NQ Minerals (NQMI PZ)#
NQ Minerals (AQSE:NQMI) has announced a significant 44% increase in contained gold ounces at the underground Beaconsfield Gold Mine in Tasmania. The JORC 2012 resource now stands at 1.45mnt at 10.3g/t Au which indicates 483koz. NQMI is acquiring the project through a staged payment structure announced in February of this year which totals A$2m.
At over 10g/t, the resource is one of the highest-grade deposits globally and with a significant upgrade in tonnage NQMI are now demonstrating that the resource also has expansion potential. Highlights from the drill programme which led to the resource upgrade included 7m at 21.7g/t Au from 1,220m and 11m at 15g/t Au from 1,235m. The successful resource upgrade adds momentum to NQMI’s efforts to expedite a restart of production.
Beaconsfield is a brownfield project last shutting down in 2012, although production of around 1.8mnoz across the project area has been mined since 1877. In 2012 a low gold price of A$1,200/oz made the development of a new decline unfeasible, however, with prices now above A$2,600/oz the backdrop is far stronger to justify the necessary work and refurbish the 350ktpa plant which is on C&M currently.
In terms of exploration upside there are three areas of interest, in our view. Firstly, the historic tailings contain additional ounces, estimated at 67koz from the first dam. Secondly, the existing resource is based on drilling between c415-1,500m below surface and remains open at depth. Perhaps the most interesting target is the zone from surface to 415m; the modern operation (1999-2012) ignored this area of historic working, however, historic techniques focused only on the quartz rock leaving a significant portion of the mineralised ore in place. Drilling from surface would enable NQMI to understand the potential for open pit mining and fully exploiting the remaining near surface high grade zones.
NQMI already has gold and silver exposure through production at its Hellyer operation where gold and silver credits in the zinc and lead concentrates are payable, however, the potential for higher near term gold output would clearly be of interest given the tailwinds of a strong and rising gold price environment.