Genesis Minerals (ASX:GMD) has revealed its long awaited five-year plan three days after saying it would be launched on Monday.
The plan is aimed at building output to 300,000 ounces a year (probably a bit more) without departing from the mantra of (quality) profits over ounces.
The surge in gold prices in recent weeks has probably made the plan look a lot rosier — especially the surge on Thursday over US$2,200 an ounce and more than A$3,300, according to the World Gold Council spot price.
In fact, going on the price cut-offs in the ASX filing, it looks like the price surge above US$2,000 an ounce has allowed GMD to be more confident about its plan, the finances it will involve and the returns it will bring.
The five-year plan and strategic review conducted are built on three transactions in 2023 — the first being the purchase of the Laverton assets of St Barbara, especially the Gwalia underground mine, the Tower Hill project and the 1.4 million tonnes a year Leonora mill.
Then there was the concurrent takeover of Dacian including the 3.0 million tonnes a year Laverton mill and the Jupiter and Redcliffe projects and finally the acquisition of the Bruno-Lewis and Raeside gold projects from Kin Mining — but not after Kin did a little gentle greenmailing by staying in the Dacian share register until GMD did a deal.
As a result of these deals and some intensive drilling, GMD says that as of March 21 (Thursday), it now has Group Resources of 15.2 million oz of gold (226 million tonnes @ 2.1 grams to the tonne) and Group Reserves of 3.3 million oz (45.4 million tonnes @ 2.3 g/t) and all in the Leonora District of WA and close to existing processing infrastructure.
GMD CEO Raleigh Finlayson said in Friday’s announcement that “It is clear that we now have the Reserve to underwrite our future as a major ASX gold producer with annual production of 300,000oz per annum and more.
“We also have long mine life and operational diversity on both the mining and processing fronts.
“Importantly, these new robust models show there is huge scope for ongoing growth in the inventory and forecast production rates, with mineralisation open across the assets and drilling continuing to return exceptional results which point to increases and upgrades in the resources”.
These updated resource and reserves figures include Genesis’ maiden resource and reserve estimates for the Gwalia and Tower Hill deposits acquired from St Barbara, "rebuilt with an underlying focus on higher quality ounces,” according to GMD.
GMD said the reserves and resources figures do not include the Tower Hill prospect.
The reserves are based on a conservative gold price of A$2,400/oz; while the resources are based on A$2,800/oz which GMD says "will underpin significant growth in production."
GMD said that the "numerous very high-grade drill intersections at Gwalia and Tower Hill (are), supporting Genesis’ confidence in the immediate mine plan as well as future growth at both deposits. The drilling results include a high grade, 6.7 metres @ 329 grams to the tonne (g/t) at Gwalia.
GMD said Gwalia underground has a maiden reserve estimate of 6.7 million tonnes @ 5.3 grams to the tonne for 1.1 million ounces "(including the Hoover Decline’s 2.6 million tonnes @ 7 g/t for 573 ounces.
Tower Hill’s maiden reserve estimate is 15.4 million tonnes @ 2 g/t for one million ounces; Ulysses has 2.1 million tonnes @ 3.7g/t for 250,000 ozs, (Unchanged compared to Genesis 30th June 2023 estimate); Jupiter – 7.7 million tonnes @ 0.9 g/t for 230 ounces and Bruno-Lewis’s maiden reserve of 3.9 million tonnes @1.1g/t for 140,000 ounces.
So far as the resource is concerned Gwalia underground first’ Resource estimate from GMD is 26.3 million tonnes @ 4.7g/t for 4.0 million ounces with "Extensive opportunities to grow Reserves via conversion of 3.3Moz of Measured and Indicated Resources.”
Tower Hill’s maiden resource estimate from GMD is 13.9 million tonnes @ 2.5 g/t for 1.5 million ounces, while Bruno-Lewis and Raeside have 15.6 million tonnes @ 1.2 g/ t for 600,000 ounces (Following acquisition of Kin Mining projects in late 2023).
GMD said in Friday’s statement that "The latest drill results from Gwalia further validate the conservative “quality > quantity” strategy identified in due diligence and
reflected in the Reserve re-build. The latest drill results from Tower Hill infill the base of the pit and extend the high-grade shoots outside the pit design.
"Ongoing drilling at both projects highlight the potential for further organic growth,” the company added.
