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Blackham Resources Comes Up Trumps With Low Cost, High Return For Matilda

Blackham Resources (ASX: BLK) has shown high financial returns of 300% and low capital outlay for its Matilda Gold Mine in Western Australia in an initial Scoping Study, which does not include pending resource upgrades.

The study, which was prepared by Entech Mining, assumes the ore will be processed through Apex Minerals' nearby Wiluna Gold Plant, which is just 19 kilometres by existing haul road from the Matilda Mine.

Processing via the Wiluna Plant provides a very low capital option of $10 million which leads to a short payback period of seven months and a very high internal rate of return of 300% due to strong cash flows.

Importantly, the study has not factored in pending resource upgrades which will add further upside to the project.

Net operating cash flows are tipped to be $74 million, based on a gold price of A$1,667 per ounce gold price, and the mine has a net present value of $52 million.

This initial mine plan at the Matilda Mine is based on mining and processing 2.45 million tonnes at a head grade of 2.11 grams per tonne (g/t) over 4.1 years. This equates to 150,000 ounces of gold production.

C1 cash costs for the Wiluna Plant option are forecast to be around $1,039 per ounce, but could be reduced to $942 per ounce if Blackham decides to instead build an 850,000 tonne per annum plant at the Matilda site.

The reduction in costs is due mainly to the elimination of the processing margin and above ground haulage.

A Matilda Plant could be used to process all of the free milling ore including that from the Williamson and Regent deposits.

Blackham now plans to re-evaluate the mining economics on the Matilda Plant option after updating the resources for recent positive Matilda drilling results, and assess the economics of processing Williamson and Regent deposits.

Pacer Corporation has been engaged to assess the requirements and costs of installing a gravity and carbon in leach plant on the existing Matilda plant site.

Bryan Dixon, managing director, commented: "We are very encouraged by the results of the Matilda Scoping Study.

"When we acquired the Matilda Mine a year ago there were only 80,000 ounces of gold resource. With very limited expenditure we have moved the Matilda Mine forward very rapidly with the Scoping Study demonstrating robust economics.

"With further drilling of the stacked gold lodes at the Matilda Mine we expect further improvement to these economics."

Resource upgrade

Blackham recently completed an infill and extension drilling program at the Matilda Mining Centre, focusing on the M1, M3 and M4 deposits.

A total of 3,200 metres of reverse circulation drilling was completed.

Latest results from this drilling have defined further high grade zones of mineralisation with highlight intercepts of 10 metres at 5.47g/t from 120 metres, including 2 metres at 12.4g/t; and 5 metres at 5.3g/t from 125 metres, including 1 metre at 20.4g/t.

These results have extended mineralisation about 50 metres down dip.

Together with the earlier reported intercept of 31 metres at 2.32g/t, Blackham has identified a gently plunging, high grade shoot with a strike of about 200 metres that remains open at depth.

Many of the holes from this program returned thicker and higher tenor results than intercepted by previous explorers closer to surface, possibly indicating depletion zones in the weathered profile.

Blackham now plans to update the resource model to determine what effect the new results could have on the open-pit mining economics.

The current resource stands at 23 million tonnes at 1.9g/t for 1.4 million gold ounces, which includes 12 million tonnes at 1.7g/t for 683,000 gold ounces at the Matilda Mining Centre.

The high grade nature of the new drilling results may also support an underground mining operation which the company also plans to investigate soon.


Key metrics from the initial Scoping Study for the Matilda Mine are extremely favourable, providing for a low capital cost and substantially high returns.

These returns could be further enhanced with an impending update of the resource given recent strong drilling results.

Blackham started with an acquisition resource of 80,000 ounces and has rapidly grown the Matilda Project resource to 1.4 million ounces.

There is also an exploration target of 0.5 to 2 million ounces at Matilda, with drilling to potentially increase the current resource.

As importantly, the company has alternatives to become a producer in the short term now it has a critical mass of gold resources.

Options include processing ore through the Wiluna Gold Plant, which provides a low capital cost, near term development option.

The other option is to build an 850,000 tonne per annum plant on the old plant site at the Matilda Mine, which has the potential to reduce C1 cash costs.

Blackham has a tight capital structure with a market cap of around $10 million, which places it at less than $10 per ounce of gold resource and significantly undervalued relative to its peer average.

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