This article is a sponsored feature from Mining.com.au partner Prodigy Gold Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
When gold was first discovered in the Tanami Desert in northern Australia in circa 1890s, it was just small-scale mining that was scattered throughout the region in the decades that followed.
The precinct is regarded as one of Australia’s most productive gold producing areas. However, operations were sporadic up until the 1980s when the open pit and underground Tanami Gold Mine was developed by Normandy Mining.
Over the 125 years since the initial discovery, the Tanami Gold Province has proven to be a well-endowed multi-million-ounce region to pique the interest of many a gold explorer.
One such company, Prodigy Gold (ASX:PRX), is taking a contemporary and de-risked approach to being the next successful province player, with a unique greenfields and brownfields exploration portfolio.
For Managing Director Mark Edwards – who has more than 25 years’ experience working as an accredited manager and mine geologist – the value proposition of this historic region is simple.
“There have been two successful mining operations in the Tanami region since the 1980s with the Central Tanami mine producing well over one million ounces, and the Granites Gold mine which has produced over ten million ounces.
The geology of these two mining areas is well understood and this assists with targeting new deposits.
Both mills are still in place (one in operation and the other in care and maintenance) meaning converting any new resources into something that can be mined is a much simpler process than finding something isolated from this sort of infrastructure.”
At the aforementioned Tanami Gold Project, Newmont Mining (NYSE:NEM) had previously mined about 2Moz from the project’s 43 open pits between 1987 and 2005. Today the Tanami mine (also known as the Granites) is the second-largest underground gold mining operation in the country.
Delivering with defined resources
For Edwards, advancing Prodigy’s projects and adding potential ounces within close proximity to these historic assets could be mutually beneficial to all parties that operate in the region.
This is particularly reassuring for Prodigy, which has a current focus to continue exploring for gold within the Tanami region on its 100% owned tenure.
Commenting on Prodigy’s tenure, Edwards notes: “The company holds defined resources, such as Hyperion and Buccaneer, which could be expanded plus several defined prospects that require follow up work such as Tregony and Boco.”
“The company holds defined resources, such as Hyperion and Buccaneer, which could be expanded plus several defined prospects”
However, as many mining companies can attest, previous exploration success is not necessarily an indicator of future results.
Unless, like Prodigy, which is not putting all its eggs in one basket, an explorer can roll out a diverse exploration portfolio of greenfields and brownfields assets with different projects at various stages of development.
At the forefront Prodigy’s strategic focus, over the coming two years, will be around the 100% owned projects, including at the large-scale Buccaneer deposit where a scoping study is underway.
Another immediate focus is Hyperion, where metallurgical drilling and test work will be undertaken, as well as Tregony, with a review of a historic mineral resource with follow-up drilling on the cards.
In terms of greenfields exploration, drilling and reviews of its Lake Mackay Project, as well as completing the sole funding part of its agreement with IGO (ASX:IGO) through two more diamond holes, is a focus running in parallel.
Balancing the scales
While it appears Prodigy has its plate full, Edwards is clear about the company’s pathway forward and the fact that it is more than capable of delivering prescribed outcomes.
The MD notes: “The simple focus is to review advanced projects for resource growth and determine how to maximise value in these (Buccaneer, Hyperion, and Tregony) and greenfields exploration at Boco North and Lake Mackay.”
“We’re just trying to get that balance right between greenfields exploration and resource development.”
To help balance those exploration scales, a particular focus is the Buccaneer Project, located about 90km to the North-West of Newmont Mining’s world-class Callie Gold Mine.
Metallurgical text work at Buccaneer continues and Prodigy is advancing its scoping study for a simple, low-cost heap leach operation. As building and permitting a mill to process mined resources can take many years and include massive capital outlay, heap leaching will enable lower operational costs.
Buccaneer has a 585,000-ounce gold mineral resource hosted in monzogranite intrusion and is located on an existing mineral lease just 65km from the Central Tanami JV (CTJV) processing plant, with the JV being between Tanami Gold (ASX:TAM) and Northern Star Resources (ASX:NST).
If the scoping study proves positive Prodigy will seek to further extend the known mineral resource and upgrade a portion from inferred to indicated to support the likely prefeasibility study (PFS). While Edwards was reluctant to place a timeline on when the scoping study would be completed, he did note that a positive result would open the door for a near-term PFS.
However, the MD, who has strong community, business, and government ties in the Northern Territory, as well as being a committee member of the Minerals Council of Australia, is “absolutely optimistic about moving forward with Buccaneer.”
De-risking the Prodigy portfolio
This optimism extends across the company’s entire greenfields and brownfields exploration portfolio. Its range of targets are strategically situated in the Central Desert because it is one of the final frontiers for gold discovery where further world-class deposits remain to be found.
Early on, Prodigy recognised the importance to have a balance of greenfields and brownfields targets in order to find those undiscovered world-class deposits that remain.
Feedback from investors has been clear that they are keen for Prodigy to develop the known deposits and prospects as these are closer to being turned into mines, yet to also seek greenfields targets which present the potential to find another ‘Callie’.
Edwards adds: “It is really important to get the balance right but to find a significant gold resource it is good to be looking where little work has been completed before.
“It is a great area to explore as it has potential for discovery of a large-scale deposit”
Lake Mackay is a good example – a lot of the base exploration work has been done to develop targets (surface geochem sampling and geophysics) but limited drilling has tested these targets.
It is a great area to explore as it has potential for discovery of a large-scale deposit. On the other hand, we have drill-ready targets, such as Tregony, that could increase our mineral resources, so advancing these projects will add value to our company and therefore to our investors.”
As Edwards notes, the Tanami region is the most isolated gold province in Australia with a gold endowment of past production and current resources of more than 11 million ounces, hosting the aforementioned world-class Callie deposit, as well as several smaller deposits.
The MD adds that Prodigy easily fits into the current competitive landscape as a contemporary prodigious explorer backed by deals with some of Australia’s major mining companies.
Prodigy is attracting interest from these majors not only due to its impressive portfolio but its ability to be a low-cost player by executing well-designed and strategic JV agreements.
“Prodigy Gold currently has active joint ventures with Newmont on titles around their Callie operation. They are exploring their own tenure in combination with the JV to determine the potential for large scale mineral resources. We will continue to work closely with Newmont where we can.
In terms of our current 100% owned ground, tenure is located on known mineralised structures, within suitable trucking distance to current infrastructure, so potential discoveries on Prodigy tenements could potentially form part of a future agreement with their owners.
It should also be noted that Prodigy Gold is currently investigating a heap leach style operation at Buccaneer so we are looking at how we can advance our projects in the best way for our stakeholders.
On the positive side, while remote, the area is serviced by the Tanami Road and with such a large mine at the Granites/Callie, access to mining services is good.
Finally, the Territory and Federal governments are looking at upgrading the Tanami Road which will make the area much more accessible.”
The aforementioned JVs are helping the company to accelerate its gold and base metal projects. Of particular note is the unique Lake Mackay Project JV with IGO (ASX:IGO), which remains an active explorer looking for sound projects throughout Australia.
Commenting on the JV, Edwards said: “They (IGO) are not afraid of greenfields exploration and the Lake Mackay project has been something they have completed significant work on over the past few years.
While we have restructured our JV with IGO, it has allowed Prodigy to have a larger interest in the gold tenements, this works well for us as while we can explore for base metals our focus remains on gold.”
Plate is plentiful
These JV deals are not static. Moving forward, Edwards said Prodigy will continue to work with its JV partners on various tenements to continue advancing its projects.
“They are spending their exploration dollars on JV tenements which is a good outcome and if they find anything then we both benefit.
We will also continue exploring on our 100% projects to advance our understanding so it will continue to be a balance over a very large land holding.”
If all this wasn’t enough Prodigy still has more on its plate.
The company has a number of projects it deems as non-core. They are assets that do not fit into Prodigy’s strategy but would fit well into another company’s portfolio with different objectives.
“When divesting there are ways to maintain some level of involvement with the project such as royalties or share ownership, so we could benefit from their success.
“As Prodigy is a small company, we must ensure we invest in the projects that are most likely to return positive results”
As Prodigy is a small company, we must ensure we invest in the projects that are most likely to return positive results, this means we rank projects and drill those which will provide success to our stakeholders and divest or surrender lower ranked projects.
If a project is ranked in a low position, then it is unlikely that we will explore these areas, so the decision is made to either drop, sell or find other ways to get others involved in the project otherwise we hold this ground at a cost.
Examples of this are the sale of the Old Pirate project to a private entity, Stockton Mining. Prodigy Gold is working closely with Stockton as we close this deal to assist them in being successful explorers in the Tanami.”
Any capital raised from the non-core divestitures will go back into the ground in some way whether it be drilling, holding costs, or other support for exploration.
“Drilling, sampling, mapping and geophysics are the best methods to expand our knowledge and eventually our mineral resources so that is where we need to focus our money.”
Prodigy’s plate may seem full but its objectives are clear and its plans are being well-executed.
Those early days of mining in the Tanami Gold Province may have been sporadic, however Prodigy is in it for the long haul with a long-term strategy to have multiple operations at various stages of development.
As multiple major miners continue to explore in the Tanami Region, it’s clear that Prodigy is on track to be a successful explorer and could be on the cusp of producing plenty of ounces in one of Australia’s most productive gold producing regions.
Images: Prodigy Gold Ltd