The old adage says that it takes a long time to become an overnight success. Australian gold exploration and development company Vango Mining is a classic case in point. Vango floated in 2004 (under the name Ord River Resources) with one gold asset in regional New South Wales, Australia. Over time it acquired copper tenements in Western Australia and also became involved in bauxite tenements in Laos. After a decade of juggling these disparate projects, the board of the company decided to set a more focused strategy on the gold sector, following the beginning of a resurgence in the gold price in 2013. At this time, Bruce McInnes was appointed to the company’s board, soon after becoming executive deputy chairman and finally executive chairman. An accountant by profession, McInnes tells RGN: “The idea was to try to locate a near-term gold production asset with a good resource base and then look to do a deal with the owner to combine the two companies and move forward as one entity.” When the company came across a major package of quality exploration leases in the mid‐West region of Western Australia, it executed on the plan and entered into a farm-in agreement with the then owner.
Over the ensuing years the company expended considerable capital to earn a 100% interest in the project area – the Marymia Gold Project. Vango is now the sole, 100% owner of the Marymia Project, which covers an extensive 40 km of strike in a major brownfields gold belt that sits immediately Northeast of the 5.5 million ounce (Moz) operating Plutonic Gold Mine.
“Once we started drilling in early 2017, we quickly found that there was potentially six gold corridors similar to the Plutonic Mine. When you look to the overall size of area, Plutonic covers about 20% of the brownstone belt and we own the remaining 80%.”
The exploration programmes to date have identified three of the six mineralised corridors – PHB, Trident and Triple P – as being near-term opportunities to develop high-grade gold mines, with the Trident Corridor the most defined by drilling.
Vango’s targeted drill campaigns have culminated in the announcement of a +1 Moz resource at Marymia in May this year, which McInnes declares as the company’s biggest and most important milestone to date.
“That was a critical milestone in terms of proving to the shareholders that we have invested their funds wisely in line with our exploration model, and that our exploration has been validated. There was a previous JORC 2004 resource with considerable amount of gold ounces, but part of our drilling programmes have been focused on bringing the old resource into current, 2012 JORC compliant status, as well as substantially expanding the size of the resource, all of which has been achieved.
“Secondly, there has been recognition from the marketplace that we have achieved that magical 1 Moz milestone. Thirdly, it was a building block that we needed in order to complete a mine application and mine planning to the WA Department of Mines and Petroleum [DMP], to demonstrate the viability and sustainability of what we plan to be a significant long-term gold mining operation at Marymia.”
McInnes explains that the formal mining approval process is extensive – significantly more so than most people might appreciate – and so the company has applied a highly rigorous and stringent approach to its drilling programmes over the past three years. These efforts have been rewarded with a 1,002,000 oz mineral resource at 3.0 g/t gold, including open pit and underground resources, which goes a long way to establishing the project’s viability.
But, achieving the magical 1 Moz mark is just a starting point, and Vango’s next drill programmes will be designed to further expand the resource to 1.5 Moz and then to 2 Moz.
The building blocks of this exploration success were put in place by McInnes and co around four years ago upon the formation of a turnaround strategy focusing first and foremost on economic prudence.
“We are very careful about how we spend shareholders’ money. We want to know that any project we get involved in has the potential to be profitable and to deliver a sustained life to the asset that you are pouring millions of dollars into.
“Some companies prefer to drill out assets and hope that a major takes them out. We’ve taken a different view and want to unlock the full scope and size of the project area, and to be in a position to potentially mine the area for 20-30 years, not just for two or three.” says the chairman.
McInnes describes himself as a ‘builder’ and has infused this spirit into the company’s thesis for the Marymia Gold project. Part of this has been the building – or evolution – of Vango’s board. Over time the company’s board has evolved and now has a balanced mix of skillsets, from commercial and corporate to mining and technical expertise.
A key piece of the puzzle was the appointment of highly skilled mining engineer Andrew Stocks as managing director of Vango in November 2019. Stocks stood out from all other applicants due to his unmatched understanding of the geology of the Marymia region, having been instrumental in the build of the nearby Plutonic mine under the auspices of Barrick Gold in the 1990s.
“Andrew has really been an important find and compliments the other members of the board immensely. I’ve learned a lot working with him over the last four to five months and he has a major task now to bring this company to its productive capability – a task that I have utmost confidence in him to deliver.”
Raising the roof
In mid-June, Vango successfully raised A$15 million on the ASX in an oversubscribed capital raising that will allow the company to aggressively pursue the next phase of drill programmes at Marymia, which include high–grade resource expansion targets and larger scale Plutonic-style analogue targets.
The company was also able to convert $2.4 million of debt into equity in the raise through the issue of 30.3 million new shares. These incoming institutional and professional investors attest to the strength of the financial building blocks put in place over the past four years, according to McInnes.
“Now it is with Andrew to provide the company with a further upscaling of the resource base and also, in parallel, to focus on development plans for the two areas which will potentially be the initial mine targets: PHB and Trident.”
Vango has been fortunate in that it inherited a large amount of historical data relating to the Marymia Gold project when it took full control of the project. While the data doesn’t extend to depth, it has allowed Vango to locate and test specific targets throughout previous campaigns, and has delivered significant time and cost savings to the company’s exploration programmes.
“We’ve been able to rely on that database to be quite precise about where we drill. The design of our next drilling programme is being finalised and these next rounds of drilling will be designed to expand the resource toward our next target of 1.5 Moz and then to 2 Moz.”
“But equally as important is the ability then to provide evidence to the DMP that this is not a company that will go to mining then fold for a lack of resources,” McInnes highlights. “This programme is extremely important going forward.”
Vango’s primary drilling partner has been Westdrill, who are not only a great drilling company but have also been immensely supportive of the Marymia project, even becoming a shareholder in Vango. The company will continue to use Westdrill for future campaigns, along with other outfits for additional rigs where required.
Flying towards feasibilities
The company has also commenced work towards feasibility studies for the Marymia Gold project. These studies are designed to establish the economic viability of Vango’s proposed mining operation at Maryima, as well as deal with other core issues such as the environment and sustainability.
“We’ve done a lot of work in terms of the hydrology and environmental studies. Consultants, Blueprint [Environmental Strategies] has completed the majority of the environmental studies required to be submitted in our mining plan.
“The water studies have been completed by specialist consultancy group, Rockwater. Those studies include the flow rate and quality of water in the area. Surprisingly, given the project is located in a very dry area, it has an abundant supply of high-quality underground water.
Following the capital raise in June, McInnes reflects on a well-deserved celebratory drink shared with a mining analyst. “He actually said to me what I’ve been saying for some time in my chairman’s letters, and that is that we believe we have one of the largest and best undeveloped gold assets in Australia.
“He went on to say that Vango having one of the largest undeveloped gold assets in the country is only complimented by the fact that you are the most undervalued explorer out there. So, it’s come with a two-edged sword; we’ve got a great asset and we are also the most undervalued in terms of our peers.
“I came in as a complete unknown in the mining industry, so I think there was a lot of doubt in the marketplace that we could actually achieve something that even people with a long history in the sector find difficult to do.
“But I will always admit that I know what I don’t know. This has helped us bring in the right people for the right positions and I know that our current team will carry this company through to mining. And within the next three or four months I expect to see quite a massive upgrade in our market capitalisation.”
With uncertainty set to reign supreme over capital markets throughout the rest of the year, and the Australian gold price likely to hold steady in the $2,550 per ounce range, Vango is extremely well placed to deliver value for its shareholders as it undertakes its next round of resource expansion drilling and progresses towards feasibility studies at one of Australia’s largest undeveloped gold projects.