Stockpiled ore accumulates at Penny’s Find
Empire Resources Ltd (ASX:ERL) announced on Wednesday that it had negotiated a second agreement for the toll treatment of ore from the Penny’s Find gold deposit, a development which should see maiden processing commence in July.
ERL holds a 60% interest in the new Penny’s Find gold mine which is located 50 kilometres north-east of Kalgoorlie in Western Australia. ERL acts as mine manager, and the remaining 40% interest is held by unlisted group Brimstone Resources.
The company had previously signed an agreement with Golden Mile Milling to toll treat ore from the Penny’s Find gold mine at the Lakewood Mill located on the southern outskirts of Kalgoorlie-Boulder.
This second agreement with Maximus Resources Pty Ltd, operator of the Burbanks Mill situated south of Coolgardie in Western Australia, has been negotiated because of scheduling problems at the Lakewood Mill.
Management identifies processing alternative to facilitate immediate production
Management is focused on immediately moving to gold production, and this has prompted its decision to seek out an alternative processing plant in Burbanks Mill. A recent inspection of the plant facilities confirmed its suitability for treatment of the free milling Penny’s Find ore.
The agreement outlines industry standard terms and conditions for the batch treatment of Penny’s Find ore at the Burbanks Mill with each treatment campaign scheduled to process between 15,000 and 20,000 tonnes of ore.
The agreement allows for the treatment of up to 150,000 tonnes of ore with an option to extend this figure.
Of course investors should be mindful here that the agreement is in its early stages and professional financial advice should thus be sought if considering this stock for your portfolio.
Transport of ore from the growing stockpile at the Penny’s Find mine is scheduled to begin before mid-July with treatment of this ore at the Burbanks Mill starting shortly after this time.
The Penny’s Find ore reserve is contained within a planned single open pit mined to a depth of 80 metres. The ore reserve summary as at February 2016 based on a AU$1500 per ounce gold price was as follows.
It is worth noting that the current Australian dollar gold price is circa $1600. However, the February 2016 data provides some guide as to the cash flow that can be generated should ERL meet its full quota of 150,000 tonnes of treatable ore.
The end game is to eventually take the mine underground as mineralisation extends to at least 250 metres in depth where it remains open with the current known deeper resource inventory of 170,000 tonnes grading 5.4 grams per tonne gold beneath the open pit (see table below).
Cash generated from processing the open pit ore reserves would assist in funding an underground project.