THE INSIDE STORY: Intermin Resources (ASX: IRC) is a gold exploration and mining company focussed on developing and operating gold mines within the Kalgoorlie and Menzies areas of Western Australia.
Intermin Resources currently has $8.5 million in the bank, carries no debt, and has a further $1 million in investments.
Intermin’s strategy is to develop a pipeline of gold mining projects to generate cash and self-fund aggressive exploration, mine developments and further acquisitions.
A strategy that was put to effective use at the Teal gold mine, from which ore was processed at the nearby Lakewood toll milling facility.
“We started the Teal gold mine late in 2016 and poured the last gold at that operation in May 2018,” Jon Price told The Resources Roadhouse.
“Teal was forecast to produce around 18,000 to 19,000 ounces of gold but produced 21,836 ounces.
“The development and operation of the Teal mine was a perfect example of our strategy to generate cash from developing and operating mines while using third party infrastructure in the region.”
The 100 per cent-owned Goongarrie Lady gold mine 85km north of Kalgoorlie-Boulder has been designated as Intermin’s next venture.
A scoping study for Goongarrie Lady in April 2017 was followed up with infill drilling to increase geological knowledge and confidence in the project.
A Feasibility Study followed, delivering an updated JORC 2012 Mineral Resource Estimate for Goongarrie Lady of 0.31 million tonnes at 2.4 grams per tonne gold for 24,000 ounces with over 87 per cent of the Mineral Resource Estimate sitting in the Measured and Indicated categories.
A maiden Ore Reserve estimated 0.135 million tonnes at 2.94g/t gold for 12,700 ounces.
The FS included metallurgical test work on representative samples from all ore zones achieving estimated recoveries of 94 per cent.
The Goongarrie Lady FS found the project to be technically strong and financially viable with specifications including an openpit mine designed to produce 135,000 tonnes at a fully diluted grade of 2.94g/t gold for 12,700 ounces over a seven month mine life.
Third party milling at 94 per cent metallurgical recovery has been estimated to recover 11,938 ounces of gold while capex is low at $0.73 million with C1 Costs of $1,131 per ounce and All In Sustaining Costs of $1,164 per ounce.
“The Scoping Study established around 10,000 to 15,000 ounces of gold with all in costs around $1100 to $1200 delivering a profit margin of around $500 per ounce,” Price said
“Three months to first gold and then the mine will be done and dusted within seven months, depositing some five to six million dollars in the bank, based on a $1,700 per ounce gold price.”
Next up for Goongarrie Lady is completing already well-advanced statutory approvals by the September and December quarters and a review of development options and negotiations with mining and haulage contractors and third-party toll milling operators leading to anticipated Board approval for mine development in 2019.
“The Feasibility Study gave us robust economic results with strong projected cash margins and reduced geological risk for the project,” Price said.
“As with the Teal gold mine, we have taken a conservative approach at Goongarrie Lady regarding both Resource estimation and development studies with infill drilling increasing geological confidence and mine optimisation studies adopting conservative cut off grades to ensure acceptable cash margins.”
With Goongarrie Lady development progressing, Intermin is casting its discovery net wider, commencing with a Resource growth drilling program of 55,000m planned within a $4 million budget.
A combination of RC and diamond drilling is underway with the stated aim to grow Resources and Reserves to one million ounces of gold to underpin a higher production profile and support a standalone milling option.
Fifty percent of the drilling budget is allocated to new discovery drilling and 50 per cent on Resource growth to grow the current Resource base.
“We are working to grow the business to where we want to see ourselves in 18 to 24 months, holding emerging mid-tier status producing 100,000 ounces per annum, with a four to five-year mine plan,” Price said.
New discovery targets include the Blister Dam project area, Anthill east and Fire Ant and new targets within the Teal gold camp.
Resource growth drilling will focus on extensions along strike and at depth at Anthill, Teal and the new Jacques Find discovery.
“The 25,000 metres of drilling at Teal has indicated four multiple, parallel structures sitting within a six-kilometre strike window,” Price continued.
“We now know this is a very big system, from which we expect a continuous flow of drilling results and Resource updates and mine planning as we look to understand how big this system is, particularly at depth.”
“We are conducting 14,000 metres of drilling at the Ant Hill mine to extend strike from the from the 80,000 ounces of Resource we have now to over 100 metres strike,” Price said.
“We anticipate extending to over 400 metres of strike and increasing the Resource by the same multiplication factor, but we have to let the drill bit tell us that.”
Intermin’s December quarter will be all about new discoveries at Blister Dam where the company will be drilling an area not drilled since the 1990s.
“There are not a lot of drill holes below 80 metres and where we have started to put some tester holes we are already hitting some very good grades,” Price said.
Besides its gold interests, Intermin has several Joint Ventures in place across multiple commodities and regions of Australia providing exposure to vanadium, copper, PGE’s, and nickel/cobalt where the JV partners are collectively earning in to projects by spending over $20 million over five years, thus enabling the company to focus on its gold business while maintaining upside leverage.
The most advanced of these is the Richmond vanadium project in northwest Queensland with a total Mineral Resource of 2,579 million tonnes at 0.32 per cent vanadium oxide (V2O5) at a 0.29 per cent cut-off.
JV partner AXF has committed to the project’s stage 2 expenditure of $5 million over three years to March 2021 inclusive of a Feasibility Study on commercial production to qualify for a 50 per cent interest.
In late 2017, AXF collected approximately 1.2 tonnes of vanadium samples from the Lilyvale prospect area sent to two research laboratories in China: Beijing General Research Institute of Mining and Metallurgy (BGRIMM), and Hunan Research Institute for Nonferrous Metals (HRINM).
Both Institutes account for over 60 per cent of test work conducted on vanadium in China jointly developed using AXF’s in-house expertise.
Metallurgical work on Lilydale samples confirmed previous work where 90 per cent of the contained V2O5 reported to the fine size fractions below 43 microns.
Initial two-stage concentration tests resulted in a 1.1 per cent V2O5 grade in 39 per cent of the mass at a 78.4 per cent recovery.
Work is now underway to optimise the pre-concentration stages with the aim of delivering a 1.5 per cent to two per cent V2O5 feed stock at acceptable recovery for downstream processing testwork.
“Results such as these from two highly-credentialed research institutes in China was a great result for the project,” Price said.
“We are now working with AXF on the downstream processing studies and upgrading the Lilyvale resource.”
Intermin Resources Limited (ASX: IRC)
…The Short Story
163-167 Stirling Hwy
Nedlands WA 6009
Ph: +61 (8) 9386 9534
Peter Bilbe, Peter Hunt, Jon Price