PNX Metals Limited (ASX:PNX) is prioritising near-term gold production at the Fountain Head Project in the Pine Creek region of the Northern Territory by accelerating heap leach studies and development plans.
Heap leaching is being assessed as a low-cost, scalable option for rapidly monetising and generating early cashflow from existing gold resources at Fountain Head, whilst preserving the future value of the Hayes Creek project.
This strategy may also provide an opportunity to enhance overall Hayes Creek project economics and extend the project mine life with the mined-out Fountain Head pit available for use as tailings storage from subsequent sulphide flotation of ore from the Mt Bonnie and Iron Blow deposits at Hayes Creek.
Near-term development of gold resources also capitalises on a supportive high gold price environment and preserves the in-ground value of the Hayes Creek zinc-gold-silver project in a low zinc price environment.
Plan view of Fountain Head showing proposed heap leach infrastructure, waste rock stockpile, existing resource projected to surface and mineral leases
Managing director James Fox said: “After careful and comprehensive consideration of all options, the board has resolved to focus on establishing a gold heap leach operation at Fountain Head with the expectation that it will provide valuable early cashflow and also aid in the development of the broader Hayes Creek project.
“The strategy makes sense given the strength of the Australian dollar gold price and will position the company to make the best use of its growing resource base.”
New RC and DD program
The company has begun an 8,000-metre program of RC and diamond drilling aimed at increasing geological confidence in the Fountain Head resource, particularly in the western part of the deposit where development is expected to begin.
The program will also provide drill core for additional geotechnical and metallurgical test work.
Successful gold heap leach as a low-cost gold processing method may also lead to the development of other gold deposits in the region, many of which lie within PNX’s project areas.
Some of these deposits are considered 'stranded assets' due to their modest grades and distance from existing processing infrastructure.
PNX’s longer-term aim is to evolve Fountain Head into a regional processing hub capable of monetising a pipeline of gold and base metals assets.
Funds will be re-allocated from the Hayes Creek Definitive Feasibility Study (DFS) to accelerate activities at Fountain Head.
Project works timeline
- Reverse circulation (RC) and diamond drilling is underway and scheduled for completion by March 2020 with initial assays from the initial drilling program in January 2020;
- Drilling is designed to increase geological confidence in the Fountain Head mineral resource, extend gold mineralisation and identify new areas;
- The gold mineral resource estimate will be updated on completion of drilling and assays will be used for final pit optimisation and scheduling;
- Ongoing metallurgical test work and analysis will be completed on samples from the RC drilling and surface trenching to confirm gold recoveries;
- Notice of Intent in respect of a heap leach operation at Fountain Head will be submitted to the Northern Territory Environment Protection Agency (NT EPA) in December 2019;
- Environmental approvals submission to NT EPA for Fountain Head is planned for March 2020;
- Subject to receiving necessary approval, dewatering of the Fountain Head pit would commence from mid-2020; and
- If technical studies, capital funding and various Government and Environmental approvals are successful, mining activities could start from late 2020 with first gold production in H1 2021.
Planned drilling at Fountain Head in relation to existing pit and resource showing areas of priority and aim of drilling