PNX has ticked off several key boxes in its Northern Territory gold development strategy in the past few weeks, most recently defining its first resource for the newly acquired Glencoe deposit.
PNX Metals (ASX:PNX) has delivered an initial inferred resource for Glencoe of 2.1 million tonnes at 1.2 grams per tonne (g/t) for 79,000oz of gold.
This comes not long after the company received its first government approval and made a key appointment for the development of its Fountain Head project, where the company is targeting first gold production next year.
Glencoe is located on an already granted mining lease just 3km north of the Fountain Head project and is the first of several opportunities PNX has identified in the NT’s Pine Creek region to substantially grow the scale of Fountain Head.
Fountain Head – which currently has a resource of 2.94 million tonnes at 1.7g/t for 156,000oz of gold — is where PNX is planning a regional processing hub for mineral deposits in the Pine Creek region that are considered “stranded” due to their modest grades and distance from existing infrastructure.
This new resource boosts the combined Fountain Head and Glencoe gold resource inventory to around 235,000oz.
“The new mineral resource at Glencoe is a key component of PNX’s NT gold development strategy, and along with the Fountain Head gold and Hayes Creek gold/silver oxide mineral resources enhances the proposed Fountain Head development and the goal of first gold production in mid-2022,” managing director James Fox said.
“Important to note is that Glencoe remains open in all directions and drilling is planned to test potential along-strike extensions to the deposit at the end of the current wet season (in the June 2021 Quarter).”
PNX has received approval to undertake 4,000m of near-mine reverse circulation drilling at Fountain Head and Glencoe.
The Glencoe resource has so far only been defined from surface down to 120m and extends for over 1.5km, but there is plenty of exploration upside with the deposit open in all directions.
In a recent research report, Geoff Muers – analyst for Resource Capital Research – estimated resource growth potential this year alone of up to 150,000oz gold to reach a total of 700,000oz gold equivalent this year, including PNX’s Hayes Creek deposits where 177,000oz of gold, 16.2 million oz of silver and 177,000 tonnes of zinc are contained in mineral resources.
This prompted Resource Capital Research to place a 12-month price target on PNX of 2.5c per share – more than triple the current share price.
Early cashflow opportunity
Following on from the definition of the new Glencoe resource, PNX is finalising its assessment of low-risk and scalable processing infrastructure to rapidly monetise and generate early cashflow from gold resources at Fountain Head and Glencoe, as well as the Mt Bonnie gold/silver oxides – part of the Hayes Creek project.
In mid-March, PNX beefed up its skill base with the appointment of Craig Wilson as mining, infrastructure and studies manager to lead the Fountain Head and Hayes zinc-gold-silver developments.
Wilson, who is a 30-year veteran of the industry, has been engaged by PNX as a consultant for the past two years, and also previously worked on the Cosmo gold mine near the Fountain Head and Hayes Creek projects.
Muers said Fountain Head could produce around 30,000oz each year and generate $20-$25m worth of cashflow over five to seven years.
“For lower capital (±A$40m compared to ±A$60m for Hayes Creek) it could set the company up to expand later and reduce future equity dilution,” he noted.
The strategy may also provide an opportunity to enhance the overall economics of the Hayes Creek project.
It could extend the mine life with the mined-out Fountain Head pit available for use as tailings storage for subsequent sulphide flotation of ore from the Mt Bonnie and Iron Blow deposits at Hayes Creek.
PNX expects to make a development decision for Fountain Head in the current quarter, with submission of the Project Environmental Impact Statement and feasibility study due for completion in May.
This article was developed in collaboration with PNX Metals, 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.