Gold prices have been hovering at seven-year highs in 2020 as investors take advantage of its safe haven status. What does this mean for Middle Island Resources? Australian Mining finds out.
Western Australian-based explorer Middle Island Resources is coming off a busy first half of 2020 as it progresses the Sandstone gold project in the East Murchison mineral field.
Since April, Middle Island has unearthed the McClaren, McIntyre, Old Town Well, Plum Pudding and Ridge deposits during extensive reverse circulation drilling.
The company’s impressive results include four metres at 99.5 grams per tonne at Ridge, 24 metres at 1.66 grams per tonne at McIntyre and three metres at 3.72 grams per tonne at Plum Pudding.
Middle Island‘s exploration success is part of a 17,500-metre drilling campaign that it scheduled for the first half of the year.
The drilling focussed on discovering new open pit mineral resources to contribute to a pre-feasibility study.
These results set up Middle Island’s strategy of becoming a gold producer, which as a junior, can be a challenging step to take.
Middle Island Resources managing director Rick Yeates says the journey to becoming a gold producer can be difficult, but the path ahead is well laid out by previous companies in the same position and is currently boosted by high prices.
“There is certainty in the Australian gold space with the Australian dollar gold prices having been so strong,” Yeates tells Australian Mining.
“It’s certainly looking very positive still, being exposed to an Australian gold price as opposed to United States prices is an advantage.
“In Australia, we are also blessed to have a path cut in our space by very successful mid-tier gold producers, which gives us a solid model to follow.”
Middle Island knows the advantages of producing gold in Australia after starting life as a company in West Africa.
Despite taking advantage of opportunities in West African nations, Middle Island shifted focus to Australia after facing sovereign and security challenges.
In addition to the pricing opportunities Australia offers, Yeates notes the reduced travel time to visit projects that helps Middle Island make the most of complete ownership of the Sandstone project.
“Australia is as good a place as any to be,” he says. “To be able to drive for eight hours to visit your site instead of sitting on a plane for 36 to 40 hours is a pleasant change.”
The Sandstone project also has the convenience of existing infrastructure on site, such as a 6000-tonne-per-annum processing plant, which is currently on care and maintenance as part of a pre-feasibility study.
There is also a permanent tailings storage facility with a live permit and a water obstruction licence for 650,000 cubes per annum to power the processing plant.
Other existing infrastructure includes a power station, fuel tanks, mine offices, warehouses and workshops, which are in serviceable order. In the Sandstone township, there is also an accommodation camp for a workforce of 100 people.
With Sandstone all but ready to go, the next step is refurbishment work to some infrastructure, mobilising contracts and pre-production mining, which are all on the cards in 2020.
“The required pre-production mining will take about the same length of time as the refurbishment of the plant,” Yeates explains. “So, we are looking to complete these tasks concurrently.
The project’s feasibility is looking promising for Middle Island, with the company testing 14 targets in 2020, including at the McClaren, McIntyre, Old Town Well and Plum Pudding deposits.
Demonstrating these positives to investors and the wider market is essential in being a successful junior company, Yeates explains.
“One of the issues is the junior equity markets have been very challenging for about five years,” he says.
“There is certainly a limitation for junior companies being able to raise the capital and one of the other challenges is there is some nervousness about projects like this, where junior companies are recommissioning or commissioning projects.
“This is a risk we are conscious of and are doing everything we possibly can to mitigate. There is plenty of exploration potential within the project and the fact we’ve already had success, it is looking very positive for us.”
While Middle Island has already experienced tangible results, the company’s eyes are always looking ahead to the next opportunity, even the potential of building a processing hub at the site.
“We’re keen to crawl before we walk and are very happy with the plant we’ve got for now to get us on the road,” Yeates says. “But there is further opportunity to consolidate the broader district around Sandstone and become a processing hub.
“We’ve got the only processing plant for 150 kilometres and have identified up to approximately 1.8 million ounces in 13 to 15 deposits within that radius.
“Should we be successful there is every possibility to become a district hub and extend our production profile further.”
While this ideal future for Middle Island would position it to capitalise on its Western Australian assets, the company’s future is not limited to the west.
Middle Island has also acquired a copper-gold project in the Northern Territory, comprising 10 exploration licenses that provide it with opportunities for future partnerships.
“The new project in the Northern Territory is the second arrow to our quiver,” Yeates says.
“This copper-gold project is chasing Tier 1 targets similar in composition to Olympic Dam, Carrapateena and Prominent Hill.
“This has been identified from collaborative government research and we’ve got some very prospective ground and geology beneath the Georgina Basin between Tennant Creek and Mt Isa.”
With an exciting portfolio of opportunities and clear goals, Middle Island looks on track to reach production in the 2021 calendar year, notwithstanding delays because of the coronavirus pandemic.
Yeates says the company expects to be in a position to make a decision on recommissioning in the middle of 2020.
“If refurbishing, mobilisation and pre-production goes to plan, we could be in early production in 2021. Despite the coronavirus pandemic we are operating fine, being regarded as an essential service and if you’re going to be isolated, it may as well be at a place like Sandstone,” he concludes.
This article also appears in the August edition of Australian Mining.