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.
Barton Gold (ASX:BGD) is combining the benefit of hindsight (of previous explorers) with its own incredible foresight in an attempt to emerge as a “multi-generational gold producer” in the Central Gawler Craton in South Australia.
At the heart of Barton’s vision is a three-prong ‘consolidation strategy’ – of the gold and historical ground of Central Gawler Craton; of the region’s infrastructure; and of technology to accelerate progress.
Barton Gold holds the most dominant position in this area of South Australia, owning the Tunkillia Gold Project, and the Tarcoola and Challenger gold mines. The combined Mineral Resources are 1.1Moz of 2012 JORC compliant gold with a tenement and joint venture gold rights coverage of 4,660km-square.
Barton is focused on aggressive large-scale regional exploration, and growth of its already 1.1Moz Mineral Resource base. In early June, Barton completed 6,427m of RC drilling at its Tarcoola and Tunkillia projects, with first results expected imminently. The company’s objective is to significantly scale the current resource base and commence feasibility studies for a large-scale, long-term gold production operation combining Tarcoola and Tunkillia.
A long time in the planning
Managing Director Alexander Scanlon explains: “Going back to 2016-17, we recognised that we really wanted to be in gold and, while we were looking at a lot of assets around Western Australia, we realised that South Australia was overlooked, under-invested, and badly mispriced.
“Essentially, we found a geologically very attractive but under-explored area where we could come in below the radar and consolidate”
Essentially, we found a geologically very attractive but under-explored area where we could come in below the radar and consolidate the majority of the area’s most attractive assets without anyone really taking any notice.”
Barton’s acquisitions include the majority of all historically significant gold producing and exploration ground within a ~60,000km-square portion of South Australia’s Gawler Craton, which has been a substantial intermittent gold producer since the late 1800’s. South Australia’s gold rush commenced in 1893 on the same ground Barton holds today, and from 2002 – 2018 Barton’s Challenger and Tarcoola gold mines produced around 1.2Moz of gold.
Strategic infrastructure position
Importantly, it also owns the Central Gawler Mill – the only such plant and infrastructure in the region. The 650,000 tonnes per annum processing plant includes a crushing circuit (jaw/cone), two ball mills, gravity and CIP leaching circuits, and electrowinning of gold doré.
The mill sits in the ‘green zone’ of the Woomera Prohibited Area (WPA) and presents not only real monetary value in terms of installed value and production options, but also in terms of regional strategic options for the company.
The WPA is a military testing range periodically used by the Defence Department for weapons testing, with strict controls and government oversight on regional security, persons authorised to enter or operate in the region, and parties authorised to own, control or finance investments. That means any third-party proposal to build a new mill may not secure governmental approval – even if they could fund the $150 million-plus cost – due to a wide range of factors including the proponents’ background or source of financing.
Barton’s plans for the Tarcoola and Tunkillia Gold Projects includes a new large-scale gold mill at Tunkillia, which would provide Barton with sole ownership of the only two gold mills in the region, located ~200km apart, each surrounded by numerous gold explorers.
The long-term strategic approach means that Barton is aiming “to be major gold producer” that can benefit “directly or indirectly” from regional gold resources, owned or otherwise.
And within all this is direct access to all-important transportation infrastructure with the Sydney to Perth, and Darwin, railways passing right through the heart of Barton’s Tarcoola Gold Project area.
A cash-generative explorer
Alongside careful use of shareholders’ capital for exploration, Barton has another key advantage – it is systematically generating significant income and other benefits to offset exploration costs. In the ~12 months since listing in late June 2021, Barton has received almost $1 million in South Australian Government grants and has generated more than $1.7 million in surplus asset disposals ($737,500) and gold sales ($1 million) during June 2022.
With a significant base of surplus assets, the company expects to continue further disposal programs and is also looking at options to process small stockpiles of existing ore. Barton also has the option to lease its Central Gawler Camp to regional customers. Taken together, it’s a very unusual look for an explorer, and a very unique advantage relative to its peers.
Scanlon explains that the company is focused on “fortifying” its balance sheet so that it remains in a strong position to continue aggressive exploration during the coming 24 months, while deferring future capital raisings and minimising shareholder dilution.
Noting the currently difficult market environment for capital raisings, Scanlon emphasises the importance of momentum and progress in resources projects, saying: “Our existing balance sheet of over $10 million, and the ability to re-stock capital from internal sources, provides a significant advantage to Barton.
Project momentum is essential, particularly in difficult markets, and the risk of getting caught flat-footed is significant when funding is not available. We can continue investing heavily in high-value exploration and building Mineral Resources while others may need to slow investment or undertake heavily dilutive raisings at discounted valuations.
“Project momentum is essential, particularly in difficult markets, and the risk of getting caught flat-footed is significant”
This puts us in a strong position to overtake some of our peers and become a leading development proposition. When the gold market turns, and it will, we’ll be in motion and in a stronger position to move forward toward development.”
Old, new, and undiscovered
Barton is keen fuel this momentum by taking advantage of its dominant position in a significant historical gold mining jurisdiction which has remained overlooked for a long time.
The Gawler Craton itself is a globally recognised and richly mineralised geological terrain that covers some 440,000km-square, nearly 50% of South Australia’s 983,000km-square surface area. It is the oldest and largest geological province in South Australia, spawning well-known iron oxide-copper-gold (IOGC) ore deposits such as Carrapateena, Oak Dam, Olympic Dam, and Prominent Hill, which sit northeast of Barton’s focus area.
The IOCG belt hosts gold, but basically as a by-product, with little modern systematic focus on gold exploration in the region (before Barton). Hidden under South Australia’s surface lie enormous untouched riches – while the state contains some 25% of Australia’s known gold Mineral Resources, it is responsible for only 2.5% of Australia’s annual gold production.
Historical mining has only intermittently sampled the potential of this mineralisation. The region has twice been the subject of gold rushes – in the early 1890s which started at Tarcoola, and in late 1995 and early 1996 when the Tunkillia and Challenger deposits were discovered.
The discovery of Challenger and Tunkillia brought about a rush of activity to the region, however with the gold price declining in the late 1990s most activity ceased with the exception of the Challenger Project which from 2002-18 produced about 1.2Moz of gold. Many companies exited the Gawler Craton to focus on mining jurisdictions where gold was considered easier to explore, such as Western Australia, leaving behind a wealth of historical and geological data.
When assessing all this during 2017-18, Scanlon was confident the area had a lot more to offer. Work completed since this time has confirmed this view – “As we suspected it is much, much bigger than anyone ever previously understood.”
We think Tunkillia has potential to be a real district scale development opportunity. Pair that with Tarcoola and basically you have a really strong base of continuous mineralisation matched with is highly complementary source of high-grade ounces. This offers significant development optionality, including the option to commence earlier high-grade production.
“A clear advantage for us there is the ownership of infrastructure”
A clear advantage for us there is the ownership of infrastructure including the Central Gawler Mill which produces gold efficiently with about 94% recoveries.”
A new age for historical sites
The crux of Barton’s strategy in the Central Gawler Craton is taking historical infrastructure and data, using innovation and technology to accelerate the identification of new large-scale systems and structures which have not been previously recognised.
The company is working with the CSIRO and other industry-leading innovators and service providers including Daishsat Geodetic Surveyors, HiSeis, and Ultramag Geophysics.
In addition, Barton has entered into a strategic R&D partnership with SensOre (ASX:S3N), which is using artificial intelligence (AI) and Machine Learning technology to predict mineralised occurrences. Barton’s collaboration with SensOre aims to adapt their technology from its Western Australian origins where it is focused on primarily outcropping mineralisation, to the South Australian terrain which requires exploration under cover.
Scanlon notes: “For us, that’s the point for us being in this region – we’ve created the strategic platform, we know what our opportunities are, we’re bringing a lot of new tech in, we’re targeting and testing, and we’re systematically proving our theses. It was more than a year before anyone took notice of what we were doing, and since then there’s been bunch of M&A and exploration activity in the region around us.”
Well led, well capitalised
For a region recently glossed over, Barton is now commanding attention and is no longer flying under the radar. Boosting this profile is a growing team including notable industry veterans such as new Chairman Kenneth Williams, formerly the CFO of Normandy Mining, and Exploration Manager Marc Twining, also formerly of Normandy and Newmont Mining.
Barton also has a formidable treasury with $10.8 million cash as of 31 March 2022, and the aforementioned $1.7 million earned from June’s asset and gold sales offsetting exploration and corporate costs for the past quarter. Earlier in June it was also awarded $595,000 in exploration grant funding by the South Australian government under its Accelerated Discovery Initiative (ADI).
Finally, shareholders can take comfort in a strong alignment with board and management who represent about 33% shareholding in the company. This will make it tough for any hostile suitor to have a tilt at the company’s strategic position in South Australia without a seriously attractive offer, and puts management’s attention squarely on both creating, and defending, value for today’s shareholders.
As Scanlon put it: “Any shareholder who is worried about the monster that is dilution can bet that we are standing squarely between them and that monster. We have the ability to pursue income opportunities in parallel with exploration initiatives and we will do so in order to minimise and defer future shareholder dilution.
We have done this very successfully to date with more than $1.7 million in sales revenues this past quarter, and shareholders can expect to see more of these initiatives undertaken in the months and years ahead.”
Images: Barton Gold Holdings Ltd.