Javelin Minerals is pushing ahead with a new diamond drilling program to bolster its near-term plans to charge into production at the company’s historic Eureka gold project, near Western Australia’s historic Kalgoorlie mining hub.
Four holes from the six-hole program will provide vital technical information on rock properties around the designed final pit walls to finalise open-pit design work and obtain sample material for metallurgical and comminution test work on fresh ore from the base of the proposed Eureka open pit.
The vital data garnered from drilling will allow for definitive pit designs and financial modelling to be completed, in addition to mining proposals required for submission to the WA Department of Mines, Petroleum and Exploration.
Two holes will test ground to the north of the Eureka pit near historical high-grade intercepts and will provide an insight into the stratigraphy and mineralised structures present across the northern and northwestern extensions to the mineralised system at Eureka.
Notably, the potential extensions remain largely untested, despite some eye-popping results from historic reverse-circulation drilling in the area.
Previous serious gold intercepts north of the proposed Eureka pit include a head-turning 4-metres grading 134.52 grams per tonne (g/t) from 53m, a 3m run at 48.75g/t from 129m and a 4m stretch going 32.6g/t from 104m.
An additional hit of 4m at 11g/t from a reasonably shallow 42m adds justification to the decision to drill to the north.
The drill program will aim to extend the indicated resource and provide a boost to mineable ounces and add longevity to the mining operation.
Eureka’s total mineral resource is 2.04Mt at 1.69g/t gold for 110,687 ounces, including an indicated resource of 1.36Mt grading 1.8g/t for a solid 78,678 gold ounces.
Experienced gold mining exec, Mark Cossom, who joined recently as general manager-exploration and resources, plans to oversee future drilling at the company’s Eureka project and at its Coogee gold project near Kambalda.
Cossom is playing an active role in Javelin’s exploration and resource development strategy, with a particular focus on the Eureka project.
Javelin Minerals executive chairman Brett Mitchell said: “We are now aggressively pursuing multiple work streams at Eureka in parallel to ensure we meet our target of first production early in the June quarter of next year and in parallel, we are focused to continue work strategically to aggressively grow the mineable Eureka resource.”
Mitchell says the company is also in discussions with nearby ore processors to ink a binding ore purchase agreement.
It follows the recent locking-in of a profit-sharing mining agreement with renowned contacting firm MEGA Resources to mine 39,000 ounces of gold from Eureka.
Full-service mining contractor MEGA plans to fully fund the operation, which will cover the full spectrum of mining activities, project financing and haulage services.
Javelin and MEGA are set to share the profits 50:50 from mining gold ounces from the project, which has a mine plan of 698,887 tonnes at a respectable grade of 1.98 grams per tonne (g/t) gold.
A further bonus is a $250,000 per month cash pre-payment to Javelin from its share of the expected profits. The pre-payments begin from the receipt of the first project revenues.
Further bolstering the project development is MEGA’s undertaking to stump up a working capital finance facility of up to $25 million to develop the project which will be repayable from project revenues. Notably, Javelin will have no upfront funding requirements.
Javelin will get 70 per cent of the profits from any additional resources mined above and beyond the agreed mine plan, from this or future projects at Eureka.
The company plans to kick off mining activities at the site in the June quarter next year. Eureka already possesses a coveted granted mining lease and MEGA will do the hard yakka to obtain all the other relevant mining approvals. It will also provide geological and engineering services.
Javelin revealed last month it has bolted-down firm commitments to raise $4.5 million via a placement to investors at 0.25 cents per share, providing a nice discount below today’s price of 0.35c per share.
MEGA is all in when it comes to the project and corner-stoned the raise with its own $1 million equity investment into the junior goldie.
MEGA Resources is an Australian subsidiary of Bain Global Resources, part of BGR Mining and Infra Ltd, one of India’s largest mining contractors. BGR has an order book currently exceeding $18 billion.
Following the placement’s completion, Javelin plans a 1-for-31 capital consolidation, subject to shareholder approval at an upcoming general meeting.
Javelin says it is also running the rule over several potential WA Goldfields exploration plays, to add fuel to its gold production strategy.
The Eureka project sits on four granted mining leases, 50 kilometres north of one of the nation’s premier gold destinations at Kalgoorlie. It also sits 20km north of the large-scale Paddington gold operation, owned by growing gold giant Zijin Mining.
Javelin is well placed now to make something out of Eureka and is looking to emulate the stellar success by fellow asx-listed junior Spectrum Metals when it discovered a massive ore body just 300m north of what was the old Penny West mined out pit. Spectrum was taken over by Ramelius Resources after that discovery for well over $200m.
Javelin is in the enviable position of profiting in the near term from gold’s rocketing price rise while outlaying very little and taking very little risk in the MEGA deal. The precious yellow metal reached a new high in the past 24 hours, touching more than US$3975 (A$6013) per ounce, as it continues to power to new heights – pretty good timing.
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By Craig Nolan
