ASX-listed gold explorer Middle Island Resources has set about the task of further increasing the overall gold resource inventory at its multi-deposit Sandstone project in WA as it looks to improve the economic feasibility of recommissioning the old Sandstone processing plant. To help kick things along the Perth-based company says it decided to extinguish the legacy two per cent net smelter return royalty that was hanging over Sandstone by paying Troy Resources $250,000.
Management says this means forecast operating costs for a proposed project development at Sandstone fall by about $4 million.
Middle Island also unveiled a modest increase in the small open-pit Eureka indicated and inferred resource near the Sandstone treatment plant following infill and extensional drilling this year.
The company sees Eureka as a possible early ore feed candidate given its close proximity to the plant – only 1km to the west. Its resource estimate now stands at 561,000 tonnes grading an average 0.9 grams per tonne for 16,200 ounces of contained gold, using a 0.5 g/t cut-off grade.
As a result, Sandstone’s global open-pit gold resource base – made up of almost a dozen satellite deposits – rises to an indicated and inferred 7.94 million tonnes at 1.1 g/t for 284,300oz of contained gold.
Middle Island has launched a first-pass auger drilling program totalling about 3,000m aimed at testing five near-mill geochemical anomalies including about 12km of largely under-explored “prospective” greenstone belt.
The 12km sector of greenstone belt takes in the Jew Well Central prospect, 10km south of the Sandstone plant, and the nearby Jewel Well North prospect.
Much of the gold mineralisation in the Sandstone region lies under transported cover, according to the company.
Middle Island says it intends undertaking infill auger, aircore and RC drilling in due course to follow up any targets identified in the initial auger drilling geochemical survey.
Extensional and infill resource definition drilling is also planned on several existing deposits at the Sandstone project, about 12km south of Sandstone in WA’s East Murchison mineral field.
Management hopes to generate at least an additional 25,000oz in resources either via its own exploration efforts, third-party toll treatment arrangements to secure above 1.5 g/t head grade material, an asset acquisition or corporate deal.
Middle Island’s recently completed feasibility study pointed to an operation underpinned by 2Mt of mill inventory at a head grade of 1.32 g/t gold with a weighted average gold recovery of 92.9 per cent culminates in total gold production of 81,500oz.
The economic outcome of the FS on resurrecting Sandstone was deemed marginal at this juncture.
A corporate transaction of sufficient scale may provide the catalyst for the recommissioning of the Sandstone plant and possibly an expansion in the mill’s ore throughput capacity from 600,000 tonnes per annum to 750,000tpa, which would help lower operating costs.
The company says it is discussing “mutually attractive” milling or corporate possibilities with other explorers in the region.
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By Matt Birney
