How MXR Underpins the Success of AAR’s Mandilla Gold Project

Introduction

This post highlights the strategic importance of Maximus Resources’ Spargoville tenement holdings for Astral’s Mandilla Gold Project. The Mandilla Gold Project faces significant challenges due to its compact tenement footprint, which restricts flexibility for key infrastructure such as tailings storage facilities and waste landforms. These constraints also limit opportunities for future resource growth and exploration. In contrast, Maximus’ extensive tenement holdings cover the majority of the major gold trends in the northern Widgiemooltha Greenstone Belt, offering substantial exploration potential and significant resource growth opportunities that Astral cannot achieve within its current tenements. Additionally, uncertainty persists regarding the Mandilla project’s ability to secure sufficient water of suitable quality to meet processing requirements. Maximus’ tenements provide a pathway to addressing these limitations, making their acquisition essential for supporting Astral’s long-term growth.

Site Layout Constraints

The proposed layout of the Mandilla Gold Project highlights several potential issues arising from the constrained footprint within the Astral tenements, which has directly influenced the design of infrastructure such as the TSF and the WLF. As shown in Figure 1 below, the TSF is tightly confined by tenement boundaries and adjacent infrastructure, leaving minimal room for future expansion. Its integration with the Theia WLF aims to maximise space utilisation but introduces potential operational complexity. The irregular shape of the TSF reflects the constraints of the available space, prioritising footprint optimisation over operational efficiency. The stretched layout increases haulage distances and potentially raises operational costs.

The Astral scoping study acknowledges that "The available footprint has resulted in a suboptimal design for the TSF and Theia WLF. This has the potential to increase waste haulage distances to reach the northernmost parts of the Theia WLF. Further stages of technical study will examine how to mitigate these impacts and determine the optimum WLF for both the Theia and Hestia open pits."

Additionally, the placement of the TSF and WLF along the strike of known deposits poses a significant limitation, as this would obstruct future exploration and access to potential extensions of these deposits. This effectively limits the LOM to the current resource, reducing the potential for expansion and long-term development. Overall, the compact and confined nature of the Astral tenements has led to a tightly packed site layout with limited flexibility for future adjustments or expansions.

Figure 1: Mandilla Gold Project proposed site layout, showing key infrastructure within Astral’s tenement boundaries (orange), highlighting the constrained footprint and design challenges.

Mandilla Site Water Quality and Processing Challenges

The Astral scoping study highlights significant challenges related to water quality at the Mandilla Gold Project. It notes that"water quality within the mining area has salinity levels several times that of seawater and a high concentration of soluble magnesium, which has a significant buffering effect when lime is added to process slurry to raise the pH ahead of the addition of sodium cyanide." Furthermore, "the Mandilla bore water is hypersaline, with total dissolved solids (TDS) ranging from 187,400 ppm (phase 2) to 305,400 ppm (phase 1). The samples also contain a significant amount of magnesium, which determines the buffer point in lime demand testwork."

Hypersaline water presents major obstacles for gold processing, as its high salinity and magnesium content increase lime consumption to overcome buffering effects during pH adjustment for cyanidation. This also leads to higher cyanide consumption, equipment scaling, and corrosion, further driving up operational costs.

Securing sufficient water of suitable quality for processing remains a challenge for the Mandilla project, posing risks to both feasibility and timelines. The acquisition of Maximus’ extensive tenement holdings could significantly improve the chances of identifying a suitable processing water source, potentially mitigating this risk.

Comparison of Tenement Holdings and Exploration Potential

The below figure from Maximus’ December 202 MRE update highlights the extent of Maximus’ tenement holdings across the northern Widgiemooltha greenstone belt. The geology of the area includes mafic units (green), ultramafic rocks (purple), granites (pink), and felsic volcaniclastic units (yellow). Maximus holds the gold rights over the majority of the main gold trends in the belt. In contrast, Astral’s Mandilla tenements (outlined in orange) occupy only a small portion of the eastern gold trend, primarily centred around the Mandilla Gold Project. The figure also shows Astral’s scoping study site layout superimposed on the map, emphasising the spatial limitations of Astral’s tenements compared to Maximus’ extensive holdings. This contrast highlights the strategic value of Maximus’ assets, offering significant exploration potential and resource growth opportunities for Astral.

Figure 2: Comparison of Maximus’ extensive greenstone belt holdings and Astral’s limited Mandilla tenements, highlighting the strategic importance of Maximus’ assets.

Comparison to Other Operations

When benchmarked against existing gold mining operations in Western Australia, it becomes evident that the spatial constraints of Astral’s tenements pose significant challenges for implementing similarly large-scale designs. Operations such as Thunderbox, Mount Morgans, and Wiluna feature expansive pits, TSFs, and WLFs that exceed the boundaries of Astral’s available footprint. Even medium-scale operations like Mungari, Dalgaranga, and Kanowna Belle, while more compact, would still require substantial modifications to fit within Astral’s tenements. The constrained footprint not only limits infrastructure size but also demands efficient layouts to minimise haulage distances and operational costs. These comparisons highlight the inherent challenges Astral faces in optimising its site design while adhering to tenement boundaries and maximising resource development potential.

Mandilla Gold Project Overview:

• Location: 20 km west of Kambalda.
• Mineral Resource Estimate: As of September 2023 - 37Mt at 1.1 g/t gold for 1.27Moz
• Scoping Study Highlights:
  • Mine Life: 11 years.
  • Average Annual Production: 100,000 ounces for the first 7.5 years; 41,000 ounces for the remaining 3.5 years.
  • Processing Capacity: Planned at 2.5 Mtpa.
  • Ore Grade: Average feed grade of 1.3 g/t gold over the first 7.4 years.

The following sections summarise similar-scale gold mining operations in Western Australia. The figures showing Astral’s tenement boundaries overlaid on each mine highlight the spatial challenges of implementing similar-scale designs within Astral’s footprint. These comparisons provide context for the constraints faced by the Mandilla Gold Project.

Mount Morgans Gold Operation:

• Location: 25 km southwest of Laverton, WA.
• Processing Capacity: ~2.5 Mtpa.
• Ore Grade: ~1.3 g/t (modern operations).
• Mineral Resource Estimate: As of June 2021 - 31Mt at 2.5 g/t gold for 2.5Moz.
• Total Production: ~728,000 oz (historical and modern).
• Status: Placed on care and maintenance in March 2023 due to high costs and operational challenges.

Figure 3: Mount Morgans Gold Operation overlaid with Astral’s tenement boundaries (orange lines).

Thunderbox Gold Project

• Location: 45 km south of Leinster, WA.
• Processing Capacity: Initially 2.5 Mtpa; expanded to 6 Mtpa in 2022.
• Mineral Resource Estimate: As of June 2021 - 57Mt at 1.7 g/t gold for 3.1Moz.
• Ore Grade: ~2.0 g/t (early life), ~1.7 g/t (recent).
• Total Production: ~1.5 Moz since 2002.
• Status: Operational.

Figure 4: Thunderbox Gold Project overlaid with Astral’s tenement boundaries (orange lines).

Dalgaranga Gold Project

• Location: 65 km northwest of Mt Magnet, WA.
• Processing Capacity: ~2.5 Mtpa.
• Ore Grade: ~1.4 g/t.
• Mineral Resource Estimate: As of September 2021 - 30.1Mt at 1.3 g/t gold for 1.3Moz.
• Total Production: ~361,643 oz (historical and modern).
• Status: Placed on care and maintenance in November 2022 due to operational challenges. Spartan Resources is exploring high-grade deposits for a potential restart.

Figure 5: Dalgaranga Gold Project overlaid with Astral’s tenement boundaries (orange lines).

Kanowna Belle Gold Mine

• Location: 18 km northeast of Kalgoorlie, WA.
• Processing Capacity: ~2 Mtpa.
• Ore Grade: ~4.5 g/t (historical); ~4.0 g/t (recent years).
• Mineral Resource Estimate: As of June 2021 - 16Mt at 3.9 g/t gold for 2.0Moz.
• Total Production: ~5 Moz.
• Status: Operational.

Figure 6: Kanowna Belle Gold Mine overlaid with Astral’s tenement boundaries (orange lines).

South Kalgoorlie Gold Mine

• Location: 50 km south of Kalgoorlie, WA.
• Processing Capacity: ~2 Mtpa.
• Ore Grade: ~2.75 g/t (historical); ~1.8 g/t (recent years).
• Mineral Resource Estimate: As of June 2020 - 32Mt at 1.5 g/t gold for 1.5Moz.
• Total Production: ~2.5 Moz.
• Status: Operational.

Figure 7. South Kalgoorlie Gold Mine overlaid with Astral’s tenement boundaries (orange lines).

Wiluna Gold Mine

• Location: 530 km north of Kalgoorlie, WA.
• Processing Capacity: ~2.1 Mtpa.
• Ore Grade: ~2.5 g/t (modern); ~15 g/t (historical underground).
• Mineral Resource Estimate: As of September 2021 - 36.6Mt at 3.6 g/t gold for 4.24Moz.
• Total Production: ~4.5 Moz.
• Status: Care and maintenance.
  
  

Figure 8. Wiluna Gold Mine overlaid with Astral’s tenement boundaries (orange lines).

Mungari Gold Operation

• Location: 20 km west of Kalgoorlie, WA.
• Processing Capacity: ~2 Mtpa.
• Ore Grade: ~1.7 g/t.
• Mineral Resource Estimate: As of June 2021 - 50.5Mt at 1.5 g/t gold for 2.5Moz.
• Total Production: ~2 Moz.
• Status: Fully operational.

Figure 9. Mungari Gold Operation overlaid with Astral’s tenement boundaries (orange lines).

Discussion: Astral’s Takeover Bid of Maximus Resources

Astral’s proposed acquisition of Maximus underscores the strategic importance of Maximus’ assets to Astral’s growth. With the Mandilla Gold Project constrained by the size of its project tenements, Astral faces challenges in accommodating key infrastructure such as tailings storage facilities and waste landforms. This limitation highlights Astral’s need for additional land and resources, making Maximus’ tenements and gold deposits essential for extending Astral’s mine life and providing the flexibility needed for efficient infrastructure design.

A key factor in evaluating the bid is the disparity in valuations between the two companies. Astral has an EV per ounce of $110/oz, compared to Maximus’ EV of $91/oz based on the proposed offer price. While Astral is offering a 56% premium to Maximus’ previous closing price, questions remain about whether this adequately reflects the long-term growth potential of Maximus’ assets. Maximus, with a market capitalisation of $30M at the proposed offer price, holds significant underexplored ground and 335,000oz of gold resources, positioning it for substantial growth if exploration increases its resource base. By comparison, the combined entity would have an estimated market capitalisation of $210M, significantly higher than Maximus alone. This larger valuation would inherently require more substantial growth to achieve high percentage returns, potentially limiting the upside for shareholders.

The all-scrip nature of the deal also raises concerns. Astral’s share price could fluctuate significantly after the deal, potentially diminishing the effective premium offered. If Astral’s valuation declines, Maximus shareholders could find themselves with less value than anticipated.

The question for Maximus shareholders becomes whether the combined entity offers a stronger value proposition or if remaining independent could achieve greater returns. With its low market cap, underexplored tenements, and established resource base, Maximus may provide higher potential for shareholders seeking multiples on their investment, particularly if exploration success unlocks additional value.