Blackham Resources Prepares to Increase Wiluna Processing Capacity
THE INSIDE STORY: Blackham Resources (ASX: BLK) completed the first gold pour at the company’s Matilda/Wiluna gold project in Western Australia last year, a feat that would satisfy any number of companies.
Blackham Resources, however, is not your average company, something it has continually demonstrated since it began consolidating ground surrounding the Wiluna gold processing plant just a couple of years ago.
Blackham poured its first Matilda gold in the 3rd week of October 2016 and by the end of the December quarter had produced a total of 8,773 ounces of gold with 4,894 ounces produced in the month of December.
This all happened as Blackham completed refurbishment of the Wiluna gold processing plant and forged ahead to ramp up production to its Stage 1 production target of 100,000 ounces per annum.
The plant optimisation and de-bottle necking program is ongoing as the ramp up phase continues.
Gold production, at this stage, is running at a maximum level with Blackham maintaining its FY17 production forecast at 60,000 to 70,000 ounces per annum.
That, however, was then, and the now keeps powering on with Blackham recently announcing a further upgrade to Mineral Resources at the Matilda/Wiluna operation to 63 million tonnes at 3.2 grams per tonne gold for 6.4 million ounces of gold.
Of this there are 31 million tonnes at 3.1g/t gold for 3.1 million ounces of gold sitting in the Measured and Indicated categories.
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The large increase in Mineral Resources at Wiluna has been attributed to a shift of focus.
Previous estimates have focused on the high-grade underground mining at a 4g/t lower cut within the project area, however, regional exploration carried out by Blackham discovered substantial lower grade open pit mineralisation was not taken into consideration by the previous interpretation.
Blackham incorporated regional exploration drilling results to develop a new geological model, in which the mineralisation was re-interpreted above a 0.3g/t lower cut.
This model was the basis for the updated Mineral Resource estimate with potentially open pit-able material reported within an $1,800 per ounce optimised resource pit shell.
The modelling included updated Mineral Resources for a number of open pit sites within the immediate project area, including: Happy Jack; Creek Shear; and Bulletin, as well as the Adelaide/Moonlight/Lone Hand group of deposits.
Importantly the company announced a maiden open pit resource at Wiluna of 12.5 million tonnes at 2.6g/t for 1.06 million ounces, of which 730,000 ounces is in the indicated category, which will underpin the company’s expansion plan.
These Resources complemented Mineral Resources for the East and West Lodes that were reported in December 2016.
All resources are within a 20-kilometre radius of the Wiluna gold processing plant.
Blackham is now advancing mining and processing studies to increase processing capacity to more efficiently develop the upgraded Resource base.
A draft report by Orway Mineral Consultants (OMC) recommended a processing flowsheet for an additional 1.5 million tonnes per annum in a new crushing, grinding and flotation circuit to feed the existing BIOX plant.
The commissioning of this added capacity in addition to the recently refurbished 1.7 million tonnes per annum oxide circuit would increase total capacity to approximately 3.2 million tonnes per annum across the oxide and sulphide circuits.
With all Resources located within a 20-kilometre radius of the Wiluna processing hub, the expanded Wiluna plant would deliver substantial economies of scale to the combined project.
For now, the current mine planning will remain focused on the planned 1.5 million tonnes per annum sulphide circuit being fed equally from both the open pits and the Wiluna underground, which would have two of the existing five declines in operation at any point in time.
A new 1.9-kilometre long open pit resource model has been completed for the Happy Jack, Creek Shear, Gap and Bulletin and Lodes based on historic and recent drilling.
Total JORC 2012-compliant Indicated and Inferred pit resources for these lodes within an $1800 per ounce shell comprise 2.85 million tonnes at 2.75g/t gold for 250,000 ounces.
Underground resources have been modelled using a 4g/t lower cut and reported above a 2g/t cut-off outside the $1800 per ounce shell.
The pit optimisation results identified areas of limited drilling where Blackham considers potential exists to increase resources further, especially at the Happy Jack deposit and between the Gap and Bulletin pits.
The new open pit resource model for the Adelaide, Moonlight and Lone Hand deposits resulted in total JORC 2012-compliant Indicated and Inferred open pit resources within a $1800 per ounce shell of 0.7 million tonnes at 3.14g/t gold for 70,000 ounces.
Although the Mineral Resources for the East and West Lodes were updated in December 2016 to 8.6 million tonnes at 2.5g/t gold for 700,000 ounces (59% Indicated), Blackham has not included the mineralisation intersected in between the East and West Lodes in the current geological model.
This is due to the sparse nature of the drilling and the current uncertainty of the orientation of the mineralised structures, which remains open down dip and along strike to the north and south.
Blackham has two RC rigs and one diamond rig working around the clock on a 60,000m drill program around the Wiluna open pits aiming to upgrade the Wiluna open pit resources to the Measured and Indicated categories.
The company’s ambitions will be helped by funds from a recently-completed raising of $35 million through a heavily oversubscribed Placement that received strong institutional support from both existing and new shareholders.
The proceeds will accelerate the existing growth strategy by expediting conversion of the large resource base into reserves, improving and lengthening the mine life, advancing studies to enhance the Stage 2 expansion economics, and committing to Stage 2 engineering and long lead items on completion of the current Feasibility Study.
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“The proceeds from this Placement will enable us to complete the Wiluna expansion studies aimed at lifting plant throughput to 3.2 million tonnes per annum,” Blackham Resources managing director Bryan Dixon told The Resources Roadhouse.
“The geological and mining studies we have completed to date demonstrate strong grades for an operation of this size.
“The initial expansion plan is expected to be completed in the near term and having a strengthened balance sheet will allow us to expedite our growth plans.”
Blackham recently demonstrated its intention to be a good neighbour in the region by striking a non-binding Memorandum of Understanding with GWR Group Limited (ASX: GWR) in regards to the latter’s Wiluna West gold project.
The deal is a good fit for both companies as Blackham has a big gold processing plant that needs to be kept fed and GWR has a deposit worthy of mining.
The Wiluna West gold project contains JORC 2004-compliant Mineral Resources of 3.48 million tonnes at 2.3g/t gold for an estimated 2.6 million ounces of gold, including an Indicated Resource estimate of 46,000 tonnes at 3.5g/t gold for 5,200 ounces and an Inferred Resource estimate of 3.43 million tonnes at 2.3g/t gold for 253,000 ounces.
The MoU sets the scene for Blackham and GWR to delineate, study and mine gold deposits at Wiluna West for processing through the Wiluna plant.
The MoU is grounded on the assumption both parties will agree to either a profit sharing or ore sales arrangement for Wiluna West.
Blackham Resources Limited (ASX: BLK)
… The Short Story
HEAD OFFICE
Level 2, 38 Richardson St
West Perth WA 6005
Ph: +61 8 9322 6418
Email: info@blackhamresources.com.au
Web: www.blackhamresources.com.au
DIRECTORS
Milan Jerkovic, Bryan Dixon, Alan Thom, Greg Miles, Peter Rozenauers