Hammer Metals (ASX: HMX) is cashed-up and ready to kick-off a maiden drilling program at its recently acquired Bronzewing South gold project in Western Australia.
Hammer’s maiden reverse circulation campaign at Bronzewing South will comprise 2,500m and test anomalies identified along strike to the south of the historic Bronzewing mine.
Hammer chairman Russell Davis said the company was looking forward to beginning the maiden drilling program.
“This program represents Hammer’s first step towards testing a range of gold targets the company has started to generate, in what we consider a very prospective part of the Yandal Greenstone Belt.”
He added results would be reported as soon as they became available.
Last month, Hammer undertook a placement raising $1.76 million to begin drilling Bronzewing South – exceeding the initial amount the company had hoped to raise.
Bronzewing South gold project
Hammer agreed to acquire Bronzewing South in March this year for $550,000 fully paid shares.
The project is immediately along strike of Echo Resources’ (ASX: EAR) 4 million ounce Bronzewing mine and 1Moz Orelia deposit, which form part of the company’s Yandal gold project.
Echo is currently looking at restarting the 2.5Mt per annum Bronzewing mill, which Hammer noted was only 20km from Bronzewing South.
In addition to the mill, the Yandal project has access to critical infrastructure including an operational 240-person camp, electrical reticulation and power, airstrip, haulage roads and a large capacity fully-permitted tailings storage facility.
Echo is currently in a trading halt pending a potential takeover transaction – with details yet to be released.
Strategy at Bronzewing South
Bronzewing South comprises five exploration and two prospecting licences and covers 111 square kilometres.
According to Hammer, previous drilling did not take into account the structural complexity and variable orientation of the Bronzewing lodes.
However, it did uncover notable results of 4m at 6.53 grams per tonne gold from 56m, 4m at 1.11g/t gold from 56m, 1m at 5.67g/t gold from 127m, and 1m at 4.42g/t gold from 230m.
Additional shallow RAB drilling was carried out to 30m depths, but this was not followed up with a RC program.
The shallow program returned numerous mineralised intervals including 3m at 12g/t gold from 18m and 3m at 3.6g/t gold from 9m.
Hammer also pointed out that the area to the south of Bronzewing had been tied up in a legal dispute for almost a decade and as a result, only minimal drilling had been carried out.
Experienced team at the helm
Mr Davis was the founding director of Gold Road Resources (ASX: GOR) which is one of Australia’s newest gold producers with its 50%-owned 6Moz Gruyere project in WA.
Once at full capacity, Gruyere will be producing 300,000oz gold annually with life of mine all in sustaining costs of A$1,025/oz.
Also on Hammer’s board is Ziggy Lubieniecki who discovered Gruyere while exploration director of Gold Road.
Mr Lubieniecki was also named AMEC’s 2015 Prospector of the Year for discovering Gruyere.
Mr Davis put his own money behind Hammer earlier this month, scooping up more than 1.4 million shares on-market for $32,983.
Gold explorers and producers alike have been cashing in on the high gold price which has been hovering around A$2,200/oz for several weeks now – pushing past A$2,000/oz in June.
Analysts such as Jim Rickards have been placing bets on how high the gold price will go, with Mr Rickards claiming it will reach US$10,000/oz over the next decade.
Commenting on gold market fundamentals, Northern Star Resources chief executive officer Stuart Tonkin said he anticipates a supply gap will widen in the gold space, spurring the price up higher and triggering investment to flow into lower grade and higher-cost projects.
He said once these projects get off the ground, they will fill the supply gap and the gold price will begin to fall.
However, he said the time-line from gold discovery to production could be 10 years, which is in line with the decade-long bull run analysts have been touting.