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Kalamazoo Resources has taken back the reins of its 1.44-million-ounce resource Ashburton gold project in Western Australia, after an option held over it by mega-miner Northern Star Resources expired.
Whilst Ashburton hosts potentially more than 770,000 ounces of mineable gold with a solid grade of 2.53 grams per tonne gold, Northern Star has a full book having just paid $5 billion for DeGrey Mining and has bigger fish to fry.
Kalamazoo, however, is now looking to immediately turbo charge the project with the gold price continuing to test record highs. The company has kick started a new scoping study using fresh technical data and has undertaken a new $2 million placement to unlock what could potentially become a serious producer in the near term.
Kalamazoo says the timing couldn’t be sweeter, with Aussie gold now soaring to A$5100 an ounce—up more than A$2,000 since it struck the original $33 million option deal with De Grey just 18 months ago.
That option, later handed to Northern Star in its takeover of De Grey, has now lapsed, but not before leaving Kalamazoo holding the keys to a far more valuable prize delivered from the exploration sweat of others.
Notably, an earlier 10-hole drill blitz at Ashburton by De Grey’s lit up the boards with intercepts such as 47m at 5.5g/t gold from 30m, 55.5m at 4.1g/t from 177.6m and 31.8m at 3.3g/t from 132.2m.
Despite the dazzling numbers, Northern Star says it’s taking a more measured approach to new developments outside its newly acquired 11-million-ounce Hemi juggernaut, DeGrey’s principal asset.
In addition to the colossal $5 billion price tag Northern Star is projected to throw another $1.3 billion capex at Hemi to bring it into production and has a pretty full dance card.
Retaining 100% of the Ashburton Gold project in today’s record gold market is a pivotal and positive milestone for Kalamazoo. Since initially granting the Option to De Grey almost 18 months ago, the gold price has risen by over A$2,000 – fundamentally improving the project’s economics. Northern Star has agreed to provide us with the technical data and, building on this work, our Scoping Study – to be delivered in Q4 this year – is expected to confirm compelling economics and establish Kalamazoo as a significantly undervalued gold developer.
Ashburton sits 35 kilometres southeast of Paraburdoo in Western Australia’s Pilbara region and within the richly endowed Nanjilgardy fault zone, which includes such mines as Black Cat Syndicate’s 350,000 ounce Paulson gold mine.
Historical mining between 1998 and 2004 in the region produced 350,000 ounces with many, including, Kalamazoo believing that the best is yet to be discovered.
The primary gold mineralisation centres around the company’s Mt Olympus deposit and has been subject to extensive drilling, metallurgical test work and geological modelling by De Grey during the 18-month option period.
As part of that work, recent pit optimisation studies, by combining the Mt Olympus and the West Olympus deposits into a single open pit and using updated gold price assumptions of A$4,500 per ounce, have marked out the 772,000 ounces of mineable gold going 2.53g/t gold.
Kalamazoo says the updated resource number represents an impressive 17 per cent jump on the earlier 2023 estimate, which used a A$2600 gold price.
Adding fuel to the fire, preliminary metallurgy has confirmed that a straightforward crush – grind – float circuit can produce saleable concentrates with gold recoveries of up to 94 per cent and concentrate grades averaging more than 30g/t gold.
With a lot of heavy lifting already done by previous suitors, Kalamazoo has been handed the new data, allowing the company to fast-track its scoping study for completion within the next few months – all at minimal cost.
Management has brought in BHM Process Consultants and Entech to help fast-track the study. Seasoned operator Simon Coyle, the former GM of Operations at the uber-successful Pilbara Minerals, has also been tapped to take the reins as project manager.
By combining its 2023 resource estimate of 16.2Mt at 2.8g/t gold from Mt Olympus with the fresh high-grade data, Kalamazoo is confident it can carve out a low-cost, high-margin development pathway. The upcoming scoping study could also become the launchpad for a full-scale pre-feasibility study and set the stage for a serious gold play in the Pilbara.
Backing its ambitions, the company has locked in the $2 million placement at 9 cents per share, with one free option for every two shares. Notably, directors are chipping in $450,000 of their own cash, reflecting a strong internal conviction.
With gold prices at record highs, a simplified processing route, and a major scoping study underway, Kalamazoo looks well placed in the current environment that has seen listed companies in a fever pitch to pick up gold projects with scale and grade.
The stars appear to have aligned for Kalamzoo. With Northern Star looking to fry bigger fish and its nose no doubt bleeding from the $5b price tag attached to DeGrey, Ashburton has dropped back on its lap at a time when an army of smaller listed players are out there jostling for projects just like this one.
