September 22, 2009
Beacon Minerals Shines A Light On The Halleys East Gold Discovery In Western Australia
By Our Man in Oz
To Bishkek, and back. That’s the story, so far, of Beacon Minerals, a small Australian gold explorer which took a look at the challenge of doing business in the central Asian country of Kyrgyzstan, and found the outback country north-west of Kalgoorlie far more attractive. Over the past month, investors have appeared to agree with that management decision, and have doubled the company’s share price, as it all the while makes headway with its promising Halleys East discovery. At first glance, Halleys East appears to have little to recommend it. But dig a few metres through the wind-blown sand which covers much of inland Australia, and you will find what looks very much like it might be a payable gold discovery, thanks to a combination of attractive grades and shallow depths.
A glimpse of Halleys East, which lies inside the greater Barlee project area, was vouchsafed in mid-May, when Beacon reported a drill hit of 10 metres assaying 11.9 grams of gold a tonne. This was followed up with further drilling, including the latest intersections of 27 metres at 36.4 grammes per tonne, and 11 metres at 24.9 grammes per tonne. It was these results which helped propel Beacon shares up by 50 per cent from A2.4 cents to a high late last week of A3.6 cents. The stock has since slipped back to around A3.1 cents, but it is still a country miles above the half a cent price of six months ago, and still only capitalises the company at A$11 million.
In many ways, Beacon is a classic Australian goldfields story, putting aside the short-term diversion into the mountains of Kyrgyzstan. One of the reasons it tried its luck in central Asia was because of close ties with Minesite member Nimrodel Resources, a company that’s making solid headway on uranium and gold projects out there. But Kygyzstan, it seems, and as you might imagine, is not for everyone. “We found Kyrgyz pretty tough going,” said Beacon managing director, Darryl Harris, when Minesite’s Man in Oz caught up for a cuppa in a tea shop close to his office in West Perth. “It was expensive and difficult, and we figured we could do better closer to home.”
He was right. Since focussing on Australia, and selling all of its assets in Kyrgyz to local partners, Beacon has been a much more rewarding undertaking for everyone involved. “The Barlee area is shaping as a project we can really get our teeth into. It’s got all the hallmarks of an Eastern Goldfields shear zone, and good grades close to the surface which should make for easy mining and processing,” explained Harris.
Like countless small Australian gold stocks over the past century, Beacon’s plan is simplicity itself – get into production as quickly as possible, at the lowest possible cost, and generate enough spare cash to expand. “It’s the high grades close to the surface which make us confident”, Harris said. “The ground we have at Barlee has hardly been looked at. Helix had a look for platinum, and Anglo Australian had a rummage around, but they gave up because of the surface cover.”
Those comments from Harris touch on a topic which will please London investors who have followed that well-known Kalgoorlie explorer/publican John Jones over the years. Best known for his guidance of Troy Resources, Jones has also been intimately involved with Anglo Australian, and was perhaps even responsible for its rather grand name, which is a play on a somewhat larger business called Anglo American. Whatever the background, Jones has been a keen follower of Beacon’s work at Barlee, which lies about 100 kilometres due south of Troy’s Sandstone operations. He has a small stake in Beacon.
Harris said the latest 6,500 metre drilling campaign at Halleys East had just finished, but that plans are already being drawn up for a 12,000 metre campaign starting in November. Depending on how that goes, it’s likely that an initial resource estimate could be released in the December quarter. He declined to speculate on what that first-pass number might be, but it is likely to be in the order of 500,000 ounces given that the grades encountered so far point to Beacon having sufficient material to mine at a very attractive grade of between six and eight grams a tonne. In theory that could lead to a mine producing between 50,000 and 100,000 ounces of gold a year within the next 12 months.
“It’s important to see Halleys East as a first step in our exploration of a large tenement in a region with a long history of gold production”, Harris said. “So far, we’ve only looked at about five per cent of our exploration licence area, and we have plenty of other targets well worth a much closer look.” The Phil prospect is an example. Initial drilling there, just to the north of Halleys East, returned 15 metres at 11.5grammes per tonne and 14 metres at 3.7 grammes per tonne. “The Barlee area appears to show discreet mineralised zones”, Harris said. “But, it’s been shown across the area that you can start with these pods and grow a major operation.”
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