Transcription of Finance News Network Interview with Octagonal Resources Limited (ASX:ORS) Managing Director, Anthony Gray
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today from Octagonal Resources Limited (ASX:ORS) is Managing Director, Anthony Gray. Anthony welcome to The Gold Investment Symposium here at Luna Park in Sydney.
Anthony Gray: Thank you.
Lelde Smits: Octagonal Resources is a junior Australian gold company. Where are your projects located and at what stage are they?
Anthony Gray: Octagonal’s gold operations are located in the Bendigo region of central Victoria and the Kalgoorlie region of Western Australia. In Victoria we’re currently processing third party ore, or we work to bring our own underground and open pit mines into production. While in Western Australia, we’ve discovered a gold copper and silver deposit that we’re currently evaluating with drilling.
Lelde Smits: Looking closer at your Maldon gold operation in central Victoria, where you’ve just announced the results from processing a trial parcel of Kangaroo Flat tailings. Anthony, what were the results and how did they impact your operations?
Anthony Gray: In August this year, we entered into an agreement with Unity Mining to reprocess 40,000 tonnes of tailings from the Kangaroo Flat gold operation near Bendigo. Under the terms of this agreement, we were managing the reprocessing and pay for 50 per cent of the costs and in return, receive 50 per cent of the gold produced. In our metallurgical test work that we completed, we estimated that we would be able to recover between 3.5 and six grams of gold, with four grams likely.
But we wanted to process a 2,000 tonne trial parcel to assess the handling logistics of this material. The trial parcel was performed very well; we were able to recover better than five grams gold. What this means for our business, is that we will have ongoing revenue from a third party source for at least six months, while we work to bring our own underground and open pit mines into production.
Lelde Smits: Now you’ve also just recently announced results for the Nuggetty Reef goldmine in Victoria. What were the most compelling discoveries?
Anthony Gray: The Nuggetty Reef mine is the second largest and highest grade gold deposit historically, in the Maldon goldfields. It’s produced over 301,000 ounces of gold from 50,000 tonnes of ore at an average grade of over six ounces per tonne. This mining happened in the mid-1850s and at that time, we believed that the lower cut-off grade for mining would have been between 15 and 23 grams gold.
We felt that there might be the potential for significant remnant gold in these workings and have completed sampling of the only currently accessible drive in the mine. And have proven that there is substantial gold there with entire 92 metre length, averaging better than four grams gold and shorter zones up to 12 metres at 11 grams gold. Given these results, we’re currently in the process of applying for approval to mine a bulk sample of this material to justify our second goldmine in the Maldon goldfield.
Lelde Smits: Octagonal also holds a number of exploration licences across the greater Maldon area. Which are the most advanced projects and what do they contain?
Anthony Gray: Our three most advanced projects are the Black Reef at Wehla, the Pearl Croydon deposit near Maryborough and the Specimen Reef near Dunolly. At the Black Reef, we’re currently mining a trial open pit to help justify a large open pit mining operation in that goldfield. At the Pearl Croydon deposit, we have a 53,000 ounce near-surface deposit that is overlain by a mining licence application that we expect to be granted shortly. And at the Specimen Reef, we’ve defined 10,000 ounces of gold that is not constrained by drilling in all directions.
Lelde Smits: And Anthony, how do you expect Pearl Croydon and Specimen Reef will supplement the Maldon underground mine?
Anthony Gray: Octagonal has a production target for the Maldon gold operation of 30,000 ounces per annum. Once we’re able to bring the Pearl Croydon and Specimen Reef deposits into production, this will supplement the Maldon underground mine for at least three years and allow us to achieve our production target.
Lelde Smits: In Western Australia you’re targeting a one million ounce deposit at the Hogan’s project. What are the latest exploration developments there?
Anthony Gray: The most advanced exploration target at the Hogan’s project is the Burns prospect. In January this year, we completed our initial RC drilling program at this target and discovered not only gold, but significant potentially economic gold copper and silver. We’re very excited by the potential of this target to develop into a significant multi-commodity deposit, and have just recently completed our second RC drilling program at this target. We expect to be releasing the results from this drilling program shortly, and we’ll plan further exploration based on those results.
Lelde Smits: To your financials now and you have just started production. Anthony when do you expect to become cash flow positive?
Anthony Gray: We expect to be cash flow positive during the current quarter, as we continue to process tailings from the Kangaroo Flat gold operation. Our initial metallurgical test work of this material, suggested that we would be able to produce gold at a cash cost of below $650 an ounce. But following our successful trial processing, we’ve revised those cash costs down to below $500 an ounce.
Lelde Smits: Finally Anthony, as Octagonal Resources transitions into a gold producer, what major goals have you set for the Company for next year?
Anthony Gray: Over the next 12 months, we intend to extract the maximum value out of the Kangaroo Flat tailings, as we continue to work towards production in our underground and open pit operations. We will commence maiden gold production from the Alliance South Shoot at Maldon. We will complete mining of the Black Reef open pit and we will work quickly to upgrade the resource at the Pearl Croydon deposit, to commence the mining approvals process. At Specimen Reef, we will complete upgrade the resource there. We will mine the bulk sample at the Nuggetty Reef mine and we will also continue to evaluate the potential of the Burns Prospect to host a significant multi-commodity deposit.
Lelde Smits: Anthony Gray, thank you for the update on Octagonal Resources.
Anthony Gray: Thank you.
Ends
ORS Price at posting:
16.5¢ Sentiment: None Disclosure: Held
