17/09/2018 - 15:31

Juniors get down to business

17/09/2018 - 15:31

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SPECIAL REPORT: Several junior gold-focused companies in WA are vying to mature from exploration to production.

Juniors get down to business
Andrew Muir says exploration companies are dealing with a tough market. Photo: Gabriel Oliveira

Several junior gold-focused companies in WA are vying to mature from exploration to production.

Junior explorer NTM Gold is confident of the development prospects at its Redcliffe project in the renowned Leonora region.

And its neighbours provide plenty of reason for that optimism, with the West Perth-based company’s tenements flanked by St Barbara’s Gwalia mine, Red 5’s Darlot project and Saracen Mineral Holding’s Thunderbox operations.

Further south, Dacian Gold recently opened its Mt Morgans mine.

(click to see a full PDF version of this three-article special report)

In June, NTM upgraded its gold resource estimate at Redcliffe to 537,000 ounces, and managing director Andrew Muir told Business News the company remained focused on its exploration program.

“While there has been a lot of historical exploration across the whole region, we still think it’s highly underexplored,” Mr Muir said.

“For us it’s just a case of getting on with our business, drilling lots and hopefully discovering a lot more gold.

“We think there is a lot of opportunity to find a lot more gold, and at the right point in time, build a mine.”

He said there were four processing plants within trucking distance, and he had no preconceived notion of the development path.

“We will look to mine it ourselves,” Mr Muir said.

“Where that gets processed we will assess at the time.

“We’re in quite a fortunate situation that we have very good infrastructure and very good ground.”

Mr Muir, who is a former gold analyst with Hartleys, Argonaut and JP Morgan, said exploration companies were finding it tough.

“The common theme among most juniors at the moment is the poor state of the market,” he said.

“It’s very much a risk-off market.

“While the bigger end of town is still doing okay and is still attracting funds, the smaller end of town is having a bit of a tougher time.

“Ensuring that companies have enough funding to continue exploring, that’ll probably be a key theme in the short to medium term.”

Development  

Earlier this month, Matsa Resources started mining at its Red Dog operation, which is located 15 kilometres from AngloGold Ashanti’s Sunrise Dam mine.

The junior miner has an agreement with AngloGold to treat all its ore from Red Dog at the Sunrise facilities.

Red Dog has a 26,300oz resource and is the smallest of the company’s projects.

Matsa also owns the Fortitude mine, which has a 342,600oz resource, and is targeting production early next year.

Its Red October project holds a resource of 99,00oz, and the company plans to start underground mining at the end of the year.

West Perth-based Echo Resources released a bankable feasibility study for its Yandal project east of Leinster in August, with the company forecasting a $39.3 million capital cost for the mine.

The study details a two-stage project based on open-pit mining and processing from two deposits to produce about 746,000oz over an 8.5-year life.

In comparison to Matsa, Echo will refurbish the Bronzewing processing plant at a cost of $19.4 million and truck its ore about 70km to the facility.

Meanwhile, Egan Street Resources says it will cost $36.1 million to bring its Rothsay project in the Murchison region into production.

The company released a definitive feasibility study in July, which outlined gold production of 250,000oz over an initial 6.5-year mine life.

The project will also include a 200,000 tonnes per annum processing plant.

First gold production is targeted for the fourth quarter of 2019.

Going public

Despite Mr Muir’s assessment of capital markets, several junior gold companies have been able to raise funds in recent times.

Joining NTM in the Leonora region is Kingwest Resources, which listed on the ASX in August following a $5 million initial public offering.

Its chief executive is Stephen Woodham, who was a founding director of ASX-listed Aurelia Metals.

Osborne Park-based Cygnus Gold completed a $6 million IPO in January this year and holds tenements in the Wheatbelt, ranging from early-stage exploration to drill-ready targets.

Neil Warburton-led Coolgardie Minerals listed last month after raising $4.2 million via an IPO.

The company owns the Bullabulling gold project, which is located in the Goldfields near Coolgardie.

Bullabulling includes the Geko project and five other prospects.

The gold junior recently signed a $10 million ore sale agreement with Northern Star Resources for production from its Geko mine, which is set to come online next month.

“This agreement is a significant milestone for the company, transitioning us from developer to producer and locking in consistent revenue through to Q2 2019,” managing director Bradd Granville said.

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