Interesting that in the RUI conference they likened Mulga Bill...

Interesting that in the RUI conference they likened Mulga Bill to an intrusion related gold system and the high grades to an intermediate sulphidation epithermal.

Epithermal mineralisation commonly has bonanza gold grades because gold precipitates very efficiently in the epithermal environment. Bonanza grades are often found in relatively small volumes and short extents. It doesn’t suit the giant low grade open pit business model.

Epithermals are often company makers for small companies because there is so much revenue in each tonne of ore that toll treating makes sense even when hauling long distances. This keeps the capex and associated dilution down. They are however often structurally complex so it may take to some time to fully understand it. It doesn’t take a lot of tonnes of this stuff to be a company maker. Let me explain in a theoretical example:

At 30gpt grade, we only need 500,000 tonnes of ore to deliver 500kOz. Mining and toll treating this theoretical 500,000 tonnes will be low cost per Oz due to the high grade and could be all done in a year or two. Assuming operating costs of $1000 per Oz, mining 500,000 tonnes of ore at 30gpt Au grade would net $750 million of free cash flow! Then that money can be invested in chasing the low grade stuff once the company has hit the big time.

So in my opinion, we should go chasing grade not tonnes. Drill for the high grade shoots and then let’s rip in there and get them toll treated ASAP.