Predator and Prey: This gold junior is looking to mirror the success of Victoria’s Fosterville mine

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A Victorian Goldfields postcode is again in high demand due to the success of the Fosterville and Costerfield mines, with several companies seeking the next ultra-high-grade deposit.

Fosterville was a struggling operation until the discovery of the Swan Zone in 2016, which had a reserve grade of 58.8g/t gold. To put that into perspective, most narrow veined underground mines qualify as high-grade these days at just 5g/t.

The discovery transformed Fosterville into a 500,000ozpa producer with costs so low it was barely visible on the global cost curve, in turn elevating then-owner, Canada’s Kirkland Lake Gold, into a market darling.

Fosterville (now owned by Canada’s Agnico Eagle) produces around 150,000ozpa but still has resources of around 3.3Moz at roughly 4g/t.

Who’s next?

While nearology only goes so far in the exploration game, juniors like Bubalus Resources’ (ASX:BUS) have gained a foothold in the famous mining district. It is one of several juniors looking for the next ultra-high grade deposit in the region.

The company recently spotted some compelling Fosterville-style targets at the Crosbie North gold-antimony prospect within its Crosbie project in the heart of the Victorian Goldfields.

The Crosbie licence sits within 20km of Fosterville and the Costerfield gold-antimony mine now owned by Alkane Resources (ASX:ALK). Both Agnico and Alkane will be hungry for a new, high-grade discovery to add to their depleting mines, putting a premium on any commercial-scale finds in the area.

Early exploration has shown encouraging signs.

Managing director Brendan Borg says the latest targets at Crosbie North have geological similarities to Fosterville’s host rock, supported by surface rock chip results of up to 12.1g/t gold and 2.02% antimony.

“The maiden drilling program at Crosbie South hit gold mineralisation in every hole, with some very high grades as noted, albeit over narrow widths,” Borg said.

“This is exciting as it demonstrates a mineralising system is present at Crosbie South.

“In the results, we also see some very high grades of pathfinder elements such as molybdenum, silver, bismuth, tungsten, which validates our exploration model targeting an intrusion related gold system (IRGS).”

Still potential for economic discoveries 

The maiden results mean there are still discoveries to be made in what is an already heavily explored region.

Borg says it’s important to note these were the first 5 holes ever drilled on this licence, at either the Crosbie South IRGS target or the adjacent Fosterville-style targets at Crosbie North.

“The exploration work to develop these targets over the past few years has shown that previously overlooked areas can generate drill worthy targets with a high potential for a commercial discovery,” he said.

“The geophysical survey conducted at Crosbie North has generated targets that are highly analogous to the high-grade zones at Fosterville, in terms of the interpreted geological structures and chargeability characteristics.

“This new information is supported by the existing high grade surface samples, which, in combination, have generated compelling drill targets, which we’ll be drilling next month.”

Not ruling out future M&A activity

Exploration is picking up speed thanks to a soaring gold price of around A$5000/oz, but there’s also been a flurry of M&A activity in the sector, as investor sentiment for the precious metal heats up.

That means big miners are looking to the future, taking a stake in early-stage projects with the potential to add ounces to their current operations either through joint venture or acquisition down the line.

Bubalus isn’t ruling out the project as a potential takeover target down the track – if it could mirror the success of its neighbour Fosterville.

“First we need to prove the presence of a potentially economic mineralised system,” Borg said.

“At Crosbie South, we have proven a mineralised system is present, but it is not yet defined at economic grades and widths.

“The upcoming drilling at Crosbie North will give us another chance to do that, or at the very least, to demonstrate that further exploration is warranted and that significant potential exists to make an economic discovery.”

But Crosbie isn’t the only arrow in the company’s bow. Maiden drilling is also in the works at its Avon Plains gold project (also in Victoria) in November.

“Avon Plains is a historical “lost mine” from the late 1890s, which has been completely overlooked since,” Borg said.

“For a period, it produced high grade gold but was hampered by excessive groundwater back in the day.

“We plan to drill approximately 1200 metres there, aiming to intersect the gold bearing reef and get some modern data on grades, thickness, and extent.”

There have been some recent exploration success stories in Victoria for Bubalus to follow. Southern Cross Gold (ASX:SX2) is now a C$1.5bn company, owing to the exuberance around its Sunday Creek gold and antimony discovery in the Melbourne Zone near Kilmore, while Chalice Mining (ASX:CHN) spinoff Falcon Metals (ASX:FAL) is up close to 700% in the past sixth month on high grade discoveries in an untested area north of the historic Bendigo gold field.

At Stockhead we tell is like it is. While Bubalus Resources is a Stockhead advertiser, it did not sponsor this article.