This is the second 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.
Medallion Metals (ASX:MM8) has emerged as a notable exception in the junior gold exploration space as it advances its flagship project towards feasibility studies.
As Managing Director Paul Bennett told Mining.com.au in part one of this series, the company has been advancing its portfolio in the southern Goldfields region of Western Australia and a busy 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 new 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 93% (+627,000oz) in gold and a 238% (+42,000t) 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.
Grade is always king
The MD explains that while challenges exist in the junior gold space given current global market conditions, some aspects of an asset never change in terms of what investors consider when assessing projects.
“Grade is king is something you hear a lot and there is a lot of truth in that statement. Depth from surface, grade and geometric continuity, metallurgy, jurisdiction are all important considerations as well. New discovery potential is also critical. We think our assets screen well on all of those metrics. It’s a good story to tell.”
“Grade is king is something you hear a lot and there is a lot of truth in that statement”
As reported in February, the update MRE at the Ravensthorpe Gold Project increased to 1.62Moz and grade remained unchanged at 2.6g/t Au-Eq (open pit 2.2g/t Au-Eq and underground 5.2g/t Au-Eq).
“All of the resources are within 300m of surface, three quarters of them within 150m, roughly 20% of the resource is oxide. Industry standard flotation and leaching will be used to recover the gold and copper. The asset is located 500km from Perth, the access and infrastructure is outstanding. We’ve set ourselves a target of being able to demonstrate a production rate of 100,000oz per annum for a minimum of 7 years and we’re confident Kundip and deliver that outcome.”
The MD explains that annual production of 100,000oz is an important threshold for investors, that scale providing the ability to overcome the fixed costs of running a mine in WA.
“The annual production rate of 100,000oz and 7 plus years of mine life gets us on the radar of many investors.
That would also put us on the radar of the mid-tier miners, I don’t think this moves the dial for the big boys, but the next tier down is definitely growth constrained and there aren’t that many undeveloped gold projects in Western Australia that have the scale, the grade and the upside of our assets.
That scale and grade should open us up to a broader range of equity investors, as well as to debt and commodity linked products, all these different options are open to us now that we’ve got that established mass of metal in the ground. So, we’re looking at all those different alternatives and it might be one of them or it might be a combination of them that funds us through to a final investment decision.”
Golden future
Bennett says Medallion still has a lot of work to do as it undertakes feasibility studies throughout 2023, and the whole team from the boardroom down are aligned with its growth strategy.
He notes that in terms of executive incentives, everyone from the board now has the same threshold and figures to their equity incentives, which come in 3 stages. One is achieving a mineral resource of 2 million ounces gold equivalent; achieving an ore reserve of 1Moz gold equivalent; and then achieving a positive final investment decision (FID) on the project.
“So, everyone inside the business is aligned in that regard, and there’s no confusion about what the plan is.”
“So, everyone inside the business is aligned in that regard, and there’s no confusion about what the plan is”
In addition to gold and copper, Medallion also holds a 100% interest in a base and precious metal project immediately to the south, known as the Jerdacuttup Project. Over half the ground holding in Ravensthorpe straddles Jerdacuttup’s Proterozoic sediments known to be fertile for Sedimentary Exhalative (SedEx) deposits. Bennett says that while it’s potentially a company-making asset in and of itself, Medallion is being measured and diligent about expenditure outside of gold and copper particularly as capital markets are still tight.
“We are working at rates that keep the tenements in good standing. But our investors are looking for exposure to gold, so they probably discount the exposure to the base metals. What we will look to do is try and get that asset out on its own, with its own balance sheet, its own management team, and give it a life of its own, the same as we did earlier in 2021 with our nickel ground, which we vended into our neighbours NickelSearch. Our shareholders retain a significant exposure to that business, its assets and talented management team.
We will very much remain a gold and copper focused business. As a result, we may look for more gold and copper opportunities and then with respect to the non-core assets we find ways to rationalise the portfolio to increase our focus on gold and copper to maximise the value of those non-core assets for our shareholders.”
Nickels and dimes
Medallion holds a 15.1% stake in WA nickel sulphide explorer NickelSearch. At the time of writing, NickelSearch had a market capitalisation of about $9.3 million.
As reported by Mining.com.au on 14 March, a recent reverse circulation (RC) drilling program was completed at the NickelSearch’s Carlingup Nickel Sulphide Project near Ravensthorpe. The assays confirm that the massive sulphides seen in drilling at its ‘high priority’ target Sexton contain significant nickel mineralisation, with DHEM surveys showing that the mineralisation extends down-plunge and remains open.
Follow-up drilling in planning to test the strong conductivity down-plunge where results show an increasing width of nickel mineralisation and target the off-hole conductor and continuation of mineralisation up-plunge to surface.
Bennett reiterates that while having exposure to a pure nickel play is advantageous, for the time-being it remains a strategic investment. Oftentimes it can be difficult to pivot to another commodity particularly if legacy shareholders are reluctant to buy into the shift in strategy.
“We need to stay absolutely laser-focused on that gold-copper opportunity notwithstanding, how tempting it is sometimes to look at these other options”
“We need to stay absolutely laser-focused on that gold-copper opportunity notwithstanding, how tempting it is sometimes to look at these other options. You risk losing focus, you risk creating the impression that perhaps the asset that you’re running with at present is not as strong as you might be thinking. We need to avoid that at all costs because there is no question in my mind about the quality of RGP and that it will be a mine in the future.”
For Medallion, it may not be under as much pressure as many of its peers considering the strides it has made since listing in 2021, however the company is taking nothing for granted
The MD says, while the past 2 years have been rewarding, the best is yet to come.
The writing is already on the wall.
Write to Adam Orlando at Mining.com.au
Images: Medallion Metals Limited
