(MENAFN - ProactiveInvestors - Australia) Blackham Resources (ASX: BLK) has received initial results from its scoping level metallurgy testwork program at the Matilda Gold Project that shows an 87% average recovery from combined gravity and leaching test work on six composite samples from a range of ore types.
The average oxide recovery at the Western Australian mine was 92% and the sulphide/transitional average was 82%, with testwork ongoing to optimise the flow sheet and improve recoveries.
Previously the Matilda carbon in leach (CIL) plant processed 2.6 million tonnes of ore at 2.35 grams per tonne (g/t) at an 84% average recovery for production of 162,000 ounces of gold over a six year period.
Ore processed consisted mainly of oxide material, but around 500,000 tonnes of fresh and transitional ore was processed through the historical CIL plant.
In 1992, the final year of operation, 596,000 tonnes of ore was processed with an average recovery of 92%.
Testing was conducted on the six ore composites on a whole of ore leaching basis as well as a combined gravity/CIL basis.
In all cases the gravity/CIL process delivered higher recoveries, lower reagent consumptions and faster extraction kinetics.
The leach test work did not include activated carbon which is expected to further improve recoveries.
Development progress
Blackham has begun Mining Studies of the Matilda Mine. The initial metallurgical testwork and historical production and processing data provides confidence that it is technically feasible for a conventional gravity/CIL plant to process all types of Matilda and Williamson ore plus the oxide and transitional ore from the Regent deposit.
The 2005 Williamson Feasibility Study concluded all rock types at the Williamson deposit are free milling, and significant testwork was undertaken to confirm this.
The 664,000 tonnes of oxide and transitional ore was also processed through the Wiluna Gold Plant oxide and CIL circuit during 2005/2006.
Metallurgical test work has also been completed on the Regent deposit. This test work also confirms the oxide and transitional ore is free milling.
The Matilda Project resource has grown to 23 million tonnes at 1.9g/t for 1.4 million ounces of mainly shallow gold.
Free milling resources are estimated at 19.7 million tonnes at 1.8g/t for 1.16 million ounces of gold, or about 83% of the total resource.
The refractory resource at Regent is located within 10 kilometres of the Wiluna Gold Plant refractory circuit.
Development plan
As Blackham shifts its focus towards development, priority will be given to improving the confidence of resources and ultimately converting resources into reserves.
Infill and extension drilling programs are currently in progress around the M1, M3 and M4 deposits.
As part of this drilling program more sample will be collected for further prefeasibility metallurgical and optimisation studies. Following the drilling program resources will be re-estimated.
Blackham is also focused on completing a Scoping Study of the various options for development of the Matilda Gold Project.
The recent resource upgrade to greater than 1 million ounces gives Blackham a critical mass to reconsider putting a plant back at the Matilda Mine site.
The delivery of the recent upgrade also now allows the mining economics to be evaluated for the combined deposits.
The three main mining centres within the project are all within 10 kilometres by existing haul roads of the old Matilda plant footprint and its infrastructure, and 26 kilometres by existing haul roads of the Wiluna Gold Plant.
The Scoping study is expected to be finalised by the end of October.
Analysis
Blackham has a tight capital structure with a market cap of around 12 million, which places it at less than 10 per ounce of gold resource and significantly undervalued relative to its peer average.
There is also an exploration target of 0.5 to 2 million ounces at Matilda which drilling could increase the current resource.
In less than 12 months Blackham has grown the Matilda Project resource by over 350%.
As importantly, the company has alternatives to become a producer in the short term now it has a critical mass of gold resources.
Options include processing ore through the Wiluna Gold Plant, which provides a low capital cost, near term development option, with all deposits and stockpiles within 26 kilometres of the plant by existing haul roads.
Or the use of a 350,000 to 500,000 tonne per annum mobile plant at Matilda Mine. Another option could be to acquire a 600,000 to 1 million tonne per annum second hand plant, which would allow higher throughput and production.
With a significant gold resource, paths to production and demonstrably undervalued we believe Blackham will move closer to 0.30 given the catalysts ahead to change the current valuation.
