Spotty - out of interest where did you get those numbers from? Westfarmers disclosure on Covalent Lithium (WF owns 50% of Covalent which owns the Mt Holland lithium project) and the Mt Holland project sucks so I've had a scan of Kidman Resources' scheme booklet and independent expert's report from when Westfarmers was buying Kidman back in the second half of 2019. Could not find any gold MRE for Mt Holland but there is some useful stuff in the scheme booklet.
https://www.wesfarmers.com.au/docs/default-source/asx-announcements/kdr-registration-of-scheme-booklet.pdf?sfvrsn=13043ebb_0From page 30 of the Scheme Booklet there is this background:
Kidman initially acquired the tenements making up the Mt Holland Lithium Project (including theEarl Grey lithium deposit) in 2016, with the primary focus initially on upgrading and developing thecontained gold resource. These tenements had historically produced (prior to 2002) in excess of 1.2Moz of gold from two underground mines (Bounty and Bounty North) and more than ten open pits.Following strong interest in the lithium and tantalum rights associated with the Mt Hollandtenements, Kidman undertook a technical review and confirmed the lithium potential of the MtHolland Lithium Project. As a consequence, Kidman has only conducted limited gold and basemetal exploration activities in relation to these tenements.Apparently earlier in 2019 Kidman went out to the market looking for bids for the gold rights but pulled it when Westfarmers lined them up.
From the IE Report it seems that Kidman held 100% of the gold rights on the Mt Holland tenements (50% of the lithium rights) and I guess that that arrangement was passed onto Westfarmers. Here from page 54 of the IE Report indicates that no value was placed on any gold assets. Elsewhere it was indicated that legacy gold works had been written down to zero.
No capital or operating cost was assumed for gold recovery or value assigned from the goldcontent of the material within the pit in any of the production cases. Kidman has stated that itsfocus is on developing its lithium assets, and although Kidman has announced that it will seekproposals from third parties to maximise the value of the gold and by-product assets at the site,AMC [who did the technical analysis for the IE] is not aware of any assessment for the sale or processing of gold-bearing material in theDFS. AMC has, therefore, not attributed value to any of the gold assets.On page 61 of the IE Report is this:
AMC considers that the principal opportunities for the production cases are:
• Potential for sale, toll treating or on-site treatment of gold-bearing ore within the pit thatneeds to be mined to access the Concentrator feed. In some areas, gold mineralisationoverlies the mineralised pegmatite within the pit. Although this material is not included inmine plans, it is likely that this material will be defined through grade control drilling andwill be readily amenable to segregated mining and storage for possible later sale ortreatment nearby... So you might be onto something there but 2.1g/t does seem a bit skinny to haul up to Edna May. Mt Holland apparently is about 100 clicks south of Southern Cross and Edna May is 60 clicks west of Southern Cross. Maybe Ramelius could toll treat for Westfarmers but without thinking it through 20Mt sounds a lot. I've run out of time to track how far Tampia is from Edna May and how much ore will be hauled up to EM from Tampia but I guess that would be a direct comparison. I rushed this bit so pull me up if I got things skew-whiff.
I tell you who would be able to find out a lot about Mt Holland gold: the MD of Cygnus Lithium, Tricky Dave Southam. I heard Mr Southam banging on at Diggers just last week about his experience with lithium when he was a non-exec director at Kidman (he was a NED from 2017 to a couple of months before the Westfarmers bid was made). Just so happens that DS also is currently a non-exec director at Ramelius. He's no rock kicker but unless he's burnt his bridges he surely would be able to get the inside goss on Mt Holland and maybe even what the current owners of the gold at Mt Holland are thinking of doing with their stockpiles. I think I read that Covalent will get Mt Holland into production next year so they may be actively thinking about what to do with the gold mineralisation. So a knock on the door at Westfarmers by Mark Zeptner might be timely.
(20min delay)