This article is a sponsored feature from Mining.com.au partner Kingwest Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
It’s been said that the so-called dearth of new gold discoveries is due to mining companies placing their focus on known deposits rather than risking capital in search of unknown or new terrain.
Yet ofttimes when a junior exploration company such as Kingwest Resources (ASX:KWR) has the temerity to pursue an overlooked gold exploration opportunity it pays dividends – in every sense of the word.
When your maiden diamond drilling program finds a ‘potentially large-scale’ bedrock gold mineralised system just a few short kilometres north of Bardoc Gold’s (ASX:BDC) 1.7Moz Aphrodite deposit, it’s a positive sign. Bedrock is considered the most reliable place to find gold, as it’s a natural location that traps the yellow metal.
Just like the ancient Greek goddess Aphrodite, mining minnow Kingwest Resources sees the beauty of this potential at its ‘highly prospective’ Goongarrie Project, located 75km north of Kalgoorlie – a mining hotspot with long-established infrastructure situated in the eastern part of the Yilgarn Craton.
And the company is passionate about discovering whether the litho-structural setting at its Sir Laurence prospect, just 13km north of Bardoc’s Aphrodite, can host a large, mineralised gold deposit.
At Kingwest’s southern boundary, fellow Western Australian mining company Ardea Resources (ASX:ARL) hosts the Aphrodite North gold discovery in which multiple gold targets have been defined.
Kingwest is holding court among good company.
Having the Goongarrie Gold Project situated in a globally recognised yet still overlooked mining jurisdiction alongside attractive neighbouring deposits, means the junior explorer can leverage off surrounding infrastructure, with scope to accelerate its gold strategy.
Kingwest Chief Executive Officer Ed Turner explains: “Proximity to neighbouring deposits is not necessarily important but being along strike from them in a similar geological setting is. And yes, sharing access to excellent infrastructure is a big advantage when trying to take a deposit from discovery into production.”
The Goongarrie Project hosts an 18km section of the alluvium-covered and virtually unexplored, gold-mineralised Victorious Basalt/Black Flag beds contact, which at 75km south of Kalgoorlie becomes the Golden Mile Dolerite/Black Flag beds contact, hosting 80Moz gold.
“Proximity to neighbouring deposits is not necessarily important but being along strike from them in a similar geological setting is”
Gold exploration in the Yilgarn has long since shifted out from the outcropping historic goldfields into the surrounding regolith covered areas.
This has produced eye-catching new discoveries, however the extensive salt lake-covered areas surrounding the 162,710oz historic Goongarrie gold mining centre have yet to be explored.
Kingwest has recognised this overlooked opportunity and as such acquired 125km-square of leases over the outcropping Goongarrie goldfield and surrounding salt lake and sand areas. These covered regions overlie unexplored extensions to the highly mineralised segment of the Bardoc Tectonic Zone.
The Bardoc Tectonic Zone is an intensely gold-mineralised regional shear zone that runs from Kalgoorlie in the south to Menzies in the north, which is the locus of numerous large gold deposits boasting a total gold endowment of more than 90Moz.
In parallel, Kingwest’s strategy includes assessing other targets at Goongarrie including the gold-mineralised Comet Vale Shear south of Orminex’s Sand Queen gold deposit, the alluvium-covered strike continuation of the Goongarrie Historic Mine Sequence, and gold-mineralised Mt Pleasant sill beneath Lake Goongarrie.
In times of turmoil, gold is the standard
Kingwest has reported that it has intersected bedrock gold mineralisation from maiden diamond drilling at the Sir Laurence gold targets within Goongarrie.
It’s still early days, and economic grades in the first two holes are yet to be intersected, meaning much work still needs to be done.
“Size and grade are the most important factors that will affect the economics of a deposit at Goongarrie. Goongarrie is close to numerous mills so that if the deposit is not large enough to justify building a mill onsite it could be still of interest to potential JV/strategic partners who have a mill.”
While the potential for the Goongarrie Project is yet to reveal itself, what is known is that there will be interest in what the deposit can offer from across the market.
Gold is a precious metal and has always been used as a store of wealth the world over for thousands of years.
The yellow metal is often considered to be a safe haven in times of financial or political uncertainty (much like these days) as unlike fiat currencies, or other assets that bear credit risk, it’s safe from becoming (almost) worthless, like some cryptocurrencies, for example.
“Given the state of uncertainty in the world from geopolitical and macro-economic points of view, I expect the gold sector to be attractive to investors and the price to remain strong particularly in Australian dollar terms.” says Mr Turner, a geologist with more than 30 years of global experience in the industry.
Moreover, the Australian government’s Department of Industry, Science, Energy and Resources (DISER) forecasts that global gold production will peak at 3,807 tonnes in 2024 and decline at an annual rate of 0.8% in 2025 and 2026, as ore grades decline, and operational costs increase.
While many gold miners will focus on expanding existing projects and extending the life of producing mines (usually at the expense of delivering lower grades), there will be a real need for new mines such as Goongarrie to come online.
Few people may know that while gold is a sound investment, it has intrinsic value in a range of uses. One, according to DISER, is that it’s a critical component in COVID-19 diagnostic tests.
Demand for the yellow metal surged in line with COVID-19 cases as it’s implemented into technology such as high-end LEDs which are used in skin sensors and heart rate-tracking, as well as used in smartphones and watches.
Also, demand for gold in technology and electronics increased in 2021, and last year jewellery fabrication made up some 55% of global gold use.
Kingwest holding court
If gold is the bedrock of stability for the global monetary system, then Kingwest’s potentially large-scale bedrock gold mineralised system could prove a stable revenue stream for the company.
Currently a junior explorer, Kingwest is also focused on advancing its gold projects into production.
Its other focus outside of Goongarrie is the Menzies project, one of Western Australia’s major historic gold fields. Menzies has recorded historical production of 643,200oz @ 22.5g/t Au from underground between 1895 and 1943, plus 145,000oz @ 2.6g/t Au open cut between 1995 and 1999, for a total of 787,200oz @ 18.9g/t Au.
According to Kingwest’s half-year report ending 31 December 2021, the company had $4.48 million in cash and cash equivalents.
Its major shareholders include Horizon Minerals (ASX:HRZ) (17.8%), HSBC Custody Nominees (Australia) Limited (3.66%), and Jeff Towler Building (2.5%), its latest annual report said.