THE CONFERENCE CALLER: A decision to effectively re-list shortly after making its debut on the Australian bourse seems to have paid off for Kaiser Reef (ASX: KAU) as it joins the ranks of domestic gold producers. By Mark Fraser
Having established an initially modest cash cow in the form of the A1 mine in Victoria’s Maldon Goldfield, the company is now free to pursue one of its original goals – to go out and explore a prospective chunk of the northern Lachlan Ford Belt (LFB) in New South Wales.
When Kaiser Reef first listed in February 2020, going into NSW was a priority. But shortly after it started trading on the ASX, the company identified what it believed would be a compelling and strategically attractive acquisition.
This was the combined assets of the historic A1 operation, the Porcupine Flat Maldon gold processing plant and four granted mining leases, which Kaiser Reef purchased from administrators after raising $7.5 million during the second half of last year.
First discovered in 1861, A1 had already produced 620,000 gold ounces from ore grading an average of 25.9 grams per tonne by the time Kaiser Reef bought it. First gold was poured by the proud new owner within a week of re-listing during the summer of 2020/21.
Speaking during the 20th RIU Explorers Conference in Fremantle last week, Kaiser Reef executive director Jonathan Downes said as the Victorian operation had no reserves and minimal resources added to its inventory while under administration, building a resource base via exploration was now on top of the company’s to do list.
And there was, he suggested, an opportunity to increase A1’s production rate by the middle of the year by supplementing the current air leg mining through the use of long hole open stoping methods.
“The strategy right now is to continue the current drilling to find some proper reserves and put the company back on its feet after a long period of being in that sort of administration process,” Downes explained.
“It’s going to take us several months to really get the first resources and reserves back into the company. It did have some significant resources – we deleted those because we wanted to start from scratch and have a lot of veracity behind the work that we proceed with now.”
Shortly after the RIU show, Kaiser Reef showed it was serious when it told investors that the latest drilling results from A1 had included gold intercepts like 12.1 metres at 24.26 grams per tonne from 20m and 1.8m at 11.6 grams per tonne from 81.7m.
This second result included a higher grade zone of 5m at 44.3 grams per tonne from 20m and another one of 5.1m at 13.7 grams per tonne – separated by a 0.3m core-loss interval.
Furthermore, the above-mentioned 5m at 44.29 grams per tonne interval contained 1m at 187.25 grams per tonne from 20-21m, which was within a strongly altered dyke (pervasive carbonate and sericite alteration) with disseminated sulphides.
This drilling program, Kaiser Reef said, continued to expand into resource definition for short and medium term production horizons, with around 4,000m to be completed.
Moreover, this would see more drilling at A1 in four months than there had been the three years prior, which in itself was important for the planning and development of an expanded mining operation.
During the RIU show Downes suggested the company was already more-than-happy with its Victorian investment.
“Because we just purchased this project out of administration, we didn’t pay a market price for the asset – we paid what it cost to settle with creditors, deal with administrators and bring this thing back into listing,” he said.
“So we bought something at a non-market price, which is why we have an enterprise value today of less than $35 million which, I may be wrong, but I think that is possibly Australia’s lowest priced operating gold mine.”
While the Maldon acquisition may have re-routed some of Kaiser Reef’s original corporate direction, the company hasn’t forgotten about its NSW LFB tenure, where it has two key exploration projects.
The first, the wholly-owned Stuart Town, is located on the trend just north of Newcrest Mining’s (ASX: NCM) giant Cadia gold copper mine and Alkane Resource’s (ASX: ALK) Boda discovery in the state’s central west, while just to the north west is Macquarie North, where some of the conceptual targets are large scale porphyries, “in areas beyond the belts you see the traditional porphyry mines”.
Downes told the RIU crowd that Stuart Town contained a coincident gravity and magnetic target directly below some gold workings as well as large scale geophysical targets modelled at shallow depth and not yet drill tested.
“Stuart Town may have the densest group of gold workings in NSW, and to say it has been underexplored is an understatement,” he said.
“CRA did do a detailed soil survey there and found some huge soil anomalies.
“We have been out there – we’ve been drilling. And we’ve got gold in every drill hole. We found it was very course gold so a lot more met work is going on trying to work out exactly what that gold is composed of.”
As for Macquarie North, its location at the northern end of the Macquarie Arc augers well given these rocks host some of Australia’s largest copper-gold mines.
Downes said this project contained large scale geophysical targets that were yet to be drill tested.
Obvious mineralisation, he maintained, was being obscured by shallow-to-medium overburden.
“That will probably be the last project we get to – it’s still only at an exploration application stage,” he added.