BM, which recently completed a cutback at Resources & Energy Group's Granny Venn pit to recover some 9000 ounces, has signed a similar agreement with Kingwest Resources for an underground and open pit development of the 11,500oz Selkirk deposit.
When Kingwest scoped out its Menzies project for development 18 months ago it suggested that Selkirk, as one of the smaller deposits, could be left to later in the mining sequence.
Given its recent pivot to exploration at Lake Goongarrie to the south it has decided to change up that plan as Selkirk is one of the higher-grade deposits at 2.15gpt.
About half the ounces are indicated and half inferred.
The deal, to be transacted with BM's BML Ventures, will see BML cover all capital costs and take responsibility for mining and haulage to a third-party facility for processing.
It recently used Golden Mile Milling's Lakewood plant for the Granny Venn campaigns. Karora Resources is acquiring Lakewood for A$80 million and has suggested it will have some spare capacity for tolling.
BML and Kingwest will split the net profits on a 50:50 basis.
Kingwest CEO Ed Turner said Selkirk would be the first step in unlocking the greater Menzies project, while generating cash it could put toward drilling for a potential Kanowna Belle analogue and the emerging Kambalda-style nickel sulphide targets at Lake Goongarrie, and potentially secure a larger position at Menzies, where it has 15km of strike along the Menzies Shear.
The company has been talking to various partners about its development options for some time.
Selkirk sits within a granted mining lease that had not hosted an operational mine in 20 years and remains open at depth.
Mining is expected to commence within 18 months.
Around 787,000oz grading an average 18.9gpt was recovered from the Menzies project over two main phases between 1895 and 1999.
Work by Kingwest has defined total resources of 505,100oz at 1.33gpt, with Turner convinced there is more gold to be found within the Menzies gold field given drilling is limited at depth.
Kingwest's 2021 scoping study, based on a $2300/oz gold price, examined four new open pits and four cutbacks costing around $20 million.
The study suggested 147,000oz could be recovered by trucking higher-grade oxide, transitional, and fresh ores to a mill within 100km of Menzies, generating net cashflow of up to $95 million.
Kingwest, which recently appointed Horizon Minerals chair and Goldfields identity Ashok Parekh as a director, had around $3 million cash in April.
Kingwest shares were up 7% today at 8c, valuing it at $19 million.
The stock traded as high as 24c last November, and recently bottomed out at 4.6c.
