Blackham Resources ready to push Matilda’s buttons
THE INSIDE STORY: Gold producers tend to stand out in groups of mining industry types at present, mainly because they’re the ones wearing the broadest smiles.
The second-most happiest people in the room, are those poised to join the production ranks.
Blackham Resources (ASX: BLK) managing director Bryan Dixon has his index finger hovering over the ‘on switch’ of the company’s 100 per cent-owned Wiluna gold plant, the central feature of its Matilda gold project near Wiluna in Western Australia.
Dixon’s finger is pointing to the future as Blackham moves towards first production at the project, where the company expects to be hosting an official ‘switch-flicking ceremony’ to turn the mill back on at the end of August with the intention of pouring gold in September.
Blackham’s enthusiasm is understandable, given it is reaching such an important phase at a time when the Aussie gold price is as good as it has ever been.
Blackham acquired the Matilda project in 2011, at a time when there was much enthusiasm surrounding the Australian Dollar gold price, which had peaked throughout that year at just over $1700.
Like most commodities, gold took a bit of a belting since then, but has reconfirmed its number one status in recent times.
What is different this time, however, is that production costs are much lower.
“We are turning this plant back on at a fantastic time when the sector is enjoying record margins,” Dixon told The Resources Roadhouse.
“We’ve now got to the pointy end and in the September Quarter we are confident the Matilda gold project will come into production and we will be pouring gold.
“In the December 2016 Quarter, we expect we will achieve around 25,000 ounces of gold production.”
After completing a Definitive Feasibility Study, Blackham continued further targeted drilling programs, adding two and half years of minelife to the Matilda operation, extending it out to eight years.
This infill drilling converted a healthy percentage of Inferred Resources into Indicated Resources, and Mineral Inventory into Reserves.
After finalising the DFS Resources, further drilling programs targeted Matilda, Golden Age, Galaxy and Bulletin with the aim of improving the quality and quantity of the reserve ounces, a strategy that was rewarded with publication of a revised Ore Reserve estimate for the Matilda project.
This took the Matilda Ore Reserves to 7 million tonnes at 2.5 grams per tonne gold for 560,000 ounces of gold (up 17% since DFS) while the Mining Inventory has increased to 9.3 million tonnes at 2.9g/t gold for 873,000 ounces (up 14% since DFS).
As an added sweetener Blackham recently gained the market’s attention with the release of a maiden resource estimate for the Moonlight Shear deposit, which came in at 2.6 million tonnes at 4.6 grams per tonnes gold for 381,000 ounces of gold with 10 per cent of the Resource sitting in the Indicated category.
The Matilda gold project Resources now stand at 48 million tonnes at 3.3g/t gold for 5.1 million ounces with 48 per cent of the Resources Indicated.
No doubt the company would be pretty happy to have put together over five million ounces of Resource all within a 20 kilometre radius of the Wiluna gold plant, pretty much on the eve of the first gold production at the Matilda gold project.
With a PFS well underway and production around the corner, Blackham has also kicked off mining studies over the Moonlight resources as its exploration team is confident of there being significant potential along this two kilometre-long underexplored shear.
Blackham’s initial focus is the free-milling resources from Matilda, which it will process through an established, low-risk circuit of crushing, grinding, gravity and carbon in leach.
It plans the free-milling open pit Matilda deposits, along with ore from the Williamson mine, to provide base-load feed stock for the Wiluna plant.
The Matilda open pit mine plan consists of 5.8 million tonnes at 1.7g/t gold for 324,000 ounces (including stockpiles) of shallow free milling ore to be mined over the first four years.
The open pit Reserves comprise 5.5 million tonnes at 1.8g/t gold for 310,000 ounces.
To supplement the Matilda ore, Blackham will commence underground mining in July 2016 from the high-grade Golden Age orebody.
The Golden Age initial mine plan consists of 206,000 tonnes at 5.8g/t gold for 38,000 ounces of free milling ore, which Blackham will mine over the first two years.
Golden Age remains open both to the east and up dip and hosts underground Reserves comprising 112,000 tonnes at 6g/t gold for 21,000 ounces.
The Golden Age reef has existing access via the Bulletin decline and has mining infrastructure in place thanks to the project’s previous owners, and good geotechnical conditions, which has allowed easy re-entry to the mine.
The DFS confirmed the Wiluna plant is capable of processing 1.3 million tonnes of ore per annum – or approx. 100,000 ounces per annum.
“The Matilda mine has never been consolidated with the Wiluna plant before and we believe that’s our major competitive advantage over the plant’s previous owners,” Dixon said.
“This has basically guaranteed we will keep the plant full during the early years of operation and, importantly, provides a low-capital option to commence mining.
“We are determined to demonstrate we can produce 100,000 ounces of gold per annum.
“We have established a very large Resource, however our next goal is to get beyond that.
“Our exploration activities have been focused on our Reserve drilling to strengthen and lengthen our Reserves, but we are also on the lookout for game-changing discoveries.”
Blackham anticipates completion of dry commissioning for the Wiluna plant by August.
Blackham purchased the Wiluna gold plant for $4.7 million, paying $2.1 million up front, with a further $2.6 million required to be paid when the project is in its fourth year of production.
“In December 2015 we finished our Scoping Study, on the back of which, we signed a $39 million deal with Orion Mine Finance,” Dixon explained.
“They backed the project very early, enabling us to use debt to finance all the drilling and feasibility work to prove the project up, which enable us to provide magnificent leverage for our shareholders.
“We are spending $32 million, which is a relatively small amount to bring such a project to production, to generate a projected cash flow of $271 million over the first eight years of operation.
“The revised Reserve Estimate is a great result as it both strengthens our reserves and lengthens the project life.”
Having received final approvals to commence operations at the project, Blackham appointed MACA Limited as the open pit mining contractor.
Underground mining of the Golden Age orebody will be carried out by Pybar Mining Services, while the Tailings Dam construction contract wen to Cape Crushing & Earthworks.
The power station is to be built by Contract Power Group, which has already installed temporary diesel power with site preparation work has underway for the installation of new gas generators.
“The expansion of the free milling reserves gives us confidence that we can keep growing the size of the Matilda gold project,” Dixon continued.
“Gold production from the Matilda gold project is on track for the Sept 2016 quarter.
“We know this gold project is going ahead.”
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
Paul Murphy, Bryan Dixon, Alan Thom, Greg Miles, Peter Rozenauers, Milan Jerkovic
MAJOR SHAREHOLDERS
Citicorp Nominees 10.9%
HSBC Nominees 10.5%
Orion Mine Finance 9.9%