Youanmi and Sandstone: Overlooked plays are back in the spotlight
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The Youanmi and Sandstone regions have long been known for their gold prospectivity and production, but until recently they have been largely overlooked compared to the main greenstone belts in Western Australia.
Gold was discovered at Sandstone at the end of the 19th Century with the greenstone belt producing over 1.3 million ounces of gold from numerous underground and open pit mining operations.
Youanmi was the subject of a gold rush in 1896 after the precious metal was discovered by prospector Tom Payne which led to the production of 667,000 ounces of gold grading 5.42 grams per tonne (g/t) gold from open pit and underground operations between 1908 and 1997.
Despite this proven prospectivity, the remote location of the two areas, location off bitumen highways and for Youanmi, the presence of deeper refractory sulphide ores that are both harder and more expensive to treat have conspired to keep explorers away.
However, recent activity has brought both Youanmi and Sandstone back into the spotlight.
At Youanmi, Spectrum Metals’ (ASX:SPX) success in defining a high-grade resource at the Penny North deposit and the subsequent takeover offer from Ramelius Resources (ASX:RMS), which is now nearing completion since moving into compulsory acquisition, has combined with Rox Resources’ (ASX:RXL) discovery of previously unrecognised granite-hosted high-grade gold to catch the attention of investors.
Likewise, Middle Island Resources’ (ASX:MDI) string of exploration successes and the recommended takeover offer for Alto Metals (ASX:AME) by China’s Goldsea Australia Mining have also turned the spotlight on the Sandstone region.
Rox managing director Alex Passmore told Stockhead that the company liked the geology of the Venus Metals (ASX:VMC) tenements that it farmed into, noting that the belt had not been properly looked at since 1997 and it was underexplored.
“We saw there was no recent drilling in and around the old pit, all the work had been done using the best of technology in the 1980s and 1990s,” he said.
“But things have moved on, things like satellite imagery, drone mag, different XRF/XRD for understanding alteration mineralogy. There have been movements in technology, there have been evolutions in exploration models with things like King of the Hill, which is an analogue we would use.”
Passmore added that the Youanmi Greenstone Belt was very well mineralised with a shear zone that ran 150km north to south.
“Not all of it is going to be mineralised but there are areas where for a variety of geological reasons, there are some serious gold deposits like Penny West,” he explained.
“With gold belts in particular, usually where there is one deposit, there are several along the belt. It’s rare in this kind of (Archean) geological setting to get just one anomalous deposit.”
Rox has continued to ring up gold hits at the Grace prospect, with the most recent results of 3m at 7.41g/t gold from a depth of 109m following up on earlier results of 7m at 54.6g/t gold from 8m and 4m at 69.5g/t gold from 28m.
“We are having good success in drilling repeatable north-plunging high-grade lodes, we will keep continuing to do that and we are aiming to have a maiden resource out for Grace in the second half of this year,” Passmore added.
Minelife senior resources analyst and founding director Gavin Wendt noted that Rox was concentrating on near-surface mineralisation and that its new Grace discovery was important as the company was now looking at granites that typically hadn’t been explored for gold in the Youanmi province before.
“What’s interesting about that is that you may not have the problems – assuming this thing develops and they put a resource on it – down the track with the refractory nature of the ore,” he explained.
“That could be a key game changer as far as this Youanmi is concerned, this new style of mineralisation.”
Wendt added that Ramelius’ acquisition of Spectrum was interesting as takeovers typically led to the acquirer looking for other opportunities regionally to grow their production and add to profitability.
“They will expect payback on their investment, so you would think that they would want to increase their resource base and tonnage so they could increase payback of their assets and at the same time potentially look at doing deals with existing companies that are in the region,” he added.
Wendt also noted that the refractory sulphide mineralisation was still present at the Youanmi project and that despite its challenges, still represented an opportunity to grow resources.
“I don’t think they are going to spend a lot of their own time and money on doing that because they realise that is not what the market wants to see,” he added.
“But they might bring someone else in, say for example Polymetal International, whose trademark is going into difficult deposits and making them work with their processing technology.”
Polymetal recently signed a refractory gold concentrate offtake agreement with Blackham Resources (ASX:BLK).
Other explorers in the Youanmi region include Golden Mile Resources (ASX:G88), which is planning to carry out exploration this quarter to prioritise existing prospects for targeted drilling.
Chairman Rhod Grivas noted that the company had acquired its Youanmi asset as it was a good “bolt-on” highly prospective gold project in a newly rediscovered gold district, adding that the region is an under-tested multi-commodity province that deserves a more modern exploration focus.
Moving on to the Sandstone region, Wendt noted that Middle Island was an interesting play as it had taken a new approach to exploration by looking for higher grade mineralisation in smaller open pits that can then be put through into a centralised processing plant.
A processing plant that the company conveniently owns and believes can be recommissioned for just $10m.
Middle Island managing director Rick Yeates told Stockhead that the processing plant was a major attraction for the company when it acquired its Sandstone project in mid-2016.
“Our plant is 150km away from the next nearest operating plant so there is a real opportunity there to provide a central processing hub for the entire Sandstone district,” he noted.
“We are more than happy to look at toll treating and indeed we have been in discussions with three or four groups about the possibility of consolidating deposits which are otherwise stranded.
“If several parties come to the same conclusion, then there might well be justification for building a new plant to be able to accommodate that feed because the production schedule will be decades rather than years.”
Yeates pointed to Goldsea’s takeover bid for Alto as an example of other parties seeing the opportunity to consolidate within the Sandstone district, though he noted that Middle Island was “sticking to our knitting” as the company was firmly of the view that it had enough resources to justify commissioning its plant on a standalone basis.
Middle Island’s exploration has been extraordinarily successful, with Yeates noting that while the company had budgeted for just one of the eight prospects that it was looking at being successful, it has made four discoveries from the five prospects it has looked at to date.
“We are victims of our own success to some extent. We under-budgeted the drilling substantially to be able to bring all of those into that feasibility study update.”
The company is now raising additional capital to complete the new deposits out to at least an indicated status, which would allow them to be brought into reserve consideration in the new feasibility study update, which is expected to be completed in September quarter.