Blackham Resources (ASX: BLK) recently announced the results of the Definitive Feasibility Study (DFS) on the company’s Matilda gold project in Western Australia.
Blackham was eager to tell all and sundry about the results, as they confirmed robust near-term cash flows from the project, which the company is confident will enable it to benefit from the current strong Australian dollar gold price.
Blackham takes no short steps when comparing Matilda to its Western Australian development peers, claiming the project to be the most capital efficient, nearest term producer with the shortest payback.
The company is continuing with drill programs at Matilda, as well as at the Golden Age and Bulletin deposits, which it is carrying out with the aim of improving the length, quality and sustainability of the mine life.
The company is well on track to become Western Australia’s next gold producer and to achieve its stated goal of pouring the first gold from Matilda in August this year.
The very low capex required for the project is due to the substantial plant and infrastructure at site and the minor plant refurbishments required to re-start the project.
The results of the DFS produced a number of highlights, including:
Mining Inventory of 8.3 million tonnes at 2.9 grams per tonne gold for 767,000 ounces of gold;
Reserves of 6.1 million tonnes at 2.5g/t gold for 481,000 ounces of gold;
An initial Life of Mine beyond seven years with expected average annual production of 101,000 ounces per annum over the first five years of operation;
LOM C1 Cash Costs of $850 per ounce (US$600 per ounce);
Annual EBITDA at an Australian Dollar gold price of $1,600 per ounce of $58M (Yr1) and 62M (5yr Avg);
Pre-Production Capital Costs $32 million;
Anticipated Project Cash Flow of $234 million;
“If you look at the DFS it really does confirm the robust nature of the Matilda project and how capital efficient it is,” Blackham Resources managing director Bryan Dixon told The Resources Roadhouse.
“However, as impressive as the results currently stand, we are determined to work Matilda towards becoming a sustainable operation with an enhanced mine life.
“When compared to our Western Australian gold development peers, we stand up very well.
“We are the nearest-term producer, the most capital efficient, and we also have the quickest payback for shareholders.”
Recent history for Blackham has been good with the company being the second placed, best performing gold stock for 2015
“Although we have come off a reasonably low base we have risen over 300 per cent for the past year,” Dixon said.
“Over the same period the ASX Gold Index has risen 26 per cent.”
Blackham’s aims for Matilda are straight forward with the company’s obvious target being to bring the project into production of 100,000 ounces of gold per annum while maintaining a strong exploration focus to find new discoveries.
The company is also open to making opportunistic bolt-on acquisitions in order to keep the Matilda mill satiated.
“Our strategy is to bring Matilda into production focusing on the project’s soft oxides and high-grade free-milling gold reefs around Wiluna that will spike the grade profile,” Dixon explained.
“It is a low risk start up as all the free-milling ore will repay all the debt.
“Our exploration will continue to focus on all the reefs and continue to grow the base-load ore from the Wiluna and Williamson open pits.
“We have around five million tonnes of open pittable ore, which is significant because the Wiluna plant has never had the privilege of feeding on that amount of open pit ore.”
Blackham will re-commission the Wiluna gold plant feeding it base load free-milling ore from the Matilda mine followed by ore from the Williamson Mine.
This will be supplemented with higher grade quartz reef ores from the Golden Age underground and the Galaxy open pit.
The DFS identified the availability of a large amount of optionality of the current 3.3 million ounces at 4.6 grams per tonne Wiluna sulphides.
“That means it is all about having the right mine plan for the project,” Dixon explained.
“To ensure there is enough ore to keep the mill running flat out, a key part of that solution is having that five million tonnes of open pittable ore.”
During the DFS process, Blackham added an additional two and half years to the mine life from the Pre-Feasibility Study which greatly improved in the project’s economics.
The DFS also confirmed strong conversion of Inferred Resources into Indicated Resources and PFS Mineral Inventory into Reserves.
“As we have drilled that Reserve out over the past year we have achieved an almost one-for-one conversion from Scoping Study Inferred Resources through to Reserves and we are hoping we can maintain that statistic.”
Blackham Resources has worked feverishly over the past four years to consolidate the Wiluna Goldfield, where it currently holds a 780 square kilometre exploration tenement package that has historically produced over 4.3 million ounces.
The Matilda gold project is located in an ideal address, being smack bang in the heart of Australia’s largest gold belt, which stretches from Norseman to Wiluna and passes through Kalgoorlie and Leinster.
Blackham owns the Wiluna gold plant, gas power station, camp, borefields and underground infrastructure – which operated up until 2013 – 100 per cent.
“We have reconsolidated the Wiluna goldfield and have made the Matilda mine our main focus, which will be the predominant feed source for the mill in our earlier years of operation,” Dixon said.
“Matilda boasts a Resource of 45 million tonnes at 3.3 grams per tonne for 4.7 million ounces of gold.
“Reserves stand at 6 million tonnes at 2.5g/t for 481,000 ounces of gold.”
The Resources at the Matilda gold project were updated with the inclusion of results of drilling programs the company had undertaken up until December 2015.
Recently completed drilling programs undertaken at Matilda, Galaxy, Golden Age and Bulletin this year were not included in the DFS, however the company will include these when revising the Resources and Reserves prior to the commencement of production.
An aspect of Blackham Resources’ project portfolio that is often overlooked is that there are four very big geological systems in the Wiluna Goldfields.
There is the Wiluna mine itself, the quartz reefs that the old timers mined, the Matilda mine – which is the company’s main focus and an asset that nobody has really taken any great notice of for over twenty years and is now coming into its own – and then there is Lake Way.
Lake Way has only been subjected to a minimal amount of drilling compared to the other prospects, however it historically produced around 40,000 ounces with its previous owner, Newmont, spending a good deal of cash and time.
“There are some very big targets out on Lake Way and we are out there at the moment looking to unlock some more base load ore,” Dixon said.
Blackham Resources Limited (ASX: BLK)
… The Short Story
Level 2, 38 Richardson St.
West Perth WA 6005
Ph: +61 8 9322 6418
Fax: +61 8 9322 6398
Paul Murphy, Bryan Dixon, Alan Thom, Greg Miles, Peter Rozenauers, Milan Jerkovic
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