Focusing on the overarching strategy of recommissioning its wholly-owned Sandstone gold processing plant within the shortest time possible, gold explorer Middle Island Resources Limited (ASX:MDI) recorded solid operational performance during the half year ended 31st December 2019.
Let us browse through Middle Island’s key developments during the half-year period:
Remarkable Progress at Sandstone Gold Project
Source: Company’s Website
Middle Island made considerable progress towards the development of its Sandstone gold project during the period, heading closer to commencing production at its flagship project.
Supported by higher and more sustained $ gold prices in the 2019 December quarter, the Company finalised an internal, high level, review of the economics of a stand-alone recommissioning of its mill, which demonstrated that the Sandstone processing plant could be profitably refurbished from its existing Mineral Resources.
Following the positive outcome of the re-optimisation study, the Company began an update of the 2017 Sandstone pre-feasibility study, which was later put on hold in the wake of an opportunity to access significant additional exploration funding (~$2.8 million) for the project via fully-underwritten Entitlement Issue and Placement.
The Company has planned to recommence the PFS update in the 2020 June quarter subsequent to completion of the ongoing ~17,900m exploration and resource definition drilling campaign at the Sandstone project, embarked in January 2020. The Company has already completed ~11,000m of the planned 12,300m Phase I, multi-rig, RC program, which will be succeeded by ~3,000m Phase II RC drilling program and ~800m limited program of oxide diamond coring.
Recently, the Company has announced a new 600m gold target at the Sandstone gold project. To Know More, Read A Huge Breakthrough, Middle Island Announced New Gold Target at Sandstone
Planned Developments at Sandstone Project
The Company has planned the following exploration and development activities for the remaining period of FY20:
- Compiling results of the recently completed ~1,800m aircore drilling program undertaken on four targets.
- Completing ~12,300m Phase 1 RC drilling program to evaluate 14 deposits and targets.
- Undertaking notional ~3,000m Phase 2 RC drilling program and notional ~800m HQ3 diamond drilling program.
- Estimating resourced and conducting open pit optimisation studies on additional deposits and deposit extensions.
- Finalising updated PFS.
- Completing and refining recommissioning funding options.
- Revisiting recommissioning decision.
- In case the decision is positive, obtaining necessary permits, recommissioning project and commencing gold production.
Moreover, the Company is continuing discussions with Alto Metals Limited (ASX:AME) and two other companies, whose gold deposits are also concentrated within 100km of the Sandstone processing plant. Recent M&A activity, including takeover offers for Alto Metals and Spectrum Metals at sizeable premiums boosts impetus for the Company’s initiatives.
Big Breakthrough in NT’s East Tennant Region
In addition to achieving substantial progress at its flagship project, the Company took a big step forward by securing a first-mover advantage in the Northern Territory’s East Tennant Region (ETR) via identification of the high-grade Barkly Copper-Gold Super-Project.
The Company applied for ten exploration licences covering a total area of ~3,912km2 and secured six applications covering ~1,890km2 and about 60 per cent of the four competing applications, which took its aggregate accepted area to ~3,253km2, comprising the Barkly Super Project.
The East Tennant Ridge (ETR) has been discovered by collaborative State (Northern Territory Geological Survey) and Federal (Geoscience Australia), pre-competitive research under the 4-year, $103 million, ‘Exploring for the Future’ (EFTF) initiative throughout northern Australia. With the initiative, the ETR now signifies one of the most intensely researched sections of lithosphere on the planet.
The Company notified that it will be the largest tenement holder along the ETR following grant of the applications (expected in June/July 2020). The Company anticipates the initial costs of exploration to remain low, targeted at refining existing targets through more extensive geophysical surveys, before basement drilling.
However, it expects drilling below the Georgina Basin sedimentary cover to be deep and expensive, for which, it may attract one or more mid-tier/major mining companies to farm into the tenure and fund the basement drilling.
It is imperative to note that the Company’s strategy for the Barkly super-project is in harmony with a ‘project incubator’ model.
Review of Financial Performance
The Company held cash and liquid investments of ~$764k as at 31 December 2019, including ~$301.8k in Tajiri Resources Corporation (TSXV: TAJ) ordinary shares and ~$462.3k in cash.
Moreover, it raised an additional $2.35 million subsequent to CY19 through a fully-underwritten non-renounceable Rights Issue via the issue of ~588.4 million fully-paid ordinary shares at 0.4 cents per share and the issue of ~588.4 million free, unlisted options, with an exercise price of 0.77 cents per share and a 3 year expiry.
In short, Middle Island advanced substantially with the development of its Sandstone project during the half year period and is well positioned to commence production from its flagship projects by early 2021.
MDI closed the trading session at $0.008 on the ASX on 16th March 2020.
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