Australian Resources & Investment showcases the emerging Adelong gold project and its near-term potential to join the NSW gold-producing ranks.
Ever since Adelong Gold acquired its namesake gold project in New South Wales in May 2020, the company has been advancing the asset on a number of fronts.
The Adelong gold project produced for a short period of time before the company acquired it, however as Adelong managing director Peter Mitchell suggested, there were some issues with the previous operation.
“Adelong had not been developed properly with the right scale, equipment and mine plan so the project needed to be revamped,” he told Australian Resources & Investment.
“It didn’t mean that the project itself shouldn’t work. The metallurgy was really good – every record showed it was getting plus-95-per-cent recoveries of gold in various process technologies. So we knew we could do it better, but we had to clean the slate and rethink how best to develop the project.”
In restrategising the Adelong gold project, Adelong Gold looked at the project’s economic potential, which supported the need for greater scale and resource expansion.
“We’ve built up a bigger resource base, larger-scale production, and designed this around what would be economic,” Mitchell said.
This saw Adelong Gold reconsider the project’s processing and tailings strategy, with the company’s sights set on maximising its mining footprint to enable more deposits and more ore streams.
Adelong’s flagship deposit, Challenger, was mined by the previous owner and has an active mining permit in place. Elsewhere, Adelong is represented by the Currajong and Caledonian deposits, as well as several other emerging prospects, with the company holding exploration permits spanning 70 square kilometres.
Since acquiring Adelong, Adelong Gold has increased the resources and average grade by 35 per cent and 18 per cent, respectively. The project has a current JORC resource of 1.55 million tonnes at 3.41 grams per tonne (g/t) gold, which equates to 169,700 ounces of gold.
Adelong Gold’s exploration and mining licences.Mitchell said in order to accommodate greater scale at Adelong, the company is exploring the option of building a 240,000-tonne processing plant, however not all of this capacity may be used initially.
“Initially, we were looking to start it (the processing plant) on one shift,” he said. “In other words, we’re planning to treat 120,000 tonnes the first year, which is what the development consent allows us to do.
“Then we plan to expand the throughput when we incorporate our other resources with approvals.”
Adelong Gold released an updated scoping study in late October 2022, which demonstrated $11.9 million of initial capital costs for a five-year mine life, with the potential to produce 81,082 ounces.
This would generate net cash flow of $69.2 million at an internal rate of return (IRR) of 72 per cent when all capital and operational expenditure is considered.
Perhaps most significantly given Adelong’s scale potential, the updated scoping study only considered 55 per cent of the JORC resource, highlighting the untapped upside of the project.
Mitchell said Adelong has “all the makings of a good mine” and that the immediate focus would be continued exploration and bolstering the resource.
“We’re satisfied that we can do it, so we’re now looking at exploration,” he said. “Anything we find now will just go straight to the bottom line – with the last resource we added $17 million. So if we get a few of those, then we’ve got a really solid project.”
Adelong commenced a drill program at its Gibraltar prospect in March, which is following up a successful drill program completed in October 2022.
Significant assays from the October program included 3m at 12.57g/t gold from 20m, including 1m at 34.6g/t, and 1m at 18.55g/t gold from 78m at drill hole 3DGIB007. Drill hole 3DGIB008 delivered 6m at 2.79g/t gold from 90m, including 1m at 8.58g/t.
Mitchell said Gibraltar, which has the potential of a porphyry system, is one of Adelong’s most exciting prospects.
“Drilling has shown, for the first time, very wide zones of pervasive mineralisation indicating the potential of the Gibraltar area to generate a large tonnage resource,” he said. “It has the sniff of a porphyry system and part of our March program is to drill some holes deeper below where we drilled last time and see what it looks like.
“When I first looked at Gibraltar and started drilling it, I was looking for a 50-60m open cut mine. But now that we’ve got some good results, we’re going to drill a couple of deeper holes to see what the trend is. If it’s really good, we’ll stick one hole below it all.”
The Adelong gold project is located near the town of Adelong in NSW.Gibraltar, which has produced 140,000 ounces of gold in the past, not only forms part of today’s Adelong project, but also forms part of the broader Adelong Goldfield which has historically produced more than 800,000 ounces.
“Historically, this area has been mined in the 19th and 20th centuries at a grade of 31 grams per tonne – over one ounce to the ton,” he said. “But we can mine it down to two, three or four grams per tonne. Our economic cut off is one gram per tonne.
“We can do things the old timers could never do and there are a lot of resources that have never been mined because they could not deliver the high grades required to be economic. We’ve got three-and-a-half kilometres of strike of a mineralised body which has historically only produced 6000 ounces and largely remains untested.
“Some drilling done in the southern part (the Sawpit deposit) of Adelong is showing good widths and grade. These are the kinds of targets we’ve got for going back and really opening up this area for more potential.”
An expanding Adelong gold project means Adelong Gold will require further approvals to mine the additional deposits. The company is in communication with the local councillors about Adelong Gold’s long-term mining prospects and has support from the local community for the project.
As Adelong Gold continues to understand the scale of its Adelong gold project, it can have confidence in the fact it has built the foundations to be a near-term gold producer. And with a passionate and committed board of directors leading the way, Adelong Gold is setting itself up for an exciting future.
