold at the Woodline target.
Hits above 5g/t are typically considered to be high-grade.
Like Ardea, Great Boulder Resources’ (ASX:GBR) flagship project isn’t a gold project, but the company does have exposure to the precious metal via its new Whiteheads gold project, about 45km north of Kalgoorlie in Western Australia.
The company has already said it will continue gold exploration at Whiteheads.
This will include the use of airborne aeromagnetics, combined with bottom-of-hole lithogeochemical mapping, structural interpretation and further multi-element auger sampling to generate targets.
Horizon Minerals (ASX:HRZ) raised $6m in March to fund development of its Boorara project and accelerate drilling.
The Boorara project sits just 10km east of the Super Pit and could see the processing of 159,000 tonnes of ore grading 1.86g/t gold for 8,700 ounces of gold under the first stage feasibility study.
This could generate about $5.4m in net cash for Horizon at an Australian dollar gold price of $2,400 per ounce.
Drilling will also be carried out to increase resources and to discover new resources.
Lefroy has a number of major targets at its Eastern Lefroy gold project that include an ancient gold-bearing river at Red Dale, the advanced Lucky Strike prospect, and an evolving high-grade discovery at Hang Glider Hill.
But the company will also benefit from exploration that its joint venture partner Gold Fields (NYSE:GFI) is carrying out at the adjacent Western Lefroy project.
Gold Fields can earn a 70 per cent stake from Lefroy by spending up to $25m on exploration over six years commencing June 2018 and has just kicked off a supplementary aircore drilling program over Lake Lefroy and the adjacent Lake Randall.
This is designed to dial in on some potential gold deposits in the deeper bedrock.
A 776-hole, 40,421m foundation aircore drilling program by Gold Fields in 2019 generated multiple new gold anomalies in Lake Lefroy and expanded the footprint of some anomalies already identified by Lefroy.
The 57 hole, 4000m drilling program is expected to be completed in April, with final results available in May 2020.
Moho is focused on bringing its East Sampson Dam project into early production.
Winter told Stockhead that the company had started preliminary mining studies and that if all went well, mining could start before the end of this year.
“From then on we will look to expand the mining on that area – we do have other prospects that we want to look at, doing further drilling on and expanding. That is all on the mining lease,” he said.
Drilling at East Sampson Dam returned results including 2m at 24.61g/t gold inside a larger 5m intersection grading 10.36g/t gold, 54m from surface.
Further drilling is planned to find out how big the deposit is and to test nearby target areas within the project area.
Meanwhile, Nova Minerals (ASX:NVA) recently invested $413,000 in Torian Resources (ASX:TNR), giving it exposure to over 400sqkm of tenements in the Kalgoorlie Leonora Greenstone Gold Belt region.