(MENAFN- ProactiveInvestors - Australia) Blackham Resources (ASX:BLK) is another step closer towards bringing its 4.3 million ounce Matilda Gold Project in Western Australia into production after securing the environmental licence.
The Department of Environment and Regulation had transferred the Environmental Protection Act 1986 licence to Matilda Operations Pty Ltd, a wholly-owned subsidiary of Blackham.
This primarily allows for the processing of ore, mine dewatering extraction and discharge plus other activities required for the operation of the site.
Blackham's entire 4.3Moz resource is located within a 20 kilometre radius of its 1.3 million tonne per annum Wiluna Gold Plant.
It is focused on the free-milling resources which it intends to process through the established low risk circuit at the plant of crushing, grinding, gravity and carbon in leach.
The ability to use the plant in its current location considerably reduces the cost of developing the free-milling open pit Matilda deposits.
Blackham has advanced its mining and processing studies further during the June 2014 quarter to convert a critical mass of robust reserves from the 4.3Moz of resources which includes 2Moz of resource to an Indicated Resource level of confidence.
It has received strong interest from a number of debt and equity funders with a view to funding the Matilda project through to production.
On finalising the development funding, the company believes it should have the Matilda Gold Project in production within 15 months.
Galaxy Deposit
During the June 2014 quarter, Blackham completed its second drill campaign at the Galaxy deposit which has an Inferred Resource of 52,000oz of gold.
This returned numerous high grade results including 9 metres at 13.4 grams per tonne gold and 2 metres at 28.9g/t gold, providing confidence that the Galaxy Deposit will be suitable feed for re-starting the Wiluna Plant.
It also provided additional confidence in the geological understanding of mineralisation controls.
High-grade mineralisation remains open down-plunge and is high priority for future exploration drilling.
Metallurgical testwork on the Galaxy deposit has commenced.
Matilda Mining Centre
Blackham has also intersected broad zones of high grade gold down plunge of the M1 West Lode that is attractive to underground mining and importantly show good continuity of thickness and grade.
A hole at the Matilda M4 north deposit shows potential for the start of another shallow high grade zone of mineralisation plunging to the north.
This shallow high grade zone of mineralisation increases the potential of future pit optimisations to extend both further north and deeper.
However, further infill and deeper drilling is required prior to re-examining the open pit economics.
Priority Targets
Blackham has also been working diligently through the historical drill and mining databases with targeted field work to identify free-milling gold targets within open pit or shallow underground depths and in close proximity to the Wiluna Plant.
This has resulted in the identification of a number of high grade quartz reef targets within 5 kilometres of the plant.
Early gold production in the Wiluna district came from quartz reefs, exploited at shallow depths where supergene enrichment of gold grades occurred and water ingress was manageable.
Historical production indicates these quartz reefs are free-milling with good recoveries and low processing costs.
Analysis
Blackham Resources is another step closer towards starting production at its Matilda Gold Project after the Western Australia Department of Environment and Regulation transferred the Environmental Protection Act 1986 licence to Matilda Operations Pty Ltd, a wholly-owned subsidiary of Blackham.
This builds on the March 2014 acquisition of the Wiluna Gold Plant and infrastructure, which is unlocking the inherent value in the Matilda Gold Project.
Matilda is well located with low relative sovereign risk in Australia and the company is positioned for new discoveries and economic development of existing resources.
Notably, the existing plant and infrastructure reduces risk and provides a low capital and high return opportunity.
The entire 4.3Moz resource also sits within a 20 kilometre radius of the 100%-owned plant, providing development options as well as potentially low operating costs.
In addition, recent resolution of corporate and shareholder changes has removed this as an impediment to investors.
Share price catalysts ahead:
- Exploration to discover new priority high grade targets;
- Conversion of Resources into Reserves;
- Finalising development funding for Matilda.
Blackham has a market cap at circa $20 Million, or less than EV $5/oz gold resource making it undervalued relative to a majority of Australian gold peers on an Ev/oz basis.
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