Blackham opens Matilda with focus fixed on future

THE INSIDE STORY: Blackham Resources (ASX: BLK) recently celebrated the official opening of the company’s Matilda and Wiluna gold operation, near Wiluna in Western Australia.

The celebrations recognised the achievements Blackham has accomplished in just 16 short months, leading to the pouring of the project’s first gold bar.

“The pouring of the first gold from the Matilda project was extremely satisfying from a company perspective, but it was also satisfying to be able to achieve such a major milestone with the participation of so many other groups,” Blackham Resources managing director Bryan Dixon told The Resources Roadhouse.

“It would not have happened so quickly if we hadn’t have received such loyal support from our shareholders, employees, contractors, the Wiluna Martu people, and community stakeholders”.

“The town of Wiluna has a long and significant mining history and we are proud to be leading the charge in the latest chapter of that history with the development of the Matilda and Wiluna gold project.”

With that achievement under its belt, Blackham Resources is now looking forwards and following a recent $25 million raising through a placement at $1 per share, the company has taken its cash position to $33.1 million.

Blackham will use the placement proceeds to expand the oxide and free milling resources and reserves at Matilda and to grow the project’s sulphide open pit and underground mine plan and reserves.

The funds will also enable the company to fast track a plant expansion study and sulphide circuit refurbishment.

Blackham also recently mitigated against any gold price risk by forward selling a further 34,250 ounces of gold at an average price of $1,774 per ounce taking its total gold hedge commitments to 35 per cent of forecast production over the next 18-month period.

What Blackham Resources has achieved, and is currently producing, has been well-documented during this recent phase.

Now, however, is time to focus on what the future has in store and how the company intends maintaining the momentum it has built to keep the re-commissioned facility turning over.

Resources at the Matilda and Wiluna gold operation currently stand at 48 million tonnes at 3.3 grams per tonne for 5.1 million ounces of gold.

Measured and Indicated Resources now total 22 million tonnes at 3.4g/t gold for 2.4 million ounces of gold.

The company anticipates to upgrade these soon with a re-estimate currently underway to include drilling undertaken since June 2016.

The stated objective at Matilda was to commence gold production at a rate of 100,000 ounces per annum and eventually ramp that up to around 230,000 ounces per annum.

Production commenced in October this year and is currently ramping to full commercial production, which Blackham hopes to achieve by years’ end.

An expansion study targeted this production goal within two years mainly through the treatment of the, previously maligned, Wiluna sulphides, which have current Measured, Indicated and Inferred Resources of 3.5 million ounces at 5.8g/t gold.

For Blackham, unlocking the value of these sulphides is crucial to its strategy, which involves increasing mining output and the capacity of the mill by running the sulphide circuit in conjunction with the current operating free milling circuit.

During Stage Two of the project, Blackham intends bringing additional resources into the mine plan from sources surrounding the mill, having determined potential exists to reduce operating costs should those resources justify a mill expansion.

Exploration drilling at Matilda on the M1 and M5 pits indicated potential mineralisation may be continuous between the two pits.

Infill and extensional drilling at M6 North confirmed plunging shoots along strike of the M6 pit.

The mining optimisation study confirmed favourable economics for the M6 pit to come into the mine plan.

Recent drilling undertaken to support the mill expansion study at the Wiluna mine defined mineralisation along strike and beneath existing pits, highlighting potential for cutbacks at several pits.

Drilling of the East and West Pits northern extensions delivered:

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23m at 3.74 grams per tonne gold from 119m;

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6m at 7.65g/t gold from 175m and 5m at 2.01g/t gold from 195m;

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6m at 8.75g/t gold from 88m; and

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7m at 3.17g/t gold from 38m

The East and West Lodes at Wiluna are former working mines, historically producing over 1.5 million ounces of gold – predominately from underground mining.

Mineralisation has been intersected below and along strike from the East and West pits with results to date from the East Lode indicating continuity of mineralisation between the East and North Pits.

Blackham is of the opinion the continuity of mineralisation between the historical East and North Pits increases the likelihood of the planned North and East pits merging together, which would improve mining economics from a lower stripping ratio.