There has been a very interesting development next to ECR Minerals’ (LSE:ECR) Bailieston license (EL5433) in Victoria, Australia. Newmont Mining Corp, one of the world’s largest gold producers has just applied for the license for a large block of land right next door. Although the license has yet to be awarded, if it is then this could prove to be a highly significant event for ECR
Excitement was already building for ECR’s 100% Bailieston gold project, given its relatively close proximity to a number of profitable, high-grade operations. The Fosterville gold mine is around 30km to the west and is currently the largest producing gold mine in Victoria. To the southwest, roughly the same distance, sits the Costerfield gold mine, which is another prolific produce.
As promising as the region Bailieston sits in already is, the recent move by Newmont could mark the start of something big for ECR. A company like Newmont typically dedicates a great deal of resources to due diligence prior to securing new licenses. A search of the Victoria State’s ‘GeoVic’ online database confirms it has indeed just applied for license EL006893, which borders Bailieston.
It seems that EL006893 has only become available within recent weeks, which suggests Newmont may have been keeping a close eye on it for some time. This might not be surprising given the resurgence of gold exploration in the region.
Traditionally Central Victoria has been an intensive gold producing area since the precious metal was first discovered there in 1850. In fact, it is only in recent years that Victoria’s gold output has been surpassed by Western Australia’s. Part of the recent revival has been driven by Kirkland Lake Gold, the owner of Fosterville, discovering more than 1.1m ounces of gold last year.
As well as the main EL5433 block shown on the map, ECR’s license also includes a smaller block (Black Cat) directly adjacent to the south of the area Newmont are showing interest in. The block used to be connected to the main section of EL5433, but due to local licensing rules explorers must drop 40% of the license after three years, and a further 40% after five years.
ECR also owns the Moormbool license (EL00628), which it secured in July 2017. The block is largely unexplored and covers approximately 59 square kilometres. This block sits south of Black Cat and the potential new license acquisition by Newmont, with the Costerfield Mine to the south-west currently producing 50,000 ounces of gold per annum. Costerfield is a below surface mine on block EL3310 consisting of narrow high-grade veins.
Then there is the Fosterville gold mine, which enjoys a very high 94% recovery rate, with a reserve grade of 23.1 g/t Au. It is estimated that approximate production costs at Fosterville are around AUD$880 per oz, compared with a current gold price of around AUD$1665 as of today. The mine is expected to produce 300,000 ounces in 2018 and is also rich in by-products such as silver.
Although GeoVic suggests Newmont’s status description for EL006893 is an “application”, the implications of a major player swooping in to secure a large chunk of the area are clear. Regardless of whether Newmont is successful in its application, it clearly sees enough that it like to regard this specific area as worthy of future exploration work. For ECR Minerals this looks good news and the company seems to be very well placed to take advantage of a gold rush revival in the Central Victoria region.