Middle Island Makes Case for Sandstone Regional Processing
THE INSIDE STORY: Middle Island Resources (ASX: MDI) objective is to re-establish an extended and enhanced gold production profile for the company’s Sandstone project in the East Murchison Mineral Field of Western Australia.
Middle Island Resources is working towards recommissioning the 600,000 tonnes per annum Sandstone processing plant at the earliest opportunity.
The company’s plans for the refurbished plant are to not only service its own future gold treatment requirements, but to also offer toll treatment or production sharing options to gold miners in the wider Sandstone district.
One example raised by Middle Island is the proximity of Alto Metals’ (ASX: AME) historic and greenfields Sandstone gold mines, deposits and prospects.
A recent research report commissioned by Alto referred to the potential for Alto to regionally process some of its historic and fresh hard rock gold inventory present within its Sandstone holdings, highlighting the capability of operating and proposed gold processing plants within a 200-kilometre radius.
The Sandstone mill is within 25km of Alto’s deposits, offering a competitive edge over the nearest operating mills, which are at least a further 150km distant.
Of importance to this strategy is that the Sandstone mill historically treated softer oxide ores, but between 1994 and 2010 under previous ownerships, processed a proportion of harder primary and lateritic gold ores.
A Pre-Feasibility Study undertaken by Middle Island earlier this year into refurbishing and recommissioning the Sandstone mill, included a focus on being able to process hard rock ore.
Key PFS outcomes included:
A suitably designed contract crushing circuit was incorporated into the PFS, producing an approximate 12mm SAG mill feed size, to achieve target mill throughput using a blend of hard and soft ore;
GR Engineering Services and Middle Island completed a detailed mill refurbishment plan and cost estimate as part of the PFS;
There are supporting infrastructure and services at or near the Sandstone mill: and
Due to the cost, and hence impact on Ore Reserves, of long distance road ore haulage, the Sandstone mill will be a competitive option for third party deposits.
Ore haulage costs to a distant mill some 150km away or more is equivalent to approximately 0.4g/t gold increase in ore cut-off grade.
For a low grade (e.g. less than 2g/t gold) deposit, this could result in a severe reduction in economic mill feed (Ore Reserves), and subsequently net revenue, compared to treatment at a nearby mill.
Middle Island requires a modest increase in available mill feed to justify a mill refurbishment, which would make it a compelling milling option for third party deposits within a 100km road haulage distance.
With that in mind the company is open to negotiations with all third party interests in regards to future third-party toll treatment or production sharing partnerships using its upgraded Sandstone gold plant.
The treatment plant at Sandstone ran from 1994 to 2010, during which time it was subjected to several upgrades and design changes.
This included the addition of a ball mill in 2000 and two additional leach tanks in 2005.
Previous owner/operator Troy Resources processed both laterite and hard rock, usually as a blend with softer material.
Since acquiring the Sandstone project in July 2016, and as part of the due diligence prior to that, Middle Island has reviewed technical and operating data, conducted additional metallurgical test work and completed the PFS on the total project, including what is required to upgrade the mill to process harder ores (comprising feed blends containing banded iron formation (BIF) and pisolitic laterites), expand the existing licenced tailings dam and an evaluation of all other existing infrastructure.
Middle Island’s acquisition of the Sandstone god project included all peripheral infrastructure (and a substantial inventory of spares) relevant to any mining and milling in the Sandstone district.
Power on site is derived from a 2.24 megawatt diesel power station owned by Pacific Energy (KPS), which requires very little work make it fully operational and KPS has provided detailed, competitive costings for power provision.
Middle Island also has a 100-person camp, parts of which are in regular use, on freehold title in the Sandstone Township, located 12km from the Sandstone mill.
Other site infrastructure includes offices, workshops, warehouse, fuel storage and dispensing, and a mine laboratory.
Middle Island Resources Limited (ASX: MDI)
…The Short Story
HEAD OFFICE
Suite 1
2 Richardson Street
West Perth WA 6005
Ph: +61 8 9322 1430
Email: info@middleisland.com.au
Website: www.middleisland.com.au
DIRECTORS
Peter Thomas, Rick Yeates, Beau Nicholls