Gold bull targets critical mass

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 27 Apr 2012   Posted by admin


SUBSEQUENT to listing on the ASX in 2010, Dampier Gold acquired the 700 square kilometre Plutonic Dome project in central WA from Barrick Gold. Since then, Dampier has rapidly positioned itself to become one of the next generation of WA gold producers, with its sights firmly set on near-term production.
The project is primarily located within the Plutonic Marymia Greenstone Belt, which remained largely unexplored until the late 1980s. Between 1998 and 2001, Barrick (then Homestake) consolidated ownership of the entire belt from a number of individual tenement holders. The area’s short history of intensive mining has helped position Dampier as one of the more exciting advanced WA gold explorers, with some considerable advantages as it heads toward first production.
An accelerated path to production Dampier is already reaping the benefits associated with a potentially accelerated, low capital expenditure path to production.
Firstly, its project surrounds Barrick’s Plutonic gold mining and processing facility, about 180km northeast of Meekatharra and less than 15km from the Great Northern Highway, which has a
1.8 million tonne per annum capacity. As Barrick processes only 0.9mtpa, Dampier has established framework terms for an ore purchase agreement that circumvents the sizeable capital outlay otherwise needed to develop its own processing facility.
Before joining Dampier in 2010 as chief operations offi cer, current chief executive officer Richard Hay held various roles in mining and exploration geology, including general manager of operations at Barrick’s Darlot gold mine. He asserts that Dampier’s affiliation with Barrick is significant.
“The relationship is very important to us, which is underpinned by Barrick being a major shareholder – they hold 6.2 per cent of Dampier at the moment – and they are very interested in a win/win situation where they can fill their mill close to capacity,” he said.
“That’s the attraction to Barrick, and obviously the attraction to us is that we can get our ore processed very easily.” Secondly, since mining started in the area in 1990, more than 4.7 million ounces of gold has been produced from 57 open pits and four underground mines within the belt. These operations have resulted in more than 85km of haul road being constructed to connect all major deposits to the Plutonic processing facility.
Thirdly, all of Dampier’s projects lie within granted mining leases, and the extensive history of environmental compliance further streamlines its progression towards a production scenario.
Advanced projects Historical drilling results coupled with follow-up drilling by Dampier in the tenements have yielded a mineral resource of 627,000oz of gold (5.2mt grading 3.8 grams per tonne of gold) across its many prospects. However, significant potential remains for additional mineralisation along strike and below the current pits. “We are still working on developing a critical mass so that we can pull together a mine plan that has sustainability; at this point in time we do not have a single deposit that would underpin a sustainable production profi le,” Mr Hay said. “We do have three advanced projects – Trident, K2 and Cinnamon – which would form part of a mining plan,” he said. Trident A revised resource estimate for Dampier’s Trident deposit was completed in November 2010, resulting in an indicated and inferred resource of 1.859mt at 5.5g/t gold for 326,100oz of gold, representing a 100 per cent increase on a 2005 estimate. While lower-grade mineralisation extends to surface, the high-grade mineralised zone occurs from 120m to 250m below surface.
During the 2011 December quarter, Dampier drilled 15 diamond core holes for 2390m and three reverse circulation (RC) holes for 2440m. Encouraging results from the RC drilling, designed to investigate shallow mineralisation, included 4m grading 8g/t of gold and 3m grading 19.22g/t of gold. These near-surface shoots have substantially enhanced Trident’s open pit potential,
with follow-up RC drilling planned for the future once assessment of the geology has occurred.
“We have always said that Trident will potentially be an open pit leading into an eventual underground operation,” Mr Hay said.
“The recent four intersections, whichare closer to the surface, are very encouraging, and we are assessing that as we speak.” K2 Dampier completed an updated mineral resource estimate for the K1 and K2 deposits in April 2011. These deposits previously formed the backbone of Resolute Resources’ Marymia operations in the 1990s. K1 has a resource of 750,000t grading 2.4g/t gold for 58,000oz of gold, while K2 hosts a total resource of 730,000t grading 4.1g/t gold for 98,000oz of gold. Well-established and well-maintained infrastructure at the deposits has positioned Dampier for a low capital outlay in its bid to re-establish production.
“The K1 deposit has a very well established haul road right through to the Plutonic mill, about 45 kilometres away,” Mr Hay said.
“With K2, you can add the 700 metre decline already into the ore body below. “So in terms of infrastructure, we can re-establish the K2 mine very quickly: getting access to the ore body to produce early tonnes once we decide to push the button on a mining decision,” he said. Drilling in the December 2011 quarter was successful in intersecting high-grade gold mineralisation along the western, central and main lodes of K2: confirming that the steeply-plunging, high-grade shoots extend below the former K2 open pit, close to the existing underground mine. These lodes constitute high-priority drill targets for Dampier, with deep drilling set to re-start in the June quarter to test their depth potential. Cinnamon The Budgie Corridor, which includes the highly-prospective Cinnamon project, is in the central area of the Plutonic Marymia Greenstone Belt. The only historical production in the area was from a shallow laterite pit mined briefly in 1997. During the 2011 December quarter, Dampier conducted an updated mineral resource estimate for the Cinnamon deposit, reporting a total indicated and inferred resource of 1.015mt grading 2.3g/t of gold for 74,100oz of gold. Dampier has identified Cinnamon as a key open pit prospect: it remains open at depth  below 200m, with potential for high-grade lodes to extend below the limits of the conceptual open pit.
“We have good reason to believe that this mineralisation style has been under-explored along that belt, and we are quite bullish in the fact that in last year’s reconnaissance RAB [rotary air blasting] air core program we had an intersection at four metres at 9.6 grams per tonne of gold, so that has us pretty excited,” said Mr Hay.
“We plan to follow that up in due course, once we have done an assessment on the geology of the area. Certainly we see significant opportunity along that corridor.”
Highly-prospective, but under-explored Despite its short history of widespread exploration, Dampier has asserted that the Plutonic Marymia Greenstone Belt hosts numerous under-explored mineralised corridors. A pipeline of new targets is emerging, including a large copper anomaly at Dampier’s Apex prospect, just 50km from Sandfire’s DeGrussa project. “It’s a very large anomaly: some 2.5 kilometres by 1 kilometre at this point in time. However, the extent is not closed off,” Mr Hay said. “We have just completed a mobile metal ion soil sampling program. The results, combined with geophysics and bottom-of-hole geochemistry, have defined two compelling drill targets which we are intending to drill in late April.” The company, in its exploration of the belt, has been assessing the extensive  geochemical data as a whole to establish potential drill targets.
“The integrated approach that we are talking about is the standard exploration approach, whereby we are looking at all the different data and assessing it on geophysics, geochemical and also surface regolith rock type,” Mr Hay said. “What is missing from the equation is the one to two million ounce deposit,
which you find when you go look at most other greenstone belts,” he said. “At the moment in this belt there is a big gap, and we see that as a massive opportunity.” Meanwhile, Dampier is enjoying the benefits that come with a buoyant gold price, potential fast tracking to production with low capex requirements, a quality mineral resource base with opportunities  for growth and a dominant holding in a prolific but under-explored greenstone belt. The company’s bullish yet innovative and calculated approach to exploration looks set to pay off in the near future. “Previous owners took the lowhanging fruit and off they went. What we are finding now is that there are far more subtle anomalies that have been overlooked for various reasons,” Mr Hay said.
“We can’t say exactly when we would be able to move into production; it depends on discovering and proving-up more tonnes and ounces over what we currently have,” he said.
“We have a very solid resource of quality ounces. What we are aiming to do is to boost that northward to a point where we can get to that critical mass.”

 

By Reuben Adams


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