Middle Island Resources Closes in on Reo Project Sale

THE BOURSE WHISPERER: Middle Island Resources (ASX: MDI) has finalised the transaction for the divestment of the Reo gold project in Burkina Faso, West Africa.

Middle Island Resources has executed a formal Option to Purchase Agreement with TSX(V)-listed Tajiri Resources Limited, which provides Tajiri with the option to acquire 100 per cent of MDI’s interest in the project.

In turn, Tajiri gave notice it will enter the 18-month exclusive option period and now has 15 days to pay to MDI a US$150,000 option fee and issue 5 million Tajiri shares to MDI.

During the Option term Tajiri must pay all expenses associated with maintaining the Reo project permits in accordance with Burkinabe law.

Should Tajiri exercise the Option, it will pay a further US$150,000 to Middle Island, however, if it has not exercised the Option within 12 months, it will be required to pay US$50,000 to Middle Island as a non-refundable advance on the Option exercise cash consideration, with the balance of US$100,000 payable if the Option is exercised during the remaining six months of the Option term.

If the Option is exercised within the first 12 months the full US$150,000 is payable on exercise.

If the Option is exercised by Tajiri, Middle Island will retain a two per cent net smelter return (NSR) royalty on any minerals derived from the Reo project.

Tajiri has the right to acquire that royalty from Middle Island for US$5 million.

If the Option is not exercised by Tajiri, Middle Island will retain all consideration already paid and continue to own its 100 per cent interest in the Reo project.

“This divestment is in line with Middle Island’s strategy to focus on developing the Sandstone gold precinct in Western Australia into a thriving gold hub, processing local deposits through the company’s 100 per cent-owned Sandstone mill,” Middle Island Resources managing director Rick Yeates said in the company’s announcement to the Australian Securities Exchange.





Middle Island Resources Strikes HoA to Divest Reo Gold Project

THE BOURSE WHISPERER: Middle Island Resources (ASX: MDI) has executed a Heads of Agreement relating to divesting the company’s 100 per cent-interest in the Reo gold project in West Africa to Tajiri Resources Corp. (TSX-V: TAJ) via an Option to Purchase Agreement.

Middle Island Resources declared summary commercial terms involve aggregate cash payments to Middle Island of US$335,000 and the issue of 5 million shares, representing eight per cent of Tajiri’s then post-issue expanded capital, plus a two per cent net smelter return (NSR) royalty, which can be purchased by Tajiri for US$5 million.

On completion, the Reo project transaction Middle Island will have divested all of its remaining gold interests in West Africa, allowing the company to fully focus on its advanced Sandstone gold project development in Western Australia.

“The transaction structure allows Middle Island shareholders to retain a significant indirect interest in the upside potential of the Reo project via the Tajiri equity and royalty components,” Middle Island Resources managing director Rick Yeates said in the company’s announcement to the Australian Securities Exchange.

“Middle Island looks forward to working closely with Tajiri to facilitate remaining aspects of the due diligence and documentation, in order to complete the transaction and progress the Reo project towards feasibility.

“Middle Island will keep shareholders updated on progress with the Reo project transaction during 2018.”




Middle Island Ore Sorting Inspires Sandstone Rethink

Testwork carried out by aspiring gold developer Middle Island Resources (ASX: MDI) on the company’s Sandstone gold project in Western Australia provided a ‘Eureka’ moment.

Middle Island’s focus at the Sandstone project is to extend and enhance its proposed gold production profile to recommission the on-site processing plant.

One major hurdle had been Sandstone’s Two Mile Hill tonalite deeps deposit, for which Middle Island has released an Exploration Target of 24 to 34 million tonnes at 1.1 to 1.4 grams per tonne gold for 0.9 to 1.5 million ounces of gold.

Two Mile Hill tonalite deeps sits four kilometres north of the 600,000 tonnes per annum Sandstone plant, and was previously considered incompatible with existing processing plant capacity.

Because of this perceived incompatibility, the company was considering Two Mile Hill tonalite deeps as a potentially separate project, even a possible farm-out deal.

The company reviewed its assessment of Two Mile Hill tonalite deeps after positive results from preliminary ore sorting testwork conducted on drill core demonstrated the deposit’s amenability to pre-concentration of gold mineralisation.

This ticks off several boxes for the recommissioning of the Sandstone processing plant, including reduced throughput and costs, and an increase to the feed grade to a level that is anticipated to be compatible with the plant’s capacity and capability.

This means the Two Mile Hill tonalite deeps deposit has potential to provide a substantially higher production profile over an extended period, without the requirement for a new larger processing plant, and Middle Island has adjusted its focus accordingly.

“We were running two separate projects within the Sandstone project,” Middle Island Resources managing director Rick Yeates told The Resources Roadhouse.

“The first was focused on recommissioning the mill, and the second was how we would develop the Two Mile Hill tonalite deeps deposit.

“We are very confident the initial ore sorting results can be substantiated by further test work.”

The process of ore sorting is not, as might be thought, grading of small bags of ore material by weight or colour.

It is rather, a simple mechanised pre-concentration process that facilitates ‘upgrading’ of ore and mineralised waste and has been used across the industry for sorting myriad of commodities, such as diamonds, uranium, tungsten for more than 25 years.

Like other technological advancements in the industry, ore sorting has also benefitted from improvements in technology, including the use of sensors and applying faster data processing speeds, which have contributed to the application of the process.

Sorting has been found to be effective for managing dilution from mining operations, upgrading low grade stockpiles, reducing haulage costs for satellite operations and, most importantly, improving processing costs and efficiencies.

Middle Island appointed Nexus Bonum Pty Ltd, a highly experienced consulting group in sorting technology and its application to mining projects, to advise on all aspects of the sorting program.

“The ore sorting technology we have employed is a good example of how new or enhanced technologies can transform the economics of mining and processing operations,” Yeates said.

“Middle Island is proud to be an early mover in utilising this significant technological opportunity.”

The ore sorting study followed an encouraging mineralogical assessment on ore sourced from the Two Mile Hill tonalite deeps deposit in October 2017. This work identified that greater than 99 per cent of the gold is hosted within the quartz veins.

The test work aimed to determine if a mill feed upgrade was achievable and the optimum pre-concentration route to do so.

Two ore sorting processes were run.

The first by Tomra, was undertaken on 78 kilograms of -30mm/+10mm material following screening to remove fines.

A primary sort using X-ray transmission (XRT) was followed by a Colour scavenge on the product and waste fractions generated.

A -10mm screen upgrade to 6.38g/t gold recovered 19.4 per cent of the gold in just 7.3 per cent of the mass in this test with the Tomra results showing 64.5 per cent of the gold was recovered in 24 per cent of the mass by XRT sorting following screening.

Colour sorting of the XRT product did not result in any further upgrade. However, Colour sorting of the XRT waste fraction recovered a further 12.3 per cent of the gold to yield a total screening (fines) plus sorting gold recovery of 96.3 per cent in 41 per cent of the mass.

Middle Island interpreted the data to indicate that a mined grade of 2.38g/t gold could be upgraded to a plant feed grade of 5.61g/t gold by screening and XRT/Colour sorting.

A second sorting trial using a Steinert sorter was carried out to assess if Laser sorting would be more effective than Colour sorting.

The Steinert sort was conducted on the recombined Tomra products (73kg), following sub-sampling for gold analyses.

The 73kg recombined composite sample was run through a Laser at different settings to produce two concentrates.

The Laser waste fraction was then scavenged twice by the XRT sensor to produce high grade (HG) and medium grade (MG) fractions.

The Steinert results indicated 12.2 per cent of the gold was recovered in 14.2 per cent of the mass by Laser (concentrates combined).

Scavenging of the Laser waste fraction with XRT recovered a further 75.6 per cent of the gold (HG plus MG) to yield a total screening plus sorting gold recovery of 95 per cent in 81 per cent of the mass.

The MG material is below the marginal cut-off for processing and would not be recovered.

Overall, the Steinert test resulted in a 93.9 per cent recovery of gold in 54 per cent of the mass.

Middle Island saw the results as an indication that reviewing ore sorting is a valid means of upgrading mill feed, thereby lowering process operating costs – and consequently the mining cut-off grade – for a possible underground mining operation, is readily justified.

It also signalled the potential that the substantial scale of the Two Mile Hill tonalite deposit could ultimately prove compatible with the milling capacity of the existing Sandstone processing plant.

“The results from the ore sorting characterisation testwork are obviously, at this stage, only preliminary, however, these initial results are outstanding,” Yeates said.

“Even Nexus Bonum principal, Geoffrey Laing, described the indicative performance as one of the best he has seen.

“The opportunity to generate a 185 to 257 per cent increase in sorter product grade, whilst retaining more than 93 per cent of the gold, is an outstanding result.

“The expected equivalent decrease in unit haulage and mill operating costs will also feed back into the economic mining cut-off grade, thereby potentially increasing the material available for mining and processing.

“Assuming more definitive testwork on larger composite samples replicates or improves on these results, ore sorting has the potential to make a significant positive impact on the economics of the Two Mile Hill tonalite deeps deposit.

Middle Island has lodged a Program of Work (POW) application to complete a large diameter (PQ) diamond core hole to provide material for more definitive ore sorting trials.

On the back of the initial ore sorting testwork results, it also lodged another POW to drill out the upper levels of the tonalite deeps deposit (to approximately 450m depth) to a notional Indicated Resource status.


Middle Island Resources Limited (ASX: MDI)
…The Short Story

Suite 1
2 Richardson Street
West Perth WA 6005

Ph: +61 8 9322 1430


Peter Thomas, Rick Yeates, Beau Nicholls

Middle Island Resources Receives Positive Pit Optimisation News

THE BOURSE WHISPERER: Middle Island Resources (ASX: MDI) announced results from pit optimisation of the Wirraminna deposit Mineral Resources.

Midlle Island Resources’ Wirraminna deposit is located immediately adjacent to the company’s 100 per cent-owned Sandstone gold project in Western Australia within one kilometre of the associated gold processing plant.

Middle Island declared a JORC 2012-compliant Mineral Resource estimate in December last year of 550,000 tonnes at 1.3 grams per tonne gold for 23,000 ounces of gold at a 0.5g/t gold lower cut-off grade for Wirraminna.

The company had open pit optimisations completed on the December 2017 Mineral Resource model using a base case Australian dollar gold price of $1,600 per ounce, as well as utilising other input parameters derived from the December 2016 Sandstone project Pre-Feasibility Study.

At a gold price of $1,600 per ounce the optimal pit shell, based on the maximum undiscounted operating cash flow, includes 72,000 tonnes at a grade of 1.97g/t gold for a strip ratio of 9:1.

According to Middle Island, this equates to a mill recovered 4,200 ounces of gold from a pit shell depth to a maximum of 45 metres from surface that is wholly contained within the oxide zone.

The company believes opportunity remains to further extend and enhance the Wirraminna deposit via follow-up drilling, including infill and extension drilling of Inferred Mineral Resources, and confirming the location of historic higher-grade holes.

To that end, it is planning further RC drilling and will obtain additional data, prior to updating pit optimisations, considering pit design work and Ore Reserve estimation.

“The positive drilling results, Mineral Resource estimation and pit optimisation work on the Wirraminna deposit serves to further extend the production profile for the proposed Sandstone gold operation,” Middle Island Resources managing director Rick Yeates said in the company’s announcement to the Australian Securities Exchange.

“However, the quantum and grade of the deposit is presently insufficient to trigger a mill recommissioning decision in isolation.

“Drilling indicates that substantial potential remains to extend the deposit, and the location of higher grade historic drill intercepts of 11 metres at 23.8 grams per tonne, 16 metres at 14.6 grams per tonne and 19 metres at 4.85 grams per tonne gold remain unresolved.

“As such, a program of infill and extension RC drilling is planned to address these opportunities.”