THE DRILL SERGEANT: Blackham Resources (ASX: BLK) is ten months into a two-year transitional period at the company’s 100 per cent-owned Matilda-Wiluna gold operation in Western Australia.
Blackham Resources operations were hindered by seasonal weather impacts, (cyclones Blake and Damien), in the first two months of the March 2020 quarter along with some equipment issues and shortages of qualified operators resulting in mining production being below plan.
In an announcement to the ASX, the company indicated its current Stage 1 Expansion activities will enable it to mitigate these disruptions by allowing high-grade stockpiles to be built.
An increased focus and expansion of underground mining will see weather becoming less of an issue.
Obviously, obstructions such as reduced mine material movement, and in-turn, gold production, will reduce the company’s FY 2020 guidance to the low end of gold production expectations, which will in turn impact unit costs.
On the up-scale, Blackham indicated that its March production has increased, which it credited to better weather conditions, new equipment being introduced and commissioned, as well as improved availability of qualified operators.
“Together these factors have seen the gold production rate returning to expected levels and this will allow a stronger operational finish to the financial year,” the company said.
“Mining and stripping development has continued in multiple mining areas, which is expected to provide both short and long-term ore supply of free milling ore into FY 2021.
“Access to high-grade free milling ore is expected to continue to increase over the coming months.”
“At the Golden Age underground mine, the transition to a new equipment supplier has resulted in a turnaround in operational performance and will allow a material uplift in mining rates to be achieved for the remainder of FY 2020 and beyond.”
Blackham’s Stage 1 Expansion activities are cracking along.
Construction of a new tailings storage facility TSF K is nearing completion.
This construction program is the first stage of construction of a ten-year capacity tailings storage facility.
The first stage is designed to hold approximately 2.5 years of tailings produced from the Wiluna processing plant.
The company has replaced an old underperforming mill motor with a new motor in early February, which has provided increased stable processing rates.
Refurbishment of the rod mill was completed and recommissioned, also in February and is now providing an approximate 20 per cent increase in grinding circuit capacity and a proportionate increase in ore throughput.
“Its benefit to the Wiluna operations will especially be seen when we begin milling the harder ore from the Williamson pit which will increase in the June quarter,” Blackham said.
Dewatering activities to enable access to the underground areas for development have been accelerated and are on target to meet the company’s Stage 1 Expansion time line.
On the exploration side, Blackham recently commenced drilling targeting high-grade shallow shoots, initially at the Essex zone.
Essex is located just 200 metres from surface, close to existing infrastructure, and requires minimal dewatering and rehabilitation to access the high-grade ore.
The program has already yielded encouraging results, which the company believes gives affirmation to its strategy of targeting the high-grade ore under the headframe at the Wiluna Mine, to underpin an expansion of reserves ahead of Stage 1 Sulphide Expansion production.
Results to date include:
26 metres at 15.69 grams per tonne gold from 182m; and
21m at 7.04g/t gold from 196m
16m at 3.72g/t gold from 254m, including 4m at 8.23g/t gold and 2m at 6.51g/t gold
8m at 10.10g/t gold from 225m
The company recently announced a funding package of up to $92 million.
The funding package will allow Blackham to finalise the Stage 1 Sulphide Expansion project, which it expects will result in the company producing between 100,000 ounces per annum and 120,000 ounces per annum in concentrate and gold ore.
“Within the current quarter of dramatic global change due to COVID-19, Blackham has been relentless in advancing our stated two-year transformation plan: we have added clout and expertise to our leadership team, refinanced the company and achieved fantastic initial underground exploration results, while significantly upgrading the processing capacity and development of our Wiluna gold mine,” Blackham Resources executive chairman Milan Jerkovic said in the company’s announcement to the Australian Securities Exchange.
“Looking ahead to Q4, we reaffirm our commitment to shareholders to deliver on our five-point strategy of transitioning to gold concentrate production, increasing operational cashflows, repairing the balance sheet, expanding gold production and advancing ‘under the headframe’ exploration, to underpin a future >250koz/pa long-life gold operation.
“We are 10 months into this two-year transformation process, and while there is still a lot of work to do, we are committed to building a safe, quality mining and exploration company, focused on creating value for Shareholders.”