Barton Gold (ASX: BGD) (OTCQB: BGDFF) has engaged Perth-based contractor Strike Drilling to conduct a Phase 2 resource upgrade campaign at its Tunkillia gold project in South Australia.
The 30,000-metre program follows Phase 1 infill drilling of the project’s high-value early S1 and S2 starter pit areas.
These have been modelled to produce $1.3 billion operating profit during the first 2.5 years of operation with broad high-grade intersections.
Key intersections from Phase 1 drilling were 23m at 2.25 grams per tonne gold from 62m including 2m at 5.45g/t from 69m, 1m at 7.5g/t from 75m, and 1m at 8.9g/t from 81m.
Other hits featured 22m at 2.43g/t gold from 100m including 1m at 17.6g/t from 107m, and 28m at 2.6g/t gold from 129m including 2m at 20.9g/t from 144m.
Resource Estimate Upgrade
The Phase 2 campaign will target further areas of interest in the S1 and S2 areas and infill drill the S3 pit, Area 223 North, and Area 51 optimised pit areas.
Barton expects the results will underpin an upgrade to Tunkillia’s global mineral resource estimate.
The company hopes to convert of all of the project’s open pit mineralisation — modelled in a recent optimised scoping study — to Measured and Indicated categories to accelerate financing and development.
The study outlined a compelling development scenario, with annual production of 120,000 ounces gold and 250,000oz silver at a 73.2% internal rate of return and a total life-of-mine operating cashflow of $2.7 billion.
Financial and Capital Leverage
Managing director Alexander Scanlon said the scoping study had demonstrated the financial and capital leverage available to large-scale bulk processing operations.
“We have the major advantage of a higher-grade ‘Starter Pit’ that can pay back development costs twice over in the first year at an assumed $5,000/oz gold price and $50/oz silver, giving us $2 billion operating profit in the first two years,” he said.
“Our recent Phase 1 resource upgrade results confirmed the mineralisation behind these compelling economics and we will now execute the balance of Tunkillia’s development drilling programs on an expedited timeline, targeting ore reserves, a robust pre-feasibility study, and a mining lease application by the end of this year.”
The mining lease application will be followed by project finance discussions, and the company intends to work with all key stakeholders – including the South Australian government – to bring Tunkillia online as soon as possible.
“This project could generate substantial economic benefits for Barton and all of our stakeholders, including the state,” Mr Scanlon added.
