While any shallow gold in the soft clayey material is unlikely to add significantly to the total 1.4 million ounce gold JORC Ore Reserve at Kalkaroo, it could potentially make an early contribution to mining cash flow
The photo below is from Havilah's 23 August 2013 ASX announcement, it shows visually the tertiary clay gold bearing envelope [shallow gold] sitting above the saprolite gold cap.
Havilah states this low-grade gold mineralisation is only 23-36 metres below the surface and is approximately 25-30 metres above the bedrock saprolite gold zone.
Havilah's 4 October 2013 ASX announcement said "Preliminary modelling suggests that the target resource of 5,000 ounces of Tertiary clay hosted gold at an average depth of approximately 30 metres has been confirmed by the drilling."
It should be stressed that the gold number above is not defined to JORC standards and has not been included in any resource or mining models for Kalkaroo to date.
Havilah states metallurgical test work showed >80% recoveries of gold in this extremely soft clayey material and low cyanide consumption rates (refer to ASX announcement 22 August 2013).
At the current Australian dollar spot gold price of A$2,660/ounce the above 5,000 ounces would equate to approximately A$13.3 million.
Using a 80% recovery, this would equate to gold revenue of A$10.6 million.
As this soft clay material has to be mined as overburden to access the underlying saprolite gold cap and copper JORC Mineral Resources, I would expect no additional mining costs would be incurred to get access to this shallow gold other than to put it on the ROM pad.
As the gold mineralisation envelope could also potentially serve to commission any gold treatment plant ahead of the main gold ore delivery from the saprolite gold cap, I would expect additional processing costs should be minimal.
Recovering and selling shallow gold earlier on could potentially equate to more money, better cash flow, and in turn a higher NPV and better IRR for the Kalkaroo Project for Havilah's shareholders.
Cheers
These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.
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