The Pilbara’s biggest gold believer reckons it will turn the industry upside down
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Barry FitzGerald writes his legendary Garimpeiro resources column weekly for Stockhead:
The gold industry could be turned “upside down’’ if the Pilbara delivers on its conglomerate gold potential.
The comment comes from Tony Makuch, president and chief executive of Toronto-based and ASX-listed Kirkland Lake Gold (ASX:KLA), the single biggest indirect investor in Pilbara conglomerate rush with about $80 million committed.
Kirkland’s exposure is through its 18 per cent stake in Novo Resources — the fellow Canadian company that led last year’s Pilbara nuggetty gold boomlet — and its 10 per cent stake in ASX-listed Pilbara gold chaser De Grey Mining (DEG).
The fizz has come out of conglomerate story in recent times, with Novo’s $C8.55 share price at the height of the Pilbara frenzy last October replaced with a more sedate price of $C4.29.
The share prices of Australian-based listed companies in the Pilbara gold hunt have also come back to the field.
But Kirkland for one is happy with its investment on which it is about square. Its opinion on the upside potential of the Pilbara conglomerates has more clout than most others, for a number of reasons.
Apart from its heavy investment in the conglomerate story through its listed investments, Kirkland last week picked up the coveted “Digger of the Year” award at the Diggers & Dealers conference in Kalgoorlie.
(Stockhead’s Angela East last week covered a presentation to D&D by Novo chairman Quinton Hennigh: Novo’s boss thinks he has the answer to the Pilbara’s nuggetty gold mystery.)
Kirkland’s Digger award was in recognition of its discovery of high-grade quartz gold shoots beneath its Fosterville mine near Bendigo in central Victoria, turning what was a scrappy and ageing mine in to one of the best gold mines in Australia, if not the best.
‘A whole new chapter in gold mining’
Kirkland’s Makuch visited the Pilbara after D&D and then flew to Melbourne to make a presentation to 600 mining types at the Melbourne Mining Club last Friday.
After his luncheon presentation to the MMC, Makuch showed us an iPhone shot of the latest and now famous “watermelon-seed” shaped gold nuggets being plucked from the Purdy’s Reward prospect in the Pilbara, a joint venture between Novo and ASX-listed Artemis Resources (ASX:ARV).
“We believe that the Pilbara has the potential to be an important new discovery,’’ Makuch told this column.
“It is going to create a whole new chapter in gold mining in Australia and the world. And if it is as big as what we think it is going to be, it is going to turn the gold industry upside down,’’ Makuch said.
Makuch acknowledged one of the concerns about the Pilbara conglomerate gold story is the very nature of the gold (nuggetty) means that it will be near impossible to define an economic deposit along the region’s extensive conglomerate beds, which Novo promotes as having similarities to South Africa’s fabled 1.8 billion oz Witwatersrand Basin.
Work to be done
“We know that there is a lot of work to be done there. We know it is going to take good time to figure it out.
“But if it turns out to be anything close to what we think it is, we want to be there and we want to be an active participant. And that’s why we are there,’’ Makuch said.
He also addressed concerns that the size of the potential prize in the conglomerate chase is grossly overstated.
“I am not saying there is a billion ounces there. But there is more than a million.’’
“Let’s say you had the chance to go back to 1900 and you’re standing in South Africa, and you know then what you know now, what would you do?
“You would say jeez, look at this. Sometimes you have to take a risk, right?
“That’s the nature of our industry,’’ Makuch said.
Barry FitzGerald is a committee member of the Melbourne Mining Club, a not-for-profit organisation which fosters discussion and debate in the mining industry.