The Wheatbelt soils have more beneath them than just nutrients for agriculture. Photo: Stockphoto

Wheatbelt may grow new golden crop

Tuesday, 6 March, 2018 - 15:01

THE gold push into Western Australia’s Wheatbelt is approaching a tipping point, with theory giving way to movement on the ground and plans ramping up for projects on prime farmland, which will surely trigger heated political and environmental debate.

Not widely followed, except by Business News, the Wheatbelt gold drive is based on a geological model that shows a sixth major greenstone belt running roughly parallel to structures that host most of WA’s gold, including mines close to Kalgoorlie, Leonora and Laverton.

While five of the belts, and their associated shear zones (or cracks through which mineralised fluids flowed) have been heavily explored and are today the site of some of the world’s biggest goldmines, the state’s sixth belt has been largely ignored, until now.

The reason for the absence of mine development is largely a result of farmers claiming the land before prospectors could do much more than kick the surface rocks; and by the time they start to dig a little deeper, the Coolgardie and Kalgoorlie gold rush of the 1890s lured them further east.

What’s changed is a combination of modern technology such as magnetic and gravity surveys, which can peer deep below the surface, and the stitching together of a theory that a broad section of land running from close to Borden in the south to Bencubbin in the north hosts potentially major gold deposits.

Inside that area are some of WA’s best-known wheat and sheep centres, including Katanning, Kojonup, Lake Grace, Narembeen and Merredin.

Almost two years ago (May 2016) Business News ran an article on the exploration activity around Katanning and Narembeen, where Ausgold and Explaurum were encountering encouraging gold assays from drilling. Neither was close to developing a mine at that time.

The game changed in late February when a new company, Cygnus Gold, reported excellent gold assays from its work close to Lake Grace. Its best hit of 9.5 metres assaying 29.2 grams of gold a tonne was a fraction short of the magic 31g/t, which is the old one-ounce to the ton that early prospectors craved.

Cygnus has a long way to go before it can say anything other than its pleased with the result from drilling a prospect called Bottleneck, which is part of the broader Stanley project between Katanning and Lake Grace and about 50 kilometres north-east of Ausgold’s Katanning project.

Further north, near Narembeen, Explaurum continues to encounter highly encouraging drill results as it tries to get an accurate measure of exactly what it has found in the Tampia project.

Work at Tampia is expected to accelerate significantly over the rest of the year after Explaurum successfully raised a fresh $8 million to fund a major drilling campaign, which will incorporate a mix of reverse circulation and diamond drilling.

Even before drilling starts, however, Explaurum is confident it will develop a mine, with size all that remains to be determined.

Explaurum managing director John Lawton said that, after the fresh capital had been raised, Tampia was shaping up to be one of the highest margin undeveloped gold projects in Australia.

At Ausgold’s Katanning project, which has been slowly coming to the boil over the past decade, the latest drilling has expanded the known mineralised area, though the challenge remains finding enough high-grade material to kick-start a mine.

Investors, who have tended to look only at traditional goldmining areas, are warming to the concept of development in the Wheatbelt.

The share prices of the three most active players in the game – Ausgold, Explaurum and Cygnus – have moved higher in recent weeks, and in the case of Cygnus, quite sharply.

A new float, which has only been on the stock exchange since early January, Cygnus shares jumped by 40 per cent (11 cents) to 37 cents in the hours after the Bottleneck drill results were released on February 22.

Ausgold has also been moving higher, effectively doubling since mid-December with a rise from 2.8 cents to recent sales at 5.4 cents. Explaurum has been more subdued, rising by 2 cents to 11.5 cents, but with the share price weighed down by an extra 79 million shares issued at 10.5 cents to provide the funds for the current drilling work.

By most measures the three Wheatbelt gold explorers are minnows, valued at a collective $87.5 million (Explaurum $45.3 million, Ausgold $31.2 million and Cygnus $11 million), but the theory they’re pursuing has the potential to be their maker.

More importantly, and given the optimism shown by Cygnus, especially in pegging vast tracts of the Wheatbelt for gold, success at any (or all) of the exploration projects has the potential to ignite a gold rush.

Right now, Wheatbelt gold is a terrific exploration story that is happening close to a number of regional agricultural centres, and in some cases less than 200km from Perth.

In time, Wheatbelt gold could become a major mine development story. And that’s when the politics could become quite interesting, given the red-hot debate about Royalties for Regions, and environmental objections to mining in farmland.