This article is a sponsored feature from Mining.com.au partner Vertex Minerals Limited. It is not financial advice. Talk to a registered financial expert before making investment decisions.
The stars are aligning for Vertex Minerals (ASX:VTX), which is on the cusp of commercial gold production at a time of record prices and with a geologically favourable project.
‘Green gold’ is not a term you hear often, with operations typically requiring multiple chemicals for processing and significant amounts of water and energy.
But that is where Vertex has a leg up as it prepares to begin mining high-grade stopes next month at its flagship Reward Mine, part of the larger Hill End and Hargraves Project in New South Wales.
Vertex describes the operation as “one of Australia’s most unique and environmentally sympathetic”.
The gold is free milling and amenable to gravity separation at coarse grind sizes, which means it does not require cyanide or reagent chemicals to separate the gold and it is not energy intensive.
Gravity separation allows more than 90% of the gold to be concentrated into a very small proportion of the total ore mass. This concentrate can then be directly smelted to produce a high-purity gold bar.
Textbook ore sorting
Executive Chair Roger Jackson says because no ball mill is required to process the gold, Vertex will have “exceptionally low power usage to ounces produced”.
The company is also investigating the use of renewable energy sources to further offset the impacts of the mine.
As well as very little energy usage, the Reward Mine will utilise recycled water.
The company has installed a closed water system that mixes the water from the gravity process plant with the waste sand material and decants it at the sand stack area.
The decanted water is then pumped back to the process plant for re-use. Make-up water is sourced from the Reward Gold Mine, where mine water is used to meet the water requirements for the gravity plant.
Water use is minimised in the process because the ore is mostly processed by ore sorting which does not require water or a tailings dam and has a much smaller footprint.
The water also does not end up polluted because the Reward ore and country rock has no sulphide minerals and the plant process does not use cyanide or reagents.
Vertex can recover an average 92% of the gold via this simple process.
“We don’t normally have the choice to produce environmentally friendly gold, it’s the ‘Geology Gods’ providing the unique gold ore that makes it a simple natural process,” Jackson tells Mining.com.au.
“Whilst we are all happy to be gentle on our environment, we are also very cognisant of how our processing is good on our people and our community.
“Plus, in our case, it keeps our operating costs down so it’s good for our shareholders.”
Vertex believes its new gold mine will have a smaller environmental footprint than any existing gold operation in Australia.
The broader Hill End and Hargraves Project hosts a resource of 483,000 ounces of gold, with 225,000 ounces of that located within the Reward Mine, which has an average grade of 16.7 grams per tonne.
Low-cost gold, high-margin output
All-in sustaining costs estimated in a Prefeasibility Study (PFS) came in at $1,833 an ounce at a time when the safehaven metal is selling for over $5,200 an ounce.
The PFS is based on indicated resources of 50,000 ounces of the total 225,000 ounces hosted within the Reward Mine, which would enable two years of production generating $122 million in pre-tax cash flow over that time at an updated assumed gold price of $4,500 an ounce.
The operation would have a forecast net present value, using a 7% discount, of $68 million and an internal rate of return of 520%.
Vertex required $17 million in pre-production capital expenditure to reach commercial production, which the company anticipates will be repaid within six months.
The original PFS used a gold price assumption of about half where the price sits currently.
Jackson says he never envisaged Vertex would become a gold producer at a time of such record high prices.
“A bucket load of ore has a lot of value at these prices and at our gold grades,” he says.
Vertex has no plans to hedge in the current strong gold price environment given it does not have any securitised debt and has a “very solid margin to work with”.
In the modern-day mining sector, there is a rising trend of junior explorers taking smaller deposits through to production more quickly to self-fund more intensive exploration and eliminate the need for continuous capital raises.
The Reward Mine was actually developed in 2009-2010 with around $20-30 million invested to build the underground adit and develop the Reward shaft ready for the start of mining.
This led to Vertex identifying a fully developed stope block to include in the mine production start-up and giving the company an additional 1,200 ounces in the first few weeks of mining.
The new mine schedule for the underground mine proposes mining two stope blocks consisting of 2,075 tonnes @ 17.8g/t gold and 700 tonnes @ 42.5g/t gold.
From stockpiles to smelted gold bars
Vertex has already started processing stockpiles at the mine and by July will have started mining and processing ore from the high-grade stopes in the underground mine.
The company plans to ramp up from 1,000 ounces a month to 2,000 ounces a month over a period of six months, with improvements on ounces expected to continue into the future.
Vertex has adopted an owner-operator model, with a fully automated operation that requires only two operators and can be run via an app on a mobile phone.
In parallel to production, Vertex plans to upgrade the remainder of the Reward Mine resource to the higher confidence indicated category so it can be added to the mine plan in future.
The company purchased its own underground diamond rig which will target the “ultra high-grade” vein system that runs down plunge of Reward.
Beyond Reward, Vertex has identified multiple targets across 34km of strike, which Vertex notes is the source of the largest gold specimen ever found globally — discovered at Hill End by Bernhardt Holtermann in 1872.
It was the largest non-alluvial nugget ever mined weighing in at 268kg.
A previously completed Lidar survey uncovered over 3,500 surficial gold workings over the line of the lode. Just 800m of the total strike has been drilled and only down to a few hundred metres.
“Old timers mined the full 30km length of Hill End tenements for 3500+ workings and they only scratched the surface. This is a big system,” Vertex says.
The Hill End and Hargraves Project, which sits about 40km from Newmont’s (NYSE:NEM) Cadia gold operation in the fertile Lachlan Fold Belt, historically produced 1.8 million ounces of gold.
Write to Angela East at Mining.com.au
