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Blackham Resources produces 65,406 ounces in FY19 and does $10 million cash deal

The company has agreed to sell its Lake Way potash tenements for $10 million cash as it focuses on ramping up its gold operation.

gold being poured
Blackham produced 12,045 ounces of gold in the June quarter

Blackham Resources Ltd (ASX:BLK) released its June quarter report confirming 65,406 ounces produced in FY2019 at an all-in sustaining cost of A$1,760 per ounce from its Matilda-Wiluna Gold Operation in WA.

The company noted that the operation was significantly mine constrained over the 6 months to 30 June, which is expected to reverse during the current September quarter.

A number of investments in the June quarter are expected to deliver higher gold production for the next six months as the company targets 120,000 ounces of annual production.

With the recent invesments made and mine constraints set to reverse, this could be a possibly inflexiion point for the company as it looks to execute on its stage I expansion.

Blackham has also revealed today that it has agreed to sell its Lake Way tenements to Salt Lake Potash Ltd (ASX:SO4) for $10 million cash.

READ: Blackham Resources confirms MACA support for transition to sulphide production in 2020

Blackham’s executive chairman Milan Jerkovic said: “We are excited to have reached agreement with Salt Lake Potash on a mutually beneficial arrangement that enables Blackham to pursue its mining plans for Williamson, whilst also enabling Salt Lake Potash to develop its Lake Way SOP project.

“The Lake Way Transaction will strengthen Blackham’s balance sheet, lower its mining costs as it progresses its strategy associated with its Sulphide Expansion Project to unlock the large sulphide reserves and resources at Wiluna."

READ: Blackham Resources major shareholder increases stake, gold price roaring

Under the deal, Blackham will sell the tenements together with certain water rights, it will also cancel its brine royalty but retain certain gold mining rights for the tenements.

The $10 million cash consideration comprises $3 million non-refundable deposit and $7 million at completion which is expected to occur by the end of September 2019.

Salt Lake Potash will also contribute up to $10 million to the pre-strip of the Williamson open pit mine with the waste material directly applied towards the construction of their on-lake evaporation ponds.

Blackham expects to commence mining the Williamson free milling orebody in the current quarter.

Focusing on stage I gold mine expansion

Blackham plans to expand production at Matilda-Wiluna through two stages of expansion, stage I targeting 100,000-120,000 ounces of gold per annum and stage two increasing to 250,000 ounces per annum.

Stage I focuses on the production of a gold concentrate predominantly from the Wiluna underground with flexibility to also process its free milling and tailings Reserves.

Underground mine plan optimisation to support the first stage sulphide expansion plan is underway and is expected to be completed in the current September quarter.

Engineering design for the sulphide flotation plant is progressing and also expected to be completed this quarter.

Blackham continues to receive strong interest for concentrate offtake, with pricing discussions and potential financing options well progressed.

Quick facts: Blackham Resources Ltd

Price: 0.014 AUD

Market: ASX
Market Cap: $140.4 m

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