This is the first in a two-part feature series.
This article is a sponsored feature from Mining.com.au partner Medallion Metals Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
The road to exploration success is not always paved in gold.
The journey for a junior mining company is as varied as there are as many explorers operating in the space. Yet few minnows can categorically claim to have progressed their flagship project to feasibility studies within just a few short years of listing on the stock exchange.
Medallion Metals (ASX:MM8) is a notable exception.
The company has been advancing its tenement portfolio in the southern Goldfields region of Western Australia and an active H2 2022 culminated in the release of an updated 2012 JORC Mineral Resource Estimate (MRE).
The updated MRE is premised on about 43,500m of reverse circulation (RC) and diamond drilling (DD) drilling undertaken since Medallion’s listing on the Australian Securities Exchange (ASX) in March 2021. As of 31 December 2022, the updated MRE was 1.62 million ounces at 2.6 grams per tonne gold equivalent.
Overall gold equivalent metal content has increased by 112% (855,000oz), comprising of a 93% (+627,000oz) uplift in gold and a 238% (+42,000t) uplift in contained copper metal in under 2 years since listing. The MRE update includes the Gem Restored, Gift, and Desmond deposits in addition to MRE updates for the Gem, Harbour View, and Flag deposits.
As Managing Director Paul Bennett explains to Mining.com.au, while the company has attractive standalone assets, it certainly helps they are situated in a tier-one mining jurisdiction that offers belt-scale opportunity and multi-million-ounce potential.
“Medallion has been absolutely laser-focused since that point in time (listing on the ASX) on growing the project resources to a critical mass that will sustain the development of a long-life and a low-cost gold and copper operation”
“Medallion has been absolutely laser-focused since that point in time (listing on the ASX) on growing the project resources to a critical mass that will sustain the development of a long-life and a low-cost gold and copper operation. So, we’ve been endeavouring to maximise the amount of money that we invest directly into the ground to that end, to growing those resources. Obviously, with gold exploration, it’s been a tough space over the last couple of years.
It’s a crowded space and the vast majority of exploration spending in Australia at the moment is going into gold exploration, notwithstanding the emergence of battery metals. The rest of it still goes to gold. And there’s a lot of companies out there who we are competing with for capital and attention to continue to fund what they want to do. But we think that there’s a number of points which when taken together that set Medallion apart.”
Commanding position
First and foremost, the MD says, is that Medallion has exposure to a large portion of the greenstone belt in Western Australia, which is fertile for gold and copper. The company’s projects are located in the southern Goldfields, some 550km from Perth, comprising 300km-square of mineral tenure straddling the boundary of the Annabelle Volcanics and the Ravensthorpe Tonalite. This corridor has hosted the majority of historical gold and copper production from the region.
Since listing in 2021, Medallion’s exploration and evaluation has been focused on the Kundip Mining Centre (KMC) at the southeast end of at the Ravensthorpe Gold Project (RGP). During H2 2022 about 7,500m of extensional RC and DD was completed at KMC, which yielded multiple ‘high-grade’ gold and copper results.
Bennett adds: “These assets, they’re increasingly rare and we think that over time they will be demonstrated to be extremely valuable. The assets are located just 550km kilometres from Perth and have access to outstanding infrastructure and the community is supportive. Also, there’s 2 major resource developments underway in region and that demonstrates that Ravensthorpe is an enabling jurisdiction for what we’ve got in mind.”
What does Medallion Metals have in mind?
Firstly, it is de-risking KMC at the southeast end of Ravensthorpe. To date, Medallion already has licences, approvals, and infrastructure in place, with a Prefeasibility Study (PFS) well underway. Also, 54,000m of drilling has been completed for resource growth and discovery with the objective to be able to demonstrate the Project can produce 100,000oz per annum for a minimum 8 years with upside.
The MD notes the company is well advanced compared to many of its peers, and while Medallion is somewhat ahead of schedule, the scope and scale of the PFS will depend on a range of factors, not least of which is access to capital.
“The resource has grown more rapidly than we expected and the proportion of that resource that converts into the mine plan is also quite high, potentially approaching 75%”
“The resource has grown more rapidly than we expected and the proportion of that resource that converts into the mine plan is also quite high, potentially approaching 75%. So, we’ve got a rapid rate of resource growth combined with a high conversion rate. So, we think we’re closer to that critical mass than perhaps we thought we expected we would be when we started on this endeavour back in 2021. And that’s good news. There still needs to be a lot of work done to demonstrate it is technically and commercially viable, but we’ve got a really good base now to go and do that work.”
Focus on feasibility studies
Medallion expects to complete the PFS by the third quarter of 2023.
“We have a high degree of confidence the PFS will yield a positive result both from technical and commercial perspective. A strong gold price is an added tail wind.
Beyond the PFS, we expect we’ll need to undertake approximately 30,000m of additional drilling which will have both infill and extensional components to it.
The objective of that work is to maximise and build the level of indicated resource that optimises into the mine plan as well as extending the known resources at a depth and along strike.
It makes sense for us to grow the resource and build confidence in it and at the same time, we want advance as quickly and efficiently as possible. When that next round of drilling gets done, we’ll collect more metallurgical samples and geotechnical data, then there’ll be testwork and analysis based on that drilling. The results of that work will inform the Bankable Feasibility Study (BFS), which we hope to kick off in 2024.”
Bennett says in order to undertake the drilling and additional work beyond the PFS, Medallion will need to raise capital. It remains open as to what avenues it could take in that respect and how much.
Medallion’s net assets increased during the half-year to 31 December 2022 by more than $3 million. The company’s cash position, inclusive of restricted cash, was almost $2.84 million. The company also holds a 15.1% stake in WA nickel sulphide explorer NickelSearch (ASX:NIS). At the time of writing, NickelSearch had a market capitalisation of about $8.34 million.
Bennett says Medallion is in a solid position to continue advancing its portfolio, however like all juniors in the gold space it is not immune to the external factors affecting the sector.
“The cost base of gold projects in Western Australia has jumped up across the board. There have been sharp increases in labour, fuel and all the key inputs to mining operations you typically encounter in WA. Because the deposit is shallow and has a favourable orientation, we have some natural advantages in terms of cost structure.”
This aspect of the project – being close to surface – means Medallion can be flexible in its development approach and opens the door wide open to potential interest from larger third parties that may seek to get involved.
The MD adds: “There aren’t many gold deposits of this scale and grade remaining undeveloped in WA so I’m sure it’s on the radar of those looking at growth options. Having said that, we believe we’re completely capable of developing this project on a standalone basis subject to markets being supportive. Given the deposit size our confidence is increasing that there will be a gold copper mine built in Ravensthorpe the next time gold equity sentiment swings up. How it gets done will come down to what makes the most sense for our shareholders.”
In the second part of this series, Bennett outlines Medallion’s expectations for another possible MRE update, and explains despite challenging market conditions having an advanced attractive asset in a tier-one mining jurisdiction positions Medallion ahead of most peers.
Write to Adam Orlando at Mining.com.au
Images: Medallion Metals Limited
