Drilling results have defined a third high-grade shoot at Lady Julie North, prompting more drilling to incorporate results into the existing resource. Pic: Getty Images
Mining
Special Report: Magnetic Resources believes there’s huge potential yet to be uncovered across the Lady Julie North 4 deposit with deep drilling delivering impressive intersections including a standout 51m at 3.5g/t, signalling a strong possibility to increase its resource base.
The company has described the latest results as ‘outstanding’ with holes MLJDD070 to MLJDD075 delivering intersections such as:
A new, third high-grade core has been defined at Lady Julie North 4 (LJN4) and remains open at depth, while another diamond drill hole (MLJDD076) is currently being drilled, stepping out from the previous MLJDD075 hole.
Deeper drilling below the northern end of the LJN4 pit design has highlighted the potential to define a significant underground resource in addition to the existing open pit inventory, Magnetic Resources (ASX:MAU) said.
The company is currently completing further infill drilling in this area, which will likely contribute to an ongoing feasibility study to assess the capability for underground production.
Magnetic’s exploration success has drawn plenty of intrigue from potential acquirers and seen analysts take bullish positions on the $362 million capped stock.
Argonaut, for one, has a ‘speculative buy’ recommendation on MAU with a price target of $3.50 – a 180% premium to its morning share price – maintaining the target after the new ‘material’ drilling results which have tagged another high-grade shoot at LJN4.
The stockbroking and corporate finance firm have modelled a 400 – 500,000oz potential inventory in the initial Northern Shoot and believes there is great potential to repeat this in the third high-grade shoot.
Lady Julie North 4 hosts a recently upgraded resource of 23.6Mt grading 2.04g/t for ~1.55Moz of gold and is the central deposit at the company’s Lady Julie project that has a broader resource of 28.11Mt at 1.93g/t gold for 1.75Moz.
The total Laverton area resource sits at 33.14Mt at 1.81g/t for ~1.93Moz.
Three quarters of the global Lady Julie resource is contained within the higher confidence indicated resource, which has enough certainty for mine planning.
Substantial underground extensions could add a significant increase to the current 104,000oz per annum and target of 150,000oz per annum.
Under an economic update from August 2024, Lady Julie is expected to produce gold at an annual rate of 104,000oz for eight years from an open pit to generate total EBITDA of $1.49bn using a $3200/oz gold price.
Development capex is estimated at $111.3m assuming a standalone 2.2Mtpa processing plant and three months pre-production activities while all-in sustaining costs are expected to be $1386/oz.
These estimates are now extremely conservative given the current gold spot prices of US$2920/oz ($4612) and the additional undergound ore being delineated with the current drilling.
The broader endowment across the Laverton area offers further development potential in a region renowned for hosting multi-million-ounce mines like Granny Smith, Wallaby and Sunrise Dam.
MAU says the latest drilling results are far below the open pit and are not included in the current resource, which bodes well for both enhancing the potential size of the open pit and underground mining potential of LJN4.
Diamond drillholes MLJDD073 (1000m) and MLJDD076 (600m) are nearing completion and additional holes are being planned to chase up the outstanding intersection in MLJDD076 of 51m at 3.5g/t from 444m including 14m at 8.8g/t from 452m.
These holes and new planned holes are surrounding and looking to extend the very promising High-Grade Core 2 and 3, MAU says.
As a result of these promising results and extensions in the northern zone a feasibility study is being completed and will include both open cut and underground resources for the first time.
MAU shares were 8% higher in early trade.
This article was developed in collaboration with Magnetic Resources, 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.
