Rick Yeates began putting Middle Island Resources together in February 2010 on the back of his resignation from Coffey Mining, the firm which bought RSG Global – the company he co-founded back in 1987. Under Yeates’ stewardship, Middle Island quickly accumulated gold assets in West Africa before listing on the ASX in December 2010. Over the next few years, the company consolidated its work in Burkina Faso, Liberia and Niger but was soon halted in its tracks in the latter nation, which blocked the purchase of the Samira Hill gold mine. However, the company bounced back from this setback by widening its exploration lens beyond Africa, acquiring the Sandstone Gold Project in Western Australia in July 2016. This asset, along with the Reo Project in Burkina Faso are the company’s two flagship projects today.
After having its fingers burnt in Niger, it quickly became imperative for Middle Island to locate a project which would mitigate shareholder exposure to sovereign risk.
Consequently, Middle Island’s conservative and deliberated approach saw it go down the safer, albeit well-trodden, path of mining in Western Australia’s gold fields, acquiring Sandstone after a meticulous three-year search.
“We were also very specifically looking for an advanced near-term production asset that had the potential to generate a cash flow from which we would be able to fund further exploration activity,” says Yeates.
“Sandstone was a near-term development opportunity because it has a 600,000-tonne processing plant in reasonably good order, and importantly the cost required to refurbish and recommission that project was achievable.”
The Sandstone Gold Project is located around 400km Northwest of Kalgoorlie in a mineral-abundant region which has seen sustained surface, underground and open-pit mining activity since the 1890s.
In excess of one million ounces (1Moz) of gold has been produced from the Sandstone area by a number of mining companies throughout its extensive history, with gold mineralisation occurring in the triangular-shaped greenstone belt.
Prior to Middle Island assuming ownership of the project, the last resource statement was undertaken by Troy Resources in 2011, which recognised an aggregate of 11 million tonnes (Mt) at 1.4g/t for 480,000oz Au.
Middle Island moved quickly to build on these figures, undertaking its own pre-feasibility study (PFS) in 2016. However, the results concluded that the project’s recommissioning was uneconomical based on the Two Mile Hill and Shillington open-pit deposits alone.
Yet responding to adversity once again, Middle Island decided to defer a recommissioning decision and went back to drilling around the existing deposits to extend and enhance the production profile.
During the last 10 months the firm has made a number of important discoveries, most notably the Two Mile Hill tonalite target, which was shown to be mineralised from end-to-end and top-to-bottom after three further diamond drill holes were completed.
“This is a significant result because it highlights the bulk underground mining potential of that target, most likely via sub-level caving, along with the open-pit potential which had already been figured into the original schedule.”
The other major recent discovery was the identification of gold targets at the Davis prospect in the Southwest corner of the project. “We generated four very cohesive gold-arsenic anomalies down there and have just completed drilling across two of those,” reveals Yeates.
“All these anomalies are within 1km of the processing plant which, along with the recently optioned Wirraminna deposit, could represent a catalyst for the mill recommissioning.”
The processing plant at Sandstone has been in care and maintenance since 2010, but remains in a remarkably healthy condition because the area is blessed with fresh ground water.
Therefore, the company will not have to invest vast sums of time and money to get the plant back up and running. The renovation work was fully costed at $9.3 million as part of the PFS.
“We are conscious that this [overall cost] is still a fair hurdle but we are confident we can get there in the end.”
With this in mind, Middle Island has pencilled in late December 2017 as the earliest date it would be in a position to revisit a mill recommissioning decision, however Yeates maintains this is dependent on many variables and is by no means guaranteed.
Middle Island remains active in West Africa, despite exiting from Niger soon after it ran into problems, and is still very much committed to the Reo Project in Burkina Faso.
“The Reo Project was an opportunity that was presented by Newmont, as they felt the project didn’t quite have the potential to come up with the 5Moz target they were looking for, but we felt it still had plenty of merit and were more than content to identify a 1-2Moz target.”
The subsequent deal was structured as a share sale agreement, meaning that Newmont came on board as a cornerstone corporate shareholder in the company.
Yeates stresses that having the support of a major international miner was crucial for the company from a marketing perspective, especially during the first five years of its existence.
“In addition, from a geological perspective the project is at the Northern end of the Boromo and Houndé greenstone belts, where the two coalesce. These have proved very prolific belts in terms of gold exploration and discoveries.”
However, the project remains in the early stages and there is still lots of work to be done in the shape of infill drilling, with most of the targets defined at a broad, 400-800 metre line spacing, which needs to be infilled.
Middle Island is currently prioritising the development of the Sandstone project and is hopeful of getting another company on board to do the heavy lifting on the Reo project, taking it through to feasibility, although Yeates affirms it will look to recommence work in its own right should this not be possible.
In any case, the company is patiently waiting three pending renewal permits at Reo and is naturally reluctant to pull the trigger on further exploration, especially being in Africa where these things take time.
Middle Island is also acutely aware of its position in the West African communities which share the land on which it explores, and takes great pride in its policy commitment to contribute up to 5% of its exploration budget each year to social development initiatives in local communities.
“It’s just a recognition that those local communities are our hosts and we effectively stay in their villages whilst we are there.
“Our objective is to become a part of the community wherever we go, whether its Western Australia or West Africa. Rather than simply working with the community we endeavour to integrate ourselves as much as possible.
“For an exploration company that is a big ask, but I think we have found a good balance, and certainly I am extremely proud of some of the work we have done.”
Yeates is adamant that the current outlook for gold across global markets is very good, based on a pure supply and demand equation where demand is currently outstripping the identification of new reserves.
It is this fundamental belief that is underpinning a growing confidence that Middle Island’s flagship projects in Australia and Burkina Faso will deliver profitable returns when they eventually come online.