ASX-listed Explaurum is an Australian gold mining company focused on the development of the Tampia Gold Project and exploration of the surrounding region. Tampia is located approximately 240 km East of Perth in the wheat belt of Western Australia, near the township of Narembeen. It was discovered in 1987 by BHP’s now-defunct gold exploration branch, who established high grade gold mineralisation near surface. Explaurum took an 80% interest in the project back in 2012, which has since increased to 90% while the company has worked on updating the mineral resource. After revealing a host of positive project metrics in a November 2017 scoping study, Explaurum has further improved the mineral resource at Tampia in a long-awaited feasibility study, published in May.
The feasibility study for the Tampia project revealed an updated mineral resource of 675,000 oz of gold from 11.7 Mt at a grading of 1.79 g/t Au, with an initial mine plan of 534,000 oz Au from 8.0 Mt at a grading of 2.07 g/t Au. From this, Explaurum expects to produce around 490,000 oz gold over a 5.3 years initial mine life.
This impressive production figure is supported by a low initial capital cost (capex) estimate of AUS$119 million, along with an all-in sustaining cost (AISC) of $896 per oz for the first two years and $998 per oz for the life of mine.
“It’s a very robust project,” says Explaurum’s managing director and chief executive officer John Lawton “With a payback period of 1.5 years and lowest quartile cash and all in sustaining costs (AISC).”
However, the net present value (NPV) decreased from AUS$181 million to AUS$125 million which Lawton believes is a result of the modelling process for the resource estimate and ore reserve, which was undertaken by consultancy groups that assisted in the production of the feasibility. The company is currently reviewing this and hopes to post an update in due course.
Nonetheless, when looking at the profitability margins outlined in the study, it becomes clear that the open pit mine qualifies as a low cost, high margin, high return project that would also be resilient to any downwards movement in the gold price.
“The cash operating costs are in the lowest quartile for gold production, so I think it’s fair to call Tampia a low-cost operation. The gold price is currently about AUS$1,650 per ounce and we are looking at a production AISC of just under AUS$1,000 which provides an attractive margin,” Lawton posits.
Unlocking the Tampia resource
When Explaurum acquired the Tampia project back in 2012, a number of fundamental building blocks for a mining project were missing, with previous development progression handicapped by limited understanding of the underlying geology.
But, over the last six years Explaurum has negotiated a land access agreement where before there was none and strongly enhanced understanding of the geology at Tampia through detailed gravity survey work, along with advancing the project to feasibility and optimising the mineral resource.
In fact, the company’s increased understanding of the regional geology has led to a significant focus on near-mine exploration in recent years with promising initial results from ground and airborne surveys contributing to a growing optimism that the company could be sitting on a new goldfield.
“There has been very little exploration around Tampia since BHP made the original discovery after follow up of a regional stream geochemical anomaly located gold mineralisation at surface.
“The main reason for this was a lack of understanding on the geology of the deposit, which is located within an area of cultivation and therefore has poor exposure. We’ve come to grips with understanding the geology and since applied that to the region and found more greenstone belts and other gold targets.”
A new gold province?
The discoveries began in April 2016, when one of Explaurum’s ground gravity surveys identified a bullseye anomaly coincident with the known Tampia deposit. This was followed one year later by a 400 km2 airborne gravity and magnetic survey of the district, which identified three major new targets and 21 secondary targets.
In a mid-2018 update to the ASX, Explaurum confirmed some exciting results from an RC drilling campaign which tested soil gold and gravity targets in an area to the North of the Tampia deposit. The drills intersected four anomalous zones of gold over an area of 3.5 km x 1.5 km.
“It’s a very exciting area that is more than four times larger than the area of the known Tampia deposit,” reveals Lawton.
“It’s a gravity target that has a similar geophysical signature to the Tampia deposit. Follow up auger soil sampling indicates the target is highly anomalous in gold with soil values up to 0.8 g/t Au, which is a very exciting exploration target.”
Explaurum has completed soil sampling in the area for the immediate period and will continue drill testing a target that has been christened Anomaly 8 over the next quarter. The intention is to identify a resource in this area, which would effectively add mine life to the Tampia project.
More recently, Explaurum announced the discovery of supergene gold mineralisation (Mace prospect) immediately West of the known Tampia resource which extends over a length of 550 metres and a width of 50 metres, having an average thickness of approximately 5 metres and uncut average grade of 5 g/t Au.
The mineralisation, which is continuous and occurs at a consistent depth of 8 meters below surface, is open to the West and associated with a gold soil anomaly that extends for some 13 km. Assessment of Mace has been given priority so it can be incorporated in the bankable feasibility study.
When factoring in these potential regional growth opportunities, Explaurum has an excellent chance to significantly build the Tampia resource while opening up a newly emerging gold province in Western Australia with outstanding repeat potential.
“We can only report the results as we get them, but the exploration results to date are very exciting. We certainly think there is significant potential, even though it’s an area that’s never been explored before.
“We have the exploration tools that can track these things down quickly and cheaply. From an exploration point of view, we are in a very good place and hope to add resources to the project.”
Timeline to production
Now that the feasibility has been ticked off, Explaurum is marching towards a bankable feasibility study which should be delivered in October. Lawton confirms that the project has already generated attention from banks and potential financiers and the company has begun talks with these interested parties.
In the lead up to the bankable feasibility, Explaurum will complete an infill drilling programme at Tampia. Up until now all drilling at the resource has been done on a 40 metres by 40 metres grid, but the company is currently infill drilling part of the resource area on a grade control basis at a spacing of 10 metres by 10 metres.
“This campaign will de-risk the project for the financiers. It’s only for a portion of the resource area but it’s within the pit designs and will be effectively grade control drilling of that area. I expect that infill drilling will provide a confirmation of the resource, if not an upgrade,” says a confident Lawton.
Explaurum is also talking to engineering companies with regards to the construction of the facility, which all things considered, should by tied up by the end of the year. Although the firm cannot give a detailed timeline at this stage, Lawton hopes that Tampia will be commissioned and in operation by early 2020.
To conclude, Explaurum’s near-term focus is twofold: “One is getting into production quickly. The Tampia resource is where gold was discovered in the region, but it’s a small area. We are talking about a single pit that is roughly 1,000 metres long and 400 metres wide.
“That’s been the basis of the feasibility study, but at the same time we don’t intend to lose momentum on the exploration front in the region and we will be developing additional resources as feed into the operation.”