This article is a sponsored feature from Mining.com.au partner Barton Gold Holdings Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Alex Scanlon, Managing Director and CEO of Barton Gold (ASX:BGD), is a man with a plan.
“At a very high level, Barton Gold is a pure-play gold, pure-play South Australian developer,” he says.
“We have a narrow focus because capital is scarce and the mining industry is hard enough. If you have a split focus on different metals and different project areas in different countries, you have to divide your time and your team and your capital resources between multiple objectives.
That may suit somebody who believes it’s their objective just to identify something and then sell it along to someone else who’s going to drill it out, but our motivation is development.”
Based in Adelaide, Barton owns roughly 5,000km-square of land in South Australia’s Gawler Craton, including the Tarcoola, Tunkillia and Challenger gold projects, the latter of which is currently on care and maintenance but features the fully-licensed, 650,000-tonnes-per-year Central Gawler Mill.
It’s these assets which form the basis of the company’s grand plan, divided into two carefully thought-out stages, which Scanlon hopes will one day deliver “South Australia’s largest independent gold producer”.
Stage one: Tarcoola
Although Tarcoola and Tunkillia — located just 70km apart — are considered one monster project, it makes greater developmental sense, Scanlon explains, to initially split the two if Barton is to reach its annual production target of 150,000 ounces without undue risk.
“Tarcoola and Tunkillia, they’re fundamentally one project with an enormous footprint, a huge number of structures, and already a very significant amount of mineralisation — well over a million ounces,” Scanlon says.
“So, you split off Tarcoola into stage one utilising the existing processing plant, and then stage two becomes an expansion at Tunkillia. It’s a simpler, staged model.”
Here, Barton’s advantage is its head start. Rather than beginning from scratch, the pathway to initial production is more or less as complex as recommissioning existing assets the company already owns — the historical Perseverance Mine at Tarcoola and the Central Gawler Mill, just 130km to the north-west.
“We’re essentially leveraging existing mining leases, proven logistics, proven metallurgy, proven infrastructure, and a fully-licensed mill to go into operations,” Scanlon adds.
“That means we can become a producer, we can start generating cash flow, and then we can actually fund the development of Tunkillia as an expansion.”
But even if Tunkillia represents an expansion, a certain ‘levelling-up’ for Barton, it’s not as if Tarcoola is out of tricks to pull.
“The pit, such as it is, is why we’re excited — the nature of that mineralisation. This pit is only about 70m deep at its deepest point and produced around 50,000 ounces of gold from a very shallow pit,” Scanlon says.
“Now, we’ve identified a new high-grade gold zone called Perseverance West, just behind the pit wall. This is, theoretically, a potential ‘walk-up, restart’ open pit. What we want to do is convert it into JORC resources and that essentially gives us year one of stage one.”
The high-grade mineralisation at the Perseverance Mine comes, according to Barton, from the Perseverance Fault. Interestingly, the company has identified a 15km-long zone of structures extending to the west of the open pit towards the Warburton prospect.
“What we think — what we hope — is that these structures will point to bodies of mineralisation similar to that at Perseverance. Then you keep growing that to establish several new open pits, and when you build your new mill at Tunkillia, you start sending this material to the new mill. By doing that, you increase the profitability of mineralisation, not only because the trucking distance is about half, but also because that larger mill would be even more efficient than our current one.”
Stage two: Tunkillia
The intent to build a second mill is important also for the fact that Tunkillia has a hefty resource of its own — 1.15 million ounces of gold at the 223 deposit, which Barton intends to grow even further.
“Tunkillia is the step from small, high-grade production to big, bulk efficiency,” Scanlon says.
“We grew the Tunkillia Project’s 223 deposit in April, and we’re looking to grow that again. If we think about stage one being nearer-term and stage two being medium- to longer-term, we want to keep growing the big picture because that’s the real anchor for everything. That’s the real platform on which the big picture objective stands.”
Over the last 18 months, Barton has also identified three new gold zones — 223 North, Area 191 and Area 51 — which are currently the subject of an expansion drilling program Scanlon hopes will deliver a JORC-compliant resource additional to the 223 deposit by mid-2024.
Forgetting for a moment the enviable ease with which Barton plans to start producing gold, such a strategy is potentially a great deal cheaper, too.
“At the end of the day, if you’re making an investment in the mining space, there are two questions you need to be asking yourself,” Scanlon says.
“If we don’t have to go and raise $200 million to build the first mill and $200 million to build a second mill, our shareholders will still own much, much more of our project or our company than would a competitor“
“One, who is the team that’s leading this and do they have strong alignment? And two, how much of this project am I still going to own by the time it gets into operation? You might have a 20-million-ounce gold project in the far northern reaches of Canada, past the Arctic Circle. But if it costs $2 billion in new roads to access it and $1 billion to build it, you’re not going to own very much of it by the time it gets built.
That’s really one of the key questions: if we’re creating all this value, how much are our shareholders still going to own of it? If we don’t have to go and raise $200 million to build the first mill and $200 million to build a second mill, our shareholders will still own much, much more of our project or our company than would a competitor.”
The importance of Barton’s infrastructure cannot be overstated. Without it, the company “would merely be an explorer,” Scanlon says.
“We’re more accurately viewed as an advanced asset manager, which is building a resources base for a more strategic, larger regional development,” he explains.
“Our objective is not to drill these targets and then sell this to a neighbouring company with a mill. That’s a very viable exploration company proposition, but our objective is to actually develop and own these operations, and to continue to grow and expand and consolidate the broader region.”
That, of course, could involve future acquisitions. While it’s not a focus at the moment, Scanlon says any potential portfolio additions will need to have some kind of “rational efficiency to be gained”.
“If we think about this in terms of economic concentric circles, we’ll always be more interested in things that are in our sphere of greater influence and where we have critical mass of operations and infrastructure,” Scanlon says.
The flip side is that a dominant infrastructural presence in the area could open the door to alternative revenue streams, such as ore purchase or toll mining agreements.
For the time being, however, Barton is all-in on the execution of its two-stage plan.
“Even in a relatively down gold market, we are outperforming. We want shareholders to understand that if you want very cost-efficient performance and outperformance, you look to Barton Gold“
“In a strange way of speaking, 2024 for us is really about crystallising and confirming the validity of this two-stage development plan, and reinforcing both stage one and stage two platforms,” Scanlon says.
“We’ve spent 2021 and 2022 proving our geological concept. We’ve spent 2023 essentially starting to now convert some of that into new gold resources — new gold zones and new mineral resources. And 2024 is about demonstrating the potential viability of this two-stage development process.
Even in a relatively down gold market, we are outperforming. We want shareholders to understand that if you want very cost-efficient performance and outperformance, you look to Barton Gold.”
Write to Oliver Gray at Mining.com.au
Images: Barton Gold