Gold explorer Resources & Energy Group (ASX: REZ) has updated the mineral resource estimate for its Mount Mackenzie gold and silver project in central Queensland, citing a material change in commodity prices in the five years since the original estimate was released.
Mount Mackenzie is now reported to contain an indicated resource of 1.7 million tonnes grading 1.2 grams per tonne gold and 11g/t silver; and an inferred 1.73Mt at 1.15g/t gold and 4g/t silver, based on an assumed gold price of $2,760 per ounce.
The price assumption is a 15% increase on the $2,400/oz being used to assess mine feasibility, and a significant increase on the $1,500/oz used for the original resource estimate released in 2015.
Total tonnage has also increased to 3.42Mt at 1.18g/t gold and 9g/t silver, for a total of 129,000ozgold and 862,000oz silver.
The updated figures represent a 48% and 42% increase in respective indicated and inferred resources, an overall 29% increase in contained gold, and a 38% increase in contained silver over the original estimate released in 2015.
In April, Resources & Energy Group revised the scoping study for Mount Mackenzie to reflect the changing gold price.
Resources & Energy Group director Richard Poole said the difference between the two mineral resource estimates is significant.
“Globally, the 2020 mineral resource estimate represents a material increase when compared to the 2015 figures,” he said.
“As the resource model used to report both estimates is the same, the differences are related to changes in metal price, mining cost and metallurgical recovery assumptions.”
The new resource estimate will be used for ongoing mine planning, which will provide a basis for advancing Mount Mackenzie through to detailed feasibility.
Additional drilling and metallurgical studies will be carried out as part of this process.
Mount Mackenzie is being investigated for its potential to host a shallow gold and silver resource which would be amenable to staged, small-scale, open-cut mining at low strip ratios.
Scoping studies completed by Resources & Energy Group have demonstrated the project should proceed to feasibility study to provide guidance on the preferred scale of operations, processing options and potential economic performance of the new resource estimate.
The Mount Mackenzie area is recognised as a high-sulphidation epithermal system with the resource largely contained within the North Knoll and Southwest Slope zones of gold mineralisation.
Historic and recent drill data has indicated an inverse relationship between the gold mineralisation and some manganese content – in some cases, areas of low gold content were included within mineralised envelopes on the basis of low manganese assays.
Mount Mackenzie’s development will be aided by funds generated from the $1.5 million sale of Resources & Energy Group’s interest in the Radio joint venture project in Western Australia.
Radio is a high-grade operation that has historically produced over 70,000oz gold predominantly from an underground mine.
In April, the company announced it would divest its interest in the project to Summit Resource Holdings.
The remaining interest is held by joint venture partner Valor Resources (ASX: VAL) via its subsidiary Bullfinch One.
Summit is also acquiring the interests held by Bullfinch One through a farm-in agreement and will eventually be the sole owner of Radio.
Mr Poole said the sale proceeds would be put to good use.
“The funds generated from the sale of our remaining Radio interests will allow us to put further managerial resources into the Mount Mackenzie project which, at current gold prices, is now looking highly profitable,” he said.
At midday, shares in Resources & Energy Group were steady at $0.016.