Carnavale Resources Ltd (ASX:CAV, FRA:YBB) spoke with Proactive last week about an upgraded mineral resource estimate for its Kookynie Gold Project in Western Australia, increasing confidence in the shallow, high-grade portions of the deposit as the company advances towards a bankable feasibility study.
Managing director Humphrey Hale told Proactive that the updated estimate was specifically designed to increase the proportion of measured resources within the proposed open-pit development area.
Hale said the resource had increased from approximately 117,000 ounces to 120,000 ounces at an average grade of 4.4 g/t gold. More importantly, the revised estimate strengthened confidence in a high-grade core within the deposit, containing around 56,000 ounces at an average grade of roughly 29 g/t gold.
According to Hale, this bonanza-grade component has the potential to significantly enhance project economics. He noted that the company was considering an ore purchase arrangement whereby mined material could be transported to a nearby processing facility rather than requiring the construction of a standalone processing plant.
Hale said that processing the highest-grade material separately could improve ounces recovered through the mill and support stronger financial outcomes. He described the high-grade core as a particularly attractive feature of the project.
The company believes substantial value already exists within the project. Hale highlighted previous study work that demonstrated strong free cash flow potential and noted that current gold prices are significantly above the assumptions used in earlier economic evaluations.
A key catalyst for investors will be continued progress towards development and production. Hale indicated that Carnavale could potentially move towards production relatively quickly, subject to development timelines and approvals.
Further resource growth also remains a potential catalyst. Hale said the Kookynie tenements continue to demonstrate exploration upside, with opportunities to expand mineralisation both along strike and down dip.
The upgraded resource strengthens the foundation for future feasibility work and supports Carnavale's strategy of advancing a potentially low-capital development pathway through third-party processing arrangements.
With gold prices remaining strong and confidence in the high-grade resource increasing, investors are likely to watch closely as the company progresses towards its next development milestones.
Key highlights
- Carnavale Resources has upgraded the mineral resource estimate at the Kookynie Gold Project.
- Total resource increased from approximately 117,000 ounces to 120,000 ounces.
- Average resource grade stands at 4.4 g/t gold.
- High-grade core contains around 56,000 ounces at approximately 29 g/t gold.
- Updated estimate increases confidence in shallow, high-grade portions of the deposit.
- Company is evaluating an ore purchase arrangement with nearby processing facilities.
- High-grade material could significantly enhance project economics.
- Gold price strength improves project value compared with previous study assumptions.
- Carnavale is progressing towards development and potential production.
- Additional exploration upside remains along strike and at depth across the project tenure.
Proactive: Welcome back to Proactive Investors. I'm your host, Kerry Stevenson, on location at the Gold Coast Investment Showcase. I managed to catch up with Humphrey Hale, managing director of Carnavale Resources. I've spoken to Humphrey before regarding the company's gold project in Western Australia. What's the latest news?
Humphrey Hale: We've just released a revised mineral resource estimate, which was designed to build measured resources rather than indicated resources within the proposed open pit. We've increased the resource from around 117,000 ounces to 120,000 ounces at an average grade of 4.4 grams per tonne.
Importantly, within that resource there's a core of bonanza-grade material containing approximately 60,000 tonnes for 56,000 ounces. That's an improvement to around 29 grams per tonne, which is fantastic and highly profitable due to the grade.
Proactive: With grades that high, is that material typically blended with lower-grade ore?
Humphrey Hale: It could be. Our current plan is to treat the ore through an ore purchase arrangement. We would mine both oxide and fresh material and transport it to a nearby processing mill. The highest-grade material would likely be processed as a separate parcel, helping improve ounces processed through the mill.
Proactive: That sounds attractive under an ore purchase arrangement and potentially for a company looking to acquire the project to improve its production profile.
Humphrey Hale: Absolutely. While it is a relatively small project, the value is already there. We currently have a market capitalisation of around $40 million, while previous studies indicated significant free cash flow potential. Gold prices are now considerably higher than the assumptions used in those studies.
We should be moving towards production relatively soon and, if everything progresses well, potentially by the end of the year. Beyond that, the tenements remain highly prospective and there is still upside both along strike and down dip, providing opportunities to further increase the value of the Kookynie asset.
Proactive: Great to chat with you here at the Gold Coast Investment Showcase. Humphrey Hale, Managing Director of Carnavale Resources.
Humphrey Hale: Thank you very much.