The Gruyere ore body was discovered in early 2014, with production expected to start in 2018. Photos: Evan Collis

New arrivals to open up ancient ore body

Friday, 7 April, 2017 - 09:37

ANALYSIS: Technology is exposing the resource-rich but isolated Yamarna region.

More than 120 years after gold saved Western Australia from an economic depression, a new gold-rich region of the state is at the centre of a curious case of history repeating.

One of the threads linking events of the 1890s and today is the role of migrants in opening up a part of WA called the Yamarna Belt, 1,100 kilometres north-east of Perth, a location long considered too remote and dry to be farmed, and with nothing of note to attract miners.

Another is the way explorers are stretching the bounds of geological knowledge through the use of new technologies to reveal minerals, especially gold, hidden from view by thick layers of sand.

And a third, perhaps more controversial observation, is that the energy crisis facing eastern Australia has the potential to trigger a regional recession, as rising power prices force businesses to relocate and households to spend more on heating and lighting.

That final point has probably eluded most people in WA, and will be dismissed as alarmist by anyone keen to see a rapid shift from fossil fuels to renewables, despite blackouts in South Australia and the rush to build a new gas-fired power station (plus expansion plans for the Snowy Mountains hydroelectricity scheme) being pointers to the size of the power crisis.

However, it is a valid observation when considering the views of global industry leaders such as Andrew Liveris, the Australian-born head of US-based Dow Chemicals, that Australia has become a difficult place to do business, describing the energy crisis as a ‘calamity, but not a natural one’.

Speaking in Melbourne last month, Mr Liveris said there was no reason to reinvest here and every reason to leave.

It was much the same in the 1890s, when the combination of a property crash and resulting depression in Melbourne lured thousands of unemployed people to WA seeking work in the gold mines that were being developed after discoveries near Kalgoorlie by three Irish-born prospectors – Paddy Hannan, Thomas Flanagan and Daniel Shea.

The new Yamarna goldfield (or gold belt as it is being called) is the work of South African migrants, in person and corporately.

Ian Murray, chief executive of Gold Road Resources, the company that controls much of the Yamarna Belt, was previously chief executive of DRD Gold, a mid-tier South African goldmining company, before moving to WA.

Gold Fields, a South Africa-based miner founded by the controversial businessman and politician Cecil Rhodes in 1887, is partnering with Gold Road to build the first gold mine in the Yamarna region.

The Gruyere mine, when it starts production next year, will make a significant contribution to WA’s annual gold production, with steady-state output estimated at 270,000 ounces a year at a globally competitive all-in cost of $US690 an ounce.

It is highly likely that more mines in the Yamarna region will follow, as the geological secrets of the region are unlocked by the use of the latest exploration tools, which include magnetic and gravity testing, chemical analysis of surface soils, and a fierce drilling

campaign using up to nine rigs.
The location of Yamarna, which is closer to the South Australian border (about 450 kilometres to the east) than Perth, inhibited early explorers. However, it is significant in a geological sense because it appears to be a sixth major sub-region of the Yilgarn Craton, a structure made up of very ancient rocks known to be prospective for gold and other minerals.

For anyone without geological inclinations, a map of the major structures that control what lies beneath the surface can be quite handy (facing page, courtesy of Breaker Resources) because it shows how the Yilgarn Craton is divided into six sub-regions, with the dividing lines being shear zones where a major fracture of the earth’s surface has occurred at some time in the past.

The biggest of those fractures is actually closest to Perth and can be clearly seen today as the Darling Scarp, or Darling Fault, a 1,500km fracture separating the 5 billion year-old Archean-age rocks of the Yilgarn Craton from the 500 million year-old Permian-age rocks of the Perth coastal plain.

Until relatively recently, the Yamarna Belt (or Yamarna Terrane as shown on the map) was regarded as being too remote by explorers and too difficult to explore because of an extensive blanket of mainly wind-blown sand sitting atop the Archean-age rocks sought by gold prospectors.

Interest in such a remote location started to change after locally based Independence Group and South African goldminer AngloGold Ashanti discovered what has become the Tropicana goldmine near the southern edge of the Yamarna Belt.

The discovery and development of Tropicana highlighted the fact that there is still a lot to learn about the geology of the far east of WA.

Mr Murray was introduced to the theory of the Yamarna Belt being a sixth major gold-rich region after he joined the board of Gold Road (when it was called Eleckra Mines) in 2007, after he migrated from South Africa.

Early exploration in the company’s extensive tenement position revealed limited encouragement but did include promising gold intersections from drilling at the Attila, Alaric and Central bore sites, but it wasn’t until the Gruyere ore body was discovered in early 2014 that Mr Murray knew he had made a discovery that could become a mine.

Activity has been hectic since then, culminating in the creation of a novel joint venture between Gold Road and Gold Fields, which marries Australian and South African companies in a similar way Independence and AngloGold are joined at Tropicana.

A key difference in the two deals is that Gold Road, after receiving a cash payment of $350 million from Gold Fields as well as retaining a 50 per cent stake in the Gruyere mine and a future production royalty, has opted to revert to its roots as an explorer focusing, naturally, on the Yamarna Belt.

Controversial since it was announced, the Gold Road-Gold Fields deal is vigorously defended by Mr Murray, who invited the big South African company to the Yamarna party partly because he knew it and its chief executive, Nick Holland, from his DRD days.

“Our strength is in exploration,” Mr Murray said.

“We’ve been particularly successful in discovering gold hidden from view by the sand cover of the Yamarna region and we’re doing that by using the latest scientific tools to locate and then pinpoint drilling targets.

“Until we struck the deal with Gold Fields, we didn’t have the financial firepower to fully test what we believe is under our tenements, or develop a mine.”

The Gruyere joint venture struck with Mr Holland justifies Mr Murray’s 10-year effort to stimulate interest in what is one of the most remote locations in Australia, with investors and rival explorers paying limited interest to his talks at mining conferences in the early years.

In a way, Mr Murray was a prophet in a foreign country trying to interest the locals in something they had ignored for decades, despite it being a region recognised as hosting similar rock types as those near Kalgoorlie, albeit hidden from view and with virtually no outcrops.

What happens next will be interesting for Mr Murray and his big South African partner, Gold Fields.

In the immediate future there is the challenge of developing Gruyere, a job being led by Gold Fields, freeing Gold Road to unleash a $22 million exploration program looking for the next mine.

The nine rigs being marshalled as part of the program make it one of the biggest greenfields exploration efforts in Australia (and perhaps the world), because most exploration today, after five years of low commodity prices, is focused on brownfields, or near-mine, drilling.

For Gold Road and Mr Murray, the Gruyere mine represents tangible proof of a concept that the Yamarna region hosts commercially viable gold deposits.

For Gold Fields, its investment in Gruyere shifts it a step further away from its South African roots. Its share of gold from the mine (135,000oz a year) will mean it has an interest in five Australian gold mines contributing more than 50 per cent of group gold output, reducing its South African interests to one mine contributing 7 per cent.

For WA, the enthusiasm of the South African migrants for a region that most people ignored is a reminder that necessity is not just the mother of invention, it’s the mother of opportunity, which Messrs Murray and Holland have gleefully seized.

Whether their enthusiasm for a remote region is necessity, or not, the point is that opening up a remote region of the state is being done by relatively new arrivals – just as the gold rush of the 1890s introduced WA to the rest of the world.