I have always said, the best way to find yourself a gold mine is to spend money and explore. Exploration success will only come from persistence and belief in your team. When I first read about the Bellevue Gold Project, I was wondering how this has come about? Initially, I dismissed the results as directors holes… However, this quickly changed to “How do people find these kinds of things ?”. I mean this is an excellent project, and yet it is still discoverable…
Historic Bellevue Gold Mine was one of Australia’s highest grade gold mines producing around 800,000oz @ 15g/t gold. The Bellevue Mine is approximately 40km north-east from the small mining town of Leinster (370km north of Kalgoorlie). The Bellevue mine was closed in 1997 after producing high-grade gold for over 100 years. After it was closed in 1997, very little to no exploration was conducted within the project area.
The mine is in the Yakabindie Domain of the Agnew-Wiluna Greenstone Belt, at the south end of the Mt Goode Basalt. Gold is in plagioclase-phyric tholeiite metabasalts. Gold is in a north to north-west trending, westerly dipping, shear zones, and associated with quartz veins and breccias. The gold is associated with massive to disseminated pyrrhotite, with minor pyrite and chalcopyrite. Free gold is rare.
Draig Resources Limited acquired the project in August 2016 from Golden Spur Pty Ltd for shares, cash and a capped royalty. The details of the acquisition are in the ASX announcement dated 22 August 2016.
Draig Resources Limited changed to Bellevue Gold Limited (ASX: BLG), on the 25th of July 2018. There was no management change over this transition period, and Steve Parsons remained the man in charge.
Some historical facts on the Bellevue Gold Mine
The mine has a long history with some interesting points. I have found the information from www.mindat.org, and a summary is listed below,
- Started in 1897 and owned by Queen Margaret Gold mines NL and Spargos Exploration NL.
- Discovered in 1895 by Toombs, O’Reilly, Parker and Dightman which were a group of prospectors from Cue. They found some minor alluvial and near surface gold and eventually sold the property to Forrest, Emanuel and Co. for 4,000 pounds.
- Bellevue Propriety Limited became a public company in 1896.
- The company was reconstructed several times and eventually called Bellevue Limited in 1912. The project at this time, comprised of 40 heads.
- The gold was mined from a north-south trending body of laminated quartz and schist with variable values. Below the oxidised level, pyrite carried virtually all the gold. Copper represents one third to one-half of the contents of the mine. This combination caused significant problems with treatment in the early day. The problems with the treatment proved to be the reason the original company ended. There was a considerable amount of gold left in the sands. The workings reached 400 feet down, where the Highway Fault cut the mineralisation.
- After the company abandoned the mine, the property was taken up by Claude de Bernales and entered a period of idleness. This behaviour is not unusual for Bernales’ mines, as he was often more interested in speculation than mining.
Modern mining at Bellevue
- S. Shiel of Lawlers applied for the lease in 1920. The plant at the mine was sold and removed from the project area in 1923.
- Only in the gold boom of the 1930s did activities returned to the area. New techniques became available to help recover the gold from the sands, and sulphide ores led to the reopening of the mine. In 1933, a C. McKeown took option over the mine and at that time had 18 leases. Bellevue Amalgamated NL formed in Sydney in 1935.
- The nest reported activity was in 1952 and at this time, the owner was an A. Peter, F. Dawson, and A. Greengrass. A total of 884 ounces were recovered. One batch of 100 tonnes recovered 484 ounces of gold at a grade of 154g/t.
- Beach Petroleum NL sold half its interest in 1995 to the unlisted Western Gold mines NL for AUD$3.75 million, and the mined closed two years later.
- Since that period, the mine has seen several owners with little more than exploration including Barrick Gold after the mine closed, Siberia Mining Corporation Ltd 2004, Hodges Resources Ltd 2007, Monarch Gold 2008, and probably others since.
Historical Gold Production (Including 10,225 ounces of silver.)
- Pre-1907 – 211,751 tonnes of Ore for 108,107 ounces of gold (16.34g/t)
- 1907 to 1911 – 26380 tonnes of ore for 21,362 ounces of gold (25.91g/t)
At 10:15, on the 06 December 1988, a Mitsubishi Mu-2B-60 Marquise aircraft crashed at Sturt Meadows Station, 55 kilometres west north-west of Leonora, while taking mine workers from the Bellevue Gold Mine to Kalgoorlie. All ten on board were killed. Investigations determined ice formed on the aircraft causing it to stall and go into a spin. It was the worst aircraft accident for fatalities in Western Australia for the previous 20 years.
How Exploration Found More Gold.
As far as I understand, two items make this project interesting. Firstly, there was an understanding that the previous orebody had been cut-off by a fault and the remaining “ore-body” were displaced. Secondly, the gold is associated with pyrrhotite. One of the characteristics of pyrrhotite is that it is magnetic which meant that you could use tools such as electromagnetic geophysical techniques. So it makes it easier to find.
The company used these parameters to mould a systematic exploration program to seek further mineralisation. Exploration is a simple process of believing in your model, planning your tests and making sure all research is thorough and of quality. In this game, quantity is not your best friend. Again, understanding the structure is of utmost importance and I will state again, this was something that I missed in my undergrad time… 🙂 I learned all about structure when I started working realising all these real geologists were always talking structure. A presentation in May 2017 laid out the exploration plan in that early stage. I learned that structure is an exploration geologist best friend.
First Principals of Exploration
On the 7th of August 2017, Draig Resources announced several geophysical targets had been identified and will be tested after reviewing historical data. If you have read the announcement and had no prior knowledge of the project, you would think that this was your typical garbage that a company puts out at this stage of a project. I will admit that if I had read that, I would have thought the same. How many times over the years have I read about a group of people going into an old mine and saying we are going to find more…etc
The next release on the 18th September 2017 was not very exciting however the one on the 16th November 2017 came up with several eye-catching numbers. Another announcement followed on the 20th November 2017.
It would be sufficient to say that from this point, the journey to the magical 1M oz target would take the dramatic turn for the better. The company went on to discover several lodes which comprised together to give the company a 1M oz gold resource.
I am assuming that when you have looked at the presentation and some of the announcements, you would have realised that the simple process of smart exploration and making sure there is enough funding to do this lead to the discovery of all the deposits. The most important part is to have a champion or a good guide. That person I assumed would be Steve Parsons… I hope…
Currently, the Bellevue Gold project has a JORC Inferred Resource Estimate of 2.6 Mt @ 12.3 g/t gold for 1,040,000 oz. The resource includes an Inferred Resource of 0.8Mt @ 22.0 g/t for 550,000 oz for the Viago Lode. There is a comprehensive presentation that was posted by the company on the 22nd October 2018.
The series of diagrams below illustrates how closely related the multiple lodes are in relation to each other spatially.
I have to say that looking at the spatial relationships of the ore bodies, I do feel that there must be more to find. I don’t believe in random events… I think if you encounter smoke and there is enough of it, there must be a mother of a fire storm.
My Thoughts as an Investor
The transaction was in late 2016, and I believe that Draig Resources was around 2c. Now today, 15th November 2018, the stock is at 46c. If I were an investor, I would be pleased. Who would not be happy? In my case, I learned of this project late and was not involved in any investment opportunities with the stock. However, I am toying with the idea of buying some?
My views are hindsight investment, so we all know how beautiful this kind of investment turns out. However, I will try to be logical.
In this case, I do see my 3 point test which is as follows,
- The flagship project has lots of legs and does not cost to explore, e.g., not in PNG or South America, not in Africa.
- There is a good driver of the project. What I mean is there is a guy that will champion the cause.
- There is a character or a group that has good financial backing, a good record of raising money or delivering the funding when required.
Those three points, if passed, will always deliver excellent results unless there is a technical failure or something like a tsunami comes along and brings down the uranium price from USD$70+ to the low USD$20. The last part is a personal experience :-).
Company Facts (As of 14th November 2018)
Shares on Issue: ~447M
Market Capitalisation: ~AUD208M
In the world of exploration, there are not too many things that you can hang your hat on when you are looking at a grassroots project. You get all your euphoria from old stories, old literature and what people have said. You follow your hunch, and with research on historical data, you come up with this great idea that there is a place to spend some money. When you have discovered this place, you will go and convince all the money people that you have a great idea. This process is that simple in a short story way, so you as the geologist or promoter need to have some very compelling truths.
I am sure when Draig Resources took on the project, they would have had a good idea on the prospectivity of the place already. It’s just the way it works. Whether the whole process hangs together will be up to who I call the flag bearer (in this instance, its Steve Parsons) and the money. If you have the two, you got all the chance to make the story work.
Currently, the results are spectacular, and I am sure it will get better. What is the difference with this project is that there has not been any modern work done on this project for 20 years and if you take it further, there have not been the technological advances since its discovery in 1895 or 1897? There are not too many of these kinds of stuff around, and I praise the guys at Bellevue to have taken the initiative to get this project. It is always good to see how to do this kind of project the correct way.
Do I like the project?
I like the project and what the future holds. Looking at where the new lodes are, you got to think about how many more could there be? It reminds me of the Kundana province where Northern Star is continually finding more gold. Here at Bellevue, they are only at 1M oz. There have been up to 5M ounces mined at Kanowna Belle since 1994 and Kundana had had up to 4M ounces mined already.
Do I think that there could be more gold discovered, all I can say is why not? Remember that at Kundana, Northern Star recently relooked at their database and went and found themselves another 1M+ ounce of gold. The discovery was in amongst an area that was densely drilled by Barrack (I think). I believe that the endowment of the entire Yilgarn goldfields
I have always said that this Norseman-Wiluna greenstone belt is 1,600km long. Imagine it as one great big mineralised fault. Do you think there are no more mines??? My money says that there are still elephants to be found and what if those found are only the baby elephants.
What are the potential Issues?
Issues are elementary.
- No further resource upgrade. – Could happen but they already got a 1M oz resource that sits nicely in their asset drawer currently.
- There is a metallurgical issue? – Possibly the only problem that I could think of that may put a spanner in the works. I have not seen any info that may create an issue. They have released some information on the metallurgy, and it appears to be positive.
- The gold price tanks. – Unlikely with all the smart Wall Street executives pumping out more credit default swaps look-alikes than in 2007.
- Natural disaster – Possibly, there was an earthquake in Kalgoorlie a few years back. But I would instead put my money on a horse than a natural disaster happening on a scale that would be devastating to the mining industry in this area.
I look at this in a straightforward manner. There is now 1M ounces of gold on the table. There is no reason to doubt that the guys on the Board are smart guys. A margin of say AUD$200/oz means that you are looking at AUD$200M profit. A gold price of AUD$1600+ and an AISC of AUD$1400 is being very conservative I think. So that profit margin could double easily to AUD$400/oz which would make it AUD$400M profit or more. However, I do believe that in Australia, an AISC around the AUD$1200 is minimum.
The geology looks good, and they will probably find more ounces which will mean more positive news, I would be assuming. Now that the company is travelling well with a healthy share price and plenty of cash in the bank, I think in the short term, we will see a rising market capitalisation. Steve Parson is a proven guy, and the Board is well versed with this game.
They have plenty of ground to support future growth in resources.
One other possible outcome is the consolidation of projects/companies. The merger of Silverlake Resources and Doray Minerals and Ramelius Resources failed attempt to make a play for Explaurum Limited and its Tampia Gold project, and subsequently, Alkane taking a stake in Explaurum is a sign that someone may make a play for Bellevue. Consolidation of projects such as this is not uncommon. I would think that the big companies such as Northern Star, Barrick, Newcrest…etc will be waiting in the wings for the opportunity. When that happens, I am sure the value will go much further than what it is now.
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