viewBlackham Resources Ltd

Blackham Resources poised to expand Matilda-Wiluna Gold Operations in 2020

The company’s gold operations are supported by reserves from the Matilda, Wiluna and Williamson open pit mines and the Golden Age underground mine.

Blackham Resources Ltd - Blackham Resources poised expand Matilda-Wiluna Gold Operations in 2020
Blackham is producing gold at its Western Australian operations

Blackham Resources Ltd (ASX:BLK) enjoyed a solid performance in the December quarter at its Matilda-Wiluna Gold operation in Western Australia and has expansion plans underway for 2020.

Gold production for the quarter was 20,000 ounces, up from 17,565 ounces in the September quarter, with annual production and cost guidance maintained at 70,000-80,000 ounces at ASIC of $1,550 to $1750 per ounce.

Total mined grade for the December quarter was 2.4 g/t compared to 1.6 g/t previously reflecting higher than expected grades.

Demand has continued to be strong for the offtake of gold concentrate with numerous parties making preliminary offers to Blackham.

The final negotiations with up to three to four of the prospective offtake partners are planned to take place in early 2020.

Wiluna statistics

Mill throughput in the December quarter was lower at 370,000 tonnes compared to 420,000 tonnes, mainly due to a higher proportion of transitional and fresh material being processed.

However, rod mill refurbishment is expected to provide throughput benefits of around 20% by the end of January.

Oversized mill scats stockpiles are being processed to supplement production as the company invests capital into establishing new mines at the Matilda and Wiluna mining camps.

The company estimates it will have processed 80,000 tonnes of scats at an average head grade of 1.5 g/t by the end of the program.

Feasibility studies are ongoing for the Golden West Resources (ASX:GWR) Joint Venture with Blackham to mine the Wiluna West Gold Project.

Expansion plans

Blackham completed the stage one expansion study with gold production rates indicated to be an average of 110,000 ounces per annum from FY22 to FY27.

Preliminary mining schedules have been completed and significant exploration programs are being planned to add reserves and further enhance the mining schedule.

Next steps toward implementation of the stage one expansion project include:

  • Execution of exploration programs to enhance the stage one expansion mine plan;
  • Consolidation and strengthening of the management team who will progress the project through to production;
  • Finalisation of key contracts for mining operations and the construction of the concentrator and filtration plant; and
  • Finalisation of offtake and logistic agreements.

Board approval for stage one will be sought during the March quarter subject to the finalisation of funding, with Blackham seeking credit approval for the $40 million debt funding package that it has received an indicative term sheet for.

The company intends to perform a share consolidation in due course.

Sulphide reserves

The company is planning a major drill program to improve and lengthen sulphide reserves during 2020.

As it stands, Wiluna is endowed with a large underground sulphide resource that stands at 18.5 million tonnes at 4.82 g/t for 2.9 million ounces.

The engineering design for the sulphide flotation plant is complete with the construction of the concentrator and filtration plant expected to take 11 months from approval.

Golden Age production

The Golden Age Underground mine delivered 4,043 mined ounces in the quarter, compared to 4,958 ounces in the previous quarter, with production hampered by poor equipment reliability.

Blackham decided to mobilise new hire equipment, demonstrating the company’s commitment to test extensions to sustain production at around 10,000 tonnes per month and scale-up production over the next 12-18 months.

Drilling is underway targeting high-grade, free-milling ore bodies at Golden Age.

Williamson progressing

Mining at Williamson progressed in the December quarter with first ore accessed and construction of Tailings Storage Facility K advanced.

In October the Lake Way transaction with Salt Lake Potash Ltd (ASX:SO4) was completed to further Williamson open pit pre-production activities.

On December 31, $3.5 million of the total $10 million contribution was paid, a further $1.9 million was paid in January 2020 and Blackham expects that the remaining $4.6 million contribution will be paid in the current financial year.

During the quarter, Salt Lake also exercised its option to acquire the Southern Borefield infrastructure for consideration of $3 million – which is payable before 30 June 2020.

Further pre-stripping at Williamson is required this quarter to deliver steady-state ore from the June quarter and to become the base load source of free milling ore for the mill.

Balance sheet

As at December 31, 2019, Blackham had $5.7 million in cash and bullion.

The company’s strong operational performance contributed to the continued balance sheet repair with total debt reduction at $9.2 million, and total trade and other payables reduced by $11.7 million over the six months ending December 2019.

Net debt at December 31, excluding the MACA Working Capital Facility, was $1.0 million compared to $2.4 million in the September quarter.

Next quarter

This quarter will require further investment to enable the company to achieve stronger production in the June quarter and maintain cash flow generation from the free milling operations during the transition to sulphide operations in FY21.

This will include investment in:

  • Pre-stripping activities at the Williamson and Wiluna mining areas to improve availability of high-grade ore;
  • Construction of the Tailings Storage Facility K; and
  • Accessing high-grade ore sources from the surface at new Wiluna open pits, extensions to the underground operations and existing stockpiles.

Quick facts: Blackham Resources Ltd

Price: 0.009 AUD

Market: ASX
Market Cap: $52.96 m

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