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Murray Ward
Aureka Limited has taken a big step towards breathing new life into Victoria’s historic Comstock gold and silver mine after bagging a key production licence, opening the door to a mining revival at site for the first time since 1995.
The seven-year prospecting licence was granted by Resources Victoria in a brisk four-month turnaround, covering a 4.5-hectare slice of the previously disturbed Comstock mine site, two kilometres north-northwest of St Arnaud. The new licence includes the Walker Zone and the main Comstock Shear, the main areas targeted for mining within the licence.
Comstock already hosts a JORC-inferred mineral resource of 1.45 million tonnes (Mt) grading 1.21g/t gold for 56,500 ounces, in addition to 100,000 ounces of silver.
The company says the licence grant is a critical piece of its broader hub-and-spoke strategy to build an integrated Victorian gold company. That strategy was turbocharged by its recent transformative acquisition of the operating Fiddlers Creek underground mine and the 42,000-tonne-per-annum Wedderburn gold processing mill.
‘Securing our first production licence is an important step for Aureka.’
Aureka Limited managing director James Gurry
The scrip-heavy $8.9 million deal, comprising just $2.5 million in cash and $6.4 million in Aureka shares, vaulted the company from explorer to producer status, delivering a cashflow positive mine and, importantly, a processing plant for its growing resource base.
Aureka’s strategy is to establish a central processing hub, trucking ore from both Fiddlers Creek and potentially Comstock to Wedderburn, just 45 kilometres away. Management says the mill, one of only six in Victoria licensed for third-party tolling, has ample spare capacity to handle the additional feed.
Aureka managing director James Gurry said: “We intend to operate Comstock alongside the already producing Fiddlers Creek underground mine, both mines feeding into the Wedderburn Gold Processing Mill, thereby maximising synergy between operations. Our focus over coming months is integration, production optimisation and realising free cash from Fiddlers Creek – while in parallel – taking the next pre-development steps to turn Comstock once again into production reality thanks to this licence approval.”
Beyond the defined resource, the company has outlined a much bigger exploration target for Comstock of between three and 3.5 million tonnes. Aureka believes the conceptual resource could add a further 112,000 to 116,000 ounces of gold and between 195,000 and 214,000 ounces of silver to the global inventory, which currently stands at 454,800 gold ounces.
Recent drilling has certainly backed up the project’s potential. A hole punched into the Comstock Shear returned a 4.4-metre hit assaying an impressive 8.9g/t gold and 57.8g/t silver from 102.8m downhole. That intercept included a spectacular 109g/t visible gold hit sitting within a broader 0.3-metre section grading a whopping 65.37g/t gold from 116.2m depth. A duplicate sample from the same interval returned a bonanza grade of 95.6g/t gold.
Drilling at the nearby Walkers Zone also delivered shallow, high-grade results, including 2.65m at 5.78g/t gold from just 20.5m depth, with a richer 0.35-metre core going 34.2g/t gold.
While Comstock represents a near-term development opportunity, the company’s long-term growth is underpinned by its flagship Irvine project, which hosts a 398,300-ounce resource. Recent drilling there dramatically expanded the project’s potential footprint, with a scout hole hitting gold 725m north of the existing 358,000-ounce Resolution lode resource boundary. It opens up a significant new stretch of ground for follow-up drilling in addition to the already identified two-kilometre gap between Irvine’s Adventure and Resolution lodes.
While the licence grant is a significant step, Aureka has not yet made a final decision to mine. The company must still secure an approved work plan, lodge a rehabilitation bond and obtain consent from the Crown Land Minister. It will also continue consultation with the Dja Dja Wurrung Clans Aboriginal Corporation under a Land Use Activity Agreement.
With a production licence now in hand for a project boasting an existing resource and high-grade drill hits, Aureka has put another key piece of its strategic puzzle in place. For a company that is rapidly transforming itself from explorer to producer, the prospect of a second mine feeding its central mill just got a whole lot closer.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
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