Alex Dorsch says a high-grade underground mine is the best opportunity to move the dial on Chalice Mining’s Gonneville project as shares in the one-time market favourite continued to slide.
Chalice Mining chief executive Alex Dorsch says a high-grade underground mine is the best opportunity to move the dial on its Gonneville project as shares in the one-time market favourite continued to slide.
Mr Dorsch was talking up the opportunities at Gonneville after addressing shareholders at the company’s annual meeting today.
“The best part about our asset is, because we have this higher-grade component, we can scale things down to really selectively focus on the high-grade part of the resource,” he told journalists after the meeting.
“We don’t have those cases modelled and completed as yet to present to the market, but they are not far away.”
Mr Dorsch was speaking three months after Chalice released a scoping study that outlined plans for a major open-pit mine costing about $1.6 billion.
Chairman Derek La Ferla acknowledged the macro-economic assumptions that drove the scoping study did not align with current market conditions.
“As outlined in our recent quarterly report, it is also clear that market expectations on certain scoping study metrics were not met,” Mr La Ferla told the annual meeting.
Mr Dorsch said the company was assessing multiple options but hinted at a preferred pathway.
“By adding a small amount of underground feed at dramatically higher grade, we think that will move the metrics, that will move the dial for the project quite considerably,” he said.
“Its probably our biggest value lever at our disposal.”
An underground decline is most likely in Chalice’s northern tenements, while an open pit could be developed in the southern tenements, where high grades have been found nearer the surface.
Mr Dorsch said the scheduling of any development remained unclear.
“It doesn’t have to be all at the same time, you might start open pit and then a few years later start the underground, there are options aplenty with this resource," he said.
“With the PFS [pre-feasibility study] we really need to do the engineering to work out where the optimum lies.”
Mr Dorsch said there had been a pretty dramatic shift in macro conditions during the past few months and the market was especially bearish on nickel and palladium: two of the key commodities at Gonneville.
The company was continuing to progress its strategic partnering process.
Mr Dorsch said a whole spectrum of companies showed interest when the strategic partnering process started.
“We’ve now gone down to a select group, which is some metals traders, some miners, some end-users that have come into the next round,” he said.
The market update did nothing to halt the dramatic decline in the company’s share price.
Its share price slipped a further 5 per cent today to $1.47.
They had peaked at $9.60 in October last year and were trading around $5 per share in late August prior to the release of the scoping study.