Astral Resources NL (ASX:AAR) earlier this week reported strong assay results from infill drilling at the Theia Deposit, part of the company’s 100%-owned Mandilla Gold Project about 70 kilometres south of Kalgoorlie in Western Australia.
The company said the program covered an 80 metre by 120 metre section of the Stage 1 pit and was drilled at a 12 metre by 12 metre spacing. It noted that the tighter drill density was designed to support a potential upgrade of the resource to the measured category.
Astral said the results continued to show strong correlation with the existing resource model and included intersections that were higher than the current resource grade. It added that the work has de-risked Stage 1 of the Mandilla pit as the company advances towards production.
Managing director Marc Ducler said the “starter pit will be a real moneymaker for us” and that two more sets of results are expected in the coming weeks.
The company also told investors it had signed a letter of intent with Mineral Mining Services to form a development partnership for the Think Big Gold Project. Astral said a scoping study is underway and that the project could generate between A$30 million and A$60 million in free cash flow.
It highlighted that these funds could supplement the capital required to develop a 2.75 million tonne per annum processing plant at Mandilla. The company added that it is seeking to reduce its equity component and attract large debt funding as it progresses toward a final investment decision.
Proactive: Astral Resources has posted the latest assay results from its recent drilling campaign at the Mandilla Gold Project. There’s a fair bit to go through this morning with the company’s Managing director, Marc Ducler. Marc, it’s good to see you again. How are you?
Marc Ducler: Likewise, very well. It’s a beautiful day. Things are going very well.
Proactive: It’s a beautiful day out here in Western Australia, and definitely a good one for Astral Resources. There have been high-grade gold intersections across those 16 holes from our understanding. What more can you tell us, Marc?
Marc Ducler: This is the third set of results we’ve released as part of this infill program. The program covers only an 80m by 120m panel of Stage 1, but we’ve drilled it down to a 12m by 12m density. That density should allow us to upgrade into the measured category, which is the highest level of resource confidence.
To date, the results continue to strongly correlate with our main resource estimate, and many intersections are significantly higher than the resource grade. We’re de-risking Stage 1 of the pit and demonstrating that, as we go into production at Mandilla, this starter pit will be a real moneymaker for us. We have another two sets of results expected over the coming weeks as this program has just been completed.
Proactive: In parallel, you’ve signed a letter of intent with Mineral Mining Services to form a development partnership for the Think Big Gold Project. Walk us through the details of this partnership and its importance for Astral at this stage.
Marc Ducler: Our primary focus is taking Mandilla into development. To do that, we need to fund a 2.75 million tonne per annum processing plant. Given the record gold price environment, we’ve identified an opportunity to monetise some of our other deposits that aren’t essential to Mandilla.
Think Big is a 30,000-ounce deposit. We’re working through a scoping study to assess the potential financials. There’s every chance the project could deliver between A$30 million and A$60 million of free cash flow. The aim is to have that arrive in time to help supplement the funding requirement for Mandilla as we move towards a final investment decision.
We’ve spoken previously about a peak negative cash flow of A$227 million in the pre-feasibility study. Typically, as you move from pre-feasibility to definitive feasibility, that number doesn’t go down. This is why demonstrating the ability to generate early revenue is so important — it reduces the equity component we’ll need. Combined with the large debt facilities we’re confident of attracting, this will further de-risk the development.
Proactive: Certainly quite a bit happening across multiple projects. Marc, we look forward to having you again soon to discuss all the latest from Astral Resources. Thank you so much for the updates.
Marc Ducler: Likewise, thanks for having me.