These ASX gold explorers are on the road to 1 million ounces
Link copied to
Every junior gold explorer, and their investors, dream of hitting the magical million ounce mark.
All the more so given the precious metal’s strong pricing and the outstanding performance of gold plays despite the COVID-19 pandemic.
That is not to say that projects with less than one million ounces of gold are not viable.
Having any combination of record high gold prices, shallow resources, high grades, free-milling oxide material, existing processing infrastructure and toll treatment options can still allow gold projects with smaller resources to be successful.
A recent example is Beacon Minerals (ASX:BCN), which brought its Jaurdi mine into production last year despite having a resource of just 163,000 ounces of gold thanks to its shallow, low strip ratio open pit and existing processing facilities.
The company has since produced 17,509 ounces of gold to the end of June 2020 at an average price of $2,356 an ounce while cash costs for the March 2020 quarter were $1,080 an ounce.
Despite this, reaching one million ounces is still seen as an important milestone as it marks (in some cases) the point where banks and other financial providers start taking a project seriously.
Here are some junior explorers that are making good progress towards that point … and beyond.
Middle Island Resources (ASX:MDI) is more than half way towards the million ounce mark with its Sandstone project hosting a resource of 624,000 ounces of gold in open pit and underground deposits.
While the Sandstone region has seen historical production a number of times, managing director Rick Yeates has guided the company to its current position through the discovery of new satellite deposits and prospects.
Yeates told Stockhead that this was achieved through the re-evaluation of historical data, applying enhanced technology to identify and evaluate possible targets as well as following up on nugget finds by its tribute prospector.
“You must also bear in mind that when some of the legacy work was completed the gold price was circa A$300/oz, as opposed to a current gold price of circa A$2,600/oz, thereby historic results need to be recast in a contemporary context,” he added.
Sandstone also includes a 600,000 tonnes per annum conventional carbon-in-leach (CIL) processing plant that can be refurbished for just $10.3m according to independent estimates.
Besides providing Middle Island with a quick and low-cost method of bringing its project into production, its location 150km from other processing facilities means it could potentially serve as a hub for processing stranded deposits in the area.
Looking ahead Yeates noted the company is currently carrying out a substantial drilling program to identify and quantify open pit resources.
“30,000m of this campaign, variously comprising aircore, RC and diamond drilling, has been completed to date, and two drill rigs are still in operation,” he added.
The program has already identified and quantified at least five new satellite open pit deposits, far more than the single discovery that the company was looking for, and is infilling and extending existing deposits.
“It is reasonably anticipated that extensions to existing deposits and the definition of new deposits will substantially increase open pit Mineral Resources that can be applied to the planned feasibility study, leading to a project recommissioning decision in late 2020 or early 2021,” Yeates added.
Musgrave Minerals (ASX:MGV) is well within shouting distance of Middle Island with an existing inventory of 600,000 ounces at its Cue project in Western Australia’s Murchison district.
This was achieved through a combination of detailed data assessment, geological model review and the test of new ideas with managing director Robert Waugh noting that it was essential to keep an open mind and be persistent.
And this advice has certainly paid off with the company making the new Starlight discovery in June that is very high grade – try 18m at 179.4g/t gold, just 2m below surface, less than 50m from historical workings and masked by 2 metres of transported hardpan clay cover.
More importantly though, it is located outside the existing resource of 199,000 ounces of gold at the Break of Day deposit.
The company has also intersected the new high-grade White Light lode about 75m south of Starlight.
“It’s an evolving story. We are currently drilling at the new 100% owned Starlight and White Light gold discoveries and expect these new gold lodes to add resources to our existing inventory,” Waugh told Stockhead.
“We have two drill rigs on site aimed at delivering a resource update in late September 2020.”
He added that a third drill rig will commence in mid-August to test regional analogue Starlight look-a-like targets.
“One million ounces is just the first milestone.”
Laneway Resources (ASX:LNY) is still shy of the halfway mark with a current resource of 471,000 ounce resource at its Agate Creek project in north Queensland, the high grade Sherwood deposit could nonetheless be in production as early as August.
Ore from Sherwood, which has a resource of 205,000 tonnes grading 5.5g/t gold, could be toll treated through one of several third party conventional CIL mills in the district.
Cashflow from Sherwood will help support additional exploration and appraisal at Agate Creek along with exploration at its New Zealand gold projects.
Kingwest Resources (ASX:KWR) is the minnow of the companies featured, but recent drilling has already provided support to its belief that the historical Menzies gold project (MGP) hosts more high-grade gold.
The MGP in the Eastern Goldfields of WA consisted of five underground mines that produced a total of 650,000 ounces of gold at an average grade of 22.5g/t gold between 1895 and 1943.
A further 145,000 ounces at an average grade of 2.6g/t gold was produced from open cut mining between 1995 and 1999.
Chief executive officer Ed Turner attributes this to the company drilling deeper than previous explorers after recognising that the historical deposits possibly had depth extensions that are economic with current gold prices.
“We also completed a detailed aeromagnetic survey in order to better define the structural controls throughout the MGP,” he told Stockhead.
“These enable us explore with more confidence between and along strike from the historic gold mines.”
Adding interest, Turner noted the just a small fraction of the structural corridor that hosts almost all of the high-grade mineralisation, which is about 1km wide and more than 15km long in its tenement package, has been effectively drill tested.
Kingwest has also been spending through with its resource upgrades.
“We have increased our JORC resources from 196,000 ounces in Sept 2019 to 258,000 ounces in March this year and will be announcing another significant upgrade shortly,” Turner said.
“Additional drilling in the second half of 2020 will continue to add to this inventory.”