Star greenlit to drill WA gold play ahead of toll treatment decision
Star Minerals has secured government approval to fire up the rigs at its 45,000-ounce Tumblegum South project 40km south of Meekatharra in WA.
The 3000-metre reverse circulation drilling program is slated to kick off in early June, dependent on rig availability and has set the stage for a high-impact drill campaign to upgrade confidence in the existing gold resource and potentially even extend it.
The company will use the infill drilling to target shallow inferred resources within the bounds of its scoping study-defined pit shell. By tightening the drill spacing from 25m x 25m down to 12.5m x 10m, Star aims to convert much of the current inferred resource into the higher confidence indicated category ahead of a decision to produce millions in quick cashflow by toll treating the ore.
'Drilling will target inferred resources aiming to increase the resource confidence from Inferred to Indicated in the shallow areas.'
Star Minerals managing director Ashley Jones
The drill bit will also plunge about a third of the metres into testing out potential extensions to the deposit where recent airborne magnetic surveys lit up an area immediately to the northwest of the existing mineralisation. Coupled with a previous 120-metre-deep hole, which intersected grade in the same spot, the data is hinting at a promising array of parallel structures. If confirmed, a new mineralised zone could supercharge the project's economics.
Drill rig contracts are being finalised and site preparation is already underway. Meanwhile, the mine plan approvals on the already mining-permitted lease are progressing.
The drill program follows on the heels of Star's updated scoping study conducted by Perth-based Orelogy Consulting and released in May last year, which outlined a compelling case for near-term mining at Tumblegum South – and that was at much lower gold prices to today's spot price.
Last year's study revealed the project could deliver between 11,800 and 15,900 ounces of gold over an 18-month campaign via toll treating, based on a gold price of $3000 to $3800 an ounce. With pre-mining costs forecast at just $700,000 to $1.5 million, the study projected tidy surplus cash flows ranging from $9.4 million up to $19.6 million, depending on various processing options.
Whilst no new study has yet been done at the new uber-high gold price the new $5000 price an ounce—a whopping 31 per cent above the study's top-end price assumption, will no doubt provide a nice upside kicker that could be worth millions to Star.
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