Dollars in the bank as Classic Minerals transitions to production

Western Australian gold exploration and development company Classic Minerals Limited (ASX:CLZ) has completed its preliminary metallurgical test work program on samples collected from drilling at Kat Gap.

The test work has been conducted on oxide and fresh mineral samples from the Kat Gap program.

The tests covered both conventional gravity and leach testing on the samples provided.

The results have been particularly encouraging, as the material tested indicated that the majority of the gold could be recovered by traditional gravity separation techniques. And, with the mineralisation located from near-surface this has the potential to provide a low processing cost option for the material.

The conventional gravity separation process has delivered up to 75% gold recovery from the oxide samples with the conventional cyanide leach process provided 95% - 96% recovery from both fresh and oxide samples.

These results are extremely positive, and the next stage of testing will focus on variability across the mineralisation and firming up the process options to deliver the indicated recoveries consistently.

The preliminary results indicate that Classic has the potential for early revenue generation through either toll treatment or self-processing of the material from Kat Gap.

The toll treating provides rapid cash flow while the onsite processing generates greater profitability as Classic can control all mining and processing costs.

400,000 ounce resource, bonanza grade gold and imminent production

Commenting on the options available and the group’s potential to boost throughput on the back of upcoming drilling, chief executive Dean Goodwin said, ‘’We are fortunate to have found, after conducting detailed research, that the metallurgical results confirm that the ore, when processed using traditional gravity and leach processes provide an outstanding gold recovery.

‘’The recent results which included 76.7 g/t gold from 79 metres and 9 metres grading 8.7 g/t gold from 14 metres give us great hope that there is the possibility of gold deposits to augment and further enhance the gold resources already determined at Kat Gap.

‘’We will be working on extending the resource with more infill drilling and then expanding the resource with extensional drilling along strike as well as in the granite.’’

One aspect that tends to be overlooked in terms of attributing a fair valuation to Classic is its established resource of more than 8.2 million tonnes grading 1.5 g/t gold for more than 400,000 ounces.

Particularly in the current gold environment, it is virtually impossible to find a company with a sizeable resource, a growing high-grade exploration deposit and imminent production for a market capitalisation of about $30 million.