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Blackham Resources High-Grade Gold Grows Free Milling Confidence At Matilda

Maiden drilling at the Williams deposit of Blackham Resources' (ASX:BLK) Matilda gold project in Western Australia has resulted in discovery of a new lode with one 2-metre intercept at 95g/t gold.

The recently completed program has confirmed the presence of a new shallow high-grade zone of oxide mineralisation along the western flank of Williamson, which extends into the Pre-Feasibility Study pit design which is likely to improve the pit's economics.

The drilling has also successfully infilled the southern extensions of the resource to a spacing that is likely to support an Indicated resource classification.

Mineralisation at Williamson remains open to the north and south and down dip in the new oxide lode.

Intercepts from the exploration have included:

- 2 metres at 95.14g/t gold from 33 metres
- 1.45 metres at 5.73g/t gold from 70 metres
- 7.78 metres at 2.15 g/t gold from 124 metres
- 16.65 metres at 1.09 g/t gold from 201 metres
- 5 metres at 4.25g/t gold from 153 metres
- 3.7 metres at 7.40g/t gold from 78 metres

These results are expected to expand and add further confidence to the free milling, open pit mining inventory prior to the planned recommissioning of the Wiluna Gold Plant in 2016.

Williamson is a bulk-tonnage gold deposit with geological similarities to Saracen Mineral Holdings' (ASX:SAR) Thunderbox and Gold Road Resources' (ASX:GOR) Gruyere elsewhere in the Yilgarn region.

Whilst the overall grade of the Williamson resource is modest, 6.3 million tonnes at 1.7g/t for 350,000 ounces of gold, the relative large tonnage typical of this style of mineralisation is an attractive exploration and development target for ensuring a sustainable base load mine plan for the Wiluna Gold Plant.

Blackham's drilling and mining studies have been focused on adding further confidence as well as extensions to the Matilda Gold Project resources totalling 44 million tonnes at 3.3g/t for 4.7 million ounces of gold.

Recent progress

Blackham has marked significant momentum at Matilda in recent weeks, with the discovery earlier this month of new high-grade extensions in a deposit only 13 kilometres from the plant expected to sharpen project economics.

Definitive Feasibility Study drilling in the high-grade Galaxy deposit returned 12 metres at 4.57 g/t gold from 83 metres and 10 metres at 4.52 g/t gold from 82 metres (including 3 metres 10 g/t gold from 88 metres).

Further confirmation of the high-grade and shallow nature of this deposit has reinforced confidence in its potential efficiency as an open pit operation with good metallurgical recoveries.

This is expected to enhance already positive economics for Matilda, contemplated in a recent PFS to include an average annual production rate of 98,000 ounces of gold at a life-of-mine all-in sustaining cost of A$1,150 an ounce.

The PFS confirmed Blackham as on-target to produce first gold in the June quarter of 2016, with Matilda payback expected within 14 months and an outstanding internal rate of return before tax of 105%.

Other key takeaways that highlighted the bankability of the project included:

- A rapid low-capital pathway to being a significant gold producer
- DFS work programmes well advanced and due for completion by January 2016
- Initial Ore Reserve Estimate of 270,000 ounces demonstrates high conversion of Scoping Mineral Inventory into Reserves
- The PFS adds an additional year of mine life with significant growth potential with ongoing drill programs

The current mine life is forecast at 4.9 years, but this is likely to be expanded based on exploration success and through ongoing drilling programs.

Analysis

Discovery of this additional shallow high-grade mineralisation is significant since it appears that it will likely have a positive impact on pit cutback economics.

It is also expected to allow the planned pit to extend further west as well as deeper on the main zone of mineralisation.

Also, the 2-metre intercept at 95g/t gold represents a tantalising hint of the potential for this deposit to offer significantly higher grades than are currently established in the resource estimate.

Consistent exploration success at Matilda has helped propel Blackham shares 62.5% over the past two months to their last trading price of A$0.26.

Further price catalysts for the stock are expected in more planned drilling to infill the newly discovered zone and to deliver an indicated resource classification prior to the DFS.

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