A coarse gold deposit where the first shovel pays is an ore body discovery that most juniors can only dream about. But Perth based company ABM Resources have found that just in the Northern Territory desert.
The company acquired the tenement, 700 km north west of Alice Springs, from Newmont in 2010 and have been pushing to develop a mine there ever since with a bulk trial set to start in July.
With no debt and little capital expenditure required to move the project into development, managing director of ABM, Darren Holden, said the company was in a great position.
Holden said the current downturn in the gold market, which has seen jobs lost and projects being scaled back, would not affect Old Pirate in the same way it had crippled other projects.
“We remain resilient,” he said.
“Investment in the gold sector in general in Australia is pretty ordinary at the moment."
But Holden said the high-grade ore body was what set ABM apart from its competitors.
“We have a high-grade system and a high-grade open-cut system should be able to survive the troughs and ride the highs of the gold market.”
With a high grade deposit, an open pit with no pre-strip, and gold that liberates easily via gravity methods, Holden said the Old Pirate had key engineering advantages that give it a leg up on other gold development plays.
“Because we have coarse gold it recovers very well on gravity separation which means we won’t need additional capital expenditure on cyanide or treatment plants so we can essentially have a modular based system there,” Holden explained.
And because the ore is so close to the surface, it puts ABM in an even better position.
“We get to mine ore before we mine waste which is unusual in the modern era.”
What is also different about this discovery is that the company has opted to not undertake a full feasibility study and will rely on the bulk trial mining process to increase confidence and understanding around geology, thickness, grade distribution and metallurgical characteristics.
Holden is confident that the completion of the 10,000 tonne bulk sample will produce 3000 ounces of gold.
Holden said this new approach was not asking investors to take a leap of faith.
“We argue that investors take a leap of faith with a bankable feasibility study anyway,” Holden said.
“Whilst they may like to see things written down in black and white, rarely, around 25 – 30 per cent of the time that those numbers are achieved anyway.”
“People have a sense of reliability to feasibility studies which aren’t actually true.”
Holden said producing results via a bulk trial was a better fit for the ore body at Old Pirate.
“It’s basically responding to the style of the system and the fact that we have relatively low engineering risk with it being right there at surface and low expenditure on that,” he said.
“It’s far cheaper to do a bulk sample and we’ll produce far more information than we would to doing a full feasibility study”
Following the completion of the trial bulk sample, ABM will look to move to open pit mining using the same plant, albeit scaled up.
“Stage two is essentially continuing mining for up to a 2- 3 year period with the same plant that we use for the trial,” said Holden.
“There will be some mining modifications and some continual upgrades and we’ll have to expand the plant.
“But it’s not like we are getting rid of the trial plant and brining in something new, we’ll just be continuing on with that and it’s scoped at around 100 -150 thousand tonne plant.
“The only difference between stage one and stage two is the mineral licence.”
And with no strategic partner need to scale up to stage two, ABM is promising to be one of the good news stories of juniors operators in Australia.
“We’ll be producing money right away and we don’t carry any back debt,” he explained.
“We can fund stage two from the proceeds.”
Holden said that while the tenement was in a remote area, infrastructure constraints would not hamstring the development of the mine.
“Gold is a perfect product for this remoteness,” he said.
“It’s isolated and remote which causes challenges but none of which are insurmountable,” he said.
“Infrastructure-wise we can drive to this year-round.
“Water is not a problem as there is plenty of ground water in the area and there are no other competing sources.”
Holden said while generators and fuel would need to be brought in to help run the bulk plant, getting the gold out would not be an issue.
“You don’t need a railway to ship gold,” Holden said.
“We put our product on an aeroplane and sell it to the person within hours of it being poured
Holden says to find such a deposit in the modern era was a scarce find.
“If this was in Western Australia it would have been mined one hundred years ago.”
“To get an old-time discovery in the new era is very rare.”