For a junior explorer in the current low price environment for minerals, patient capital is probably the most valuable asset you can have. In a time when small companies with potentially significant projects have found it extremely difficult to raise funds for exploration, being backed by persevering investors is an envious boon. MetalBank (ASX:MBK) is one such company, initially established as a private entity it has benefited from the access to capital throughout the commodity price crash. Early exploration by MetalBank on its flagship Triumph gold project in Queensland has recognised a large overlooked gold system representing a ‘first mover’ opportunity. Extensive exploration completed by MetalBank in the last nine months has culminated in what managing director Tony Schreck calls a ‘wonderful outcome’.
Schreck has a history of managing large scale exploration programmes in Australia, USA, and SW Pacific with the likes of Normandy, Newmont, Anglo Gold Ashanti and Xstrata – MetalBank’s latest venture is on familiar ground for the experienced explorer having spent half of his 25-year career targeting gold in Queensland for the majors. When MetalBank was on the hunt for assets six years ago Schreck recognised that while a lot of exploration had been undertaken in North Queensland, Southeast Queensland had been overlooked.
“We saw this as an overlooked area and that’s exactly what we have been able to show – two historical gold fields with basically no exploration around them,” explains Schreck.
MetalBank (and through its predecessor Roar Resources Pty Ltd) has spent the last six years completing the arduous task of defining a large gold system at Triumph and that has been enabled by the consistent access to capital provided by shareholders with a long term vision.
Triumph after triumph
Now, MetalBank is well-placed to take Triumph forward. Having just raised over AUS$5 million and identified high grade intersections the company has the platform in place to build a significant asset. The latest company presentation defines the strategy going forward as ‘growth after discovery’.
The recent exploration programme tested only two targets at Triumph and both resulted in ‘spectacular’ grade intersections. Drilling at the New Constitution target came back with an intersection of 10m @ 26.9g/t Au and the results from Bald Hill were equally positive with 15m @ 10.3g/t Au. Both results are a significant boost for MetalBank’s confidence in the project.
MetalBank chair Inés Scotland said of the results at Bald Hill, “This re-affirms the company’s belief in the potential of the Triumph gold camp and provides further evidence of an extensive, underexplored mineralised centre extending over 15km2 and concealed by previously unrecognised shallow sedimentary cover.”
Schreck absolutely mirrors Scotland’s sentiment on the results, “They have been an amazing outcome. It is a turning point for Triumph –we have only tested two targets and both have come up with spectacular grades.”
Schreck can now be comfortable in the knowledge the exploration models applied for the last six years have been validated by the recent results and he says there is the potential that this discovery could lead to the uncovering of a globally significant gold deposit.
“We’ve been able to show that yes, it does contain high grade gold and the next step is to do more drilling to define resource and there’s still a lot of targets that have not been tested, so it’s an exciting future ahead.
“The grades we are seeing could represent leakage of something quite substantial at depth. If we can find what is driving these systems, there could be a multi-million ounce resource down there.”
One of the key factors behind this area remaining overlooked in terms of exploration was both historical drilling programmes and modern exploration failing to recognise the shallow overburden which covers the basement rocks. Albeit only 5m thick, 95% of the gold system is under the shallow cover, according to Schreck. MetalBank has employed airborne geophysical surveys and ground geophysical surveys to take the lid off the gold system and that approach has led to the recent success.
“The gold we are finding so far is quite shallow because it [Triumph] has never been drilled before. We are fortunate to be able to show up near-surface high grades and because they are high grade we will be able to follow them down to depth,” explains Schreck.
Another boon to the project is the potential cost of developing production. Thanks to the shallow nature of the resource MetalBank would pursue an open pit operation as the first scenario, at substantially less capital expenditure than an underground mine. Secondly, the project is ideally located close to sealed roads, and only 80km from Gladstone, a large industrial centre and export port with excellent services and facilities to support a mining operation and options to export a product to market with ease.
Having made the initial discovery, defining the resource is going to take the bulk of MetalBank’s resources and focus moving into 2017.
Schreck says defining the resource will require an extensive drilling programme in the coming 12 months. MetalBank is embarking on at least a 7,000m drill programme focused on the near-surface targets in the hope to continue to identify high grade intersections and develop an understanding of the potential of the gold system.
“Once we start to define the near-surface high grade deposits, we will follow those zones down to depth and they will be potential underground scenarios but the focus for now is near-surface high grade gold and defining resources.
“The more holes we drill, the more we can understand and that way we put that understanding back into being more predictive in how we conduct our exploration. It’s still early days but I think there is incredible upside [at Triumph] and that’s where we will focus.”
In addition to the positive outlook for Triumph, MetalBank holds a second Queensland gold asset, Eidsvold. It is a similarly underexplored historical gold field which has produced around 100,000 oz production dating back to the 1900s.
Eidsvold has serious upside potential as MetalBank has secured the entire intrusive complex of 250km2 under tenure. Although Triumph is the key priority for Schreck, he says the company will apply the exploration approach which led to such success at Triumph and hope for a similar outcome.
Scotland, responsible for driving Citadel Resources to become the first Western group to secure a mining licence in Saudi Arabia and growing the company to a market cap of AUS$1.3 billion, says the experience of progressing Citadel is reflected in the management of MetalBank.
“One of the advantages MetalBank has is that it has some really patient capital in it that invested against the cycle. For the last five years no one has been investing in exploration and that’s all we have been doing with patient capital.
“When we required capital we tapped on those people who had a lot of faith in the management and our ability to bring projects to fruition. I think our Citadel experience, not just mine but other people who are involved and investing in MetalBank, is to be patient, give management space and be aligned in terms of goals.
“We have absolutely seen that to date.”