Proposed hub to revitalise area

Pending the acceptance of a hostile takeover bid for Alto Metals, Middle Island Resources is looking to progress plans to create a gold processing hub in central Western Australia.

The proposed hub would centre around the Sandstone Mill, which Middle Island acquired in mid-2016 and has since devised plans to turn into a regional gold facility that would potentially take advantage of up to 15 deposits comprising 1.2 million ounces of gold from its own tenements and the surrounding area.

Middle Island Managing Director Rick Yeates said it would be the only processing plant for 160km and would take in a number of deposits, predominantly within a 100km radius, that would otherwise be stranded.

“It would be very good for the region if it was to go ahead,” he said. “Sandstone is an absolutely delightful town which is well run by a very competent shire, but they have had a rough ride of late and had to close the primary school in 2014.

“This type of project would be great for the Sandstone community and would reinvigorate an economically and socially significant part of Western Australia.”

Although there are a number of potential benefits associated with the project, the stalled takeover of Alto Metals has presented a hurdle.

According to Mr Yeates, the explorer’s board has rebuffed or ignored Middle Island’s multiple attempts to engage since late 2016.

Mr Yeates said the success and longevity of the gold processing facility would primarily rely on Middle Island’s own deposits, but would need additional feedstock from other deposits to collectively provide the critical mass necessary to justify a sustainable operation.

Getting to that point could be dependent on Alto Metals’ shareholders accepting the hostile takeover bid launched at the start of March, something Mr Yeates said was commercially logical and highly beneficial to all involved.

“It will be in the best interests of both sets of shareholders to combine assets, and I am con dent Alto shareholders will see this as a great opportunity,” he said.

“I would have much preferred it to be a friendly merger rather than a hostile one, but we just haven’t been able to get any meaningful engagement from the majority of Alto directors that have come and gone over this period despite giving them every opportunity, so we felt it necessary to let the Alto shareholders decide.”

Should the bid be successful, Mr Yeates said the next step would be to review Alto Metals’ estimates of its deposits.

“We would complete pit optimisations on its deposits using our costings, which would include haulage costs, and then incorporate those into the schedule to come up with a reserve position for the combined assets,” he said.

“The next step is obviously making sure we can access the funding necessary for the recommissioning of the processing facility but, as this process is reasonably well advanced, we’re con dent of securing that.”

Funding would lead to a recommissioning decision, a process Mr Yeates was hopeful would occur in the second half of 2019, with the recommissioning itself expected to follow four to six months after.

“We would look to recommission initially on our three permitted deposits and then integrate our other yet-to-be- permitted deposit, plus the Alto deposits, into the schedule in the best possible combination for blending purposes,” he said.

“We would look to be in production next calendar year.”

Once operational, Mr Yeates would look to encourage growth in the local area by supporting the concept of a residential workforce where practical before looking further afield for workers.

“We would then turn to a drive-in, drive-out option, drawing on Mount Magnet, Leinster and other surrounding areas, before the fall-back position of fly-in, fly-out employees,” he said. “Inevitably at least a proportion of the workforce would need to be FIFO.”

Mr Yeates said he was con dent the strength of the Australian gold industry at present would translate to success for the proposed processing mill, with the Australian dollar gold price helping tougher, lower-grade deposits get started.

“The really encouraging thing about the gold industry, not just in WA but in Australia in general, is the application of technological innovation, which is driving down costs,” he said.

“I’ve seen several instances of this, including at our Two Mile Hill deeps underground deposit, where technology – in our case ore sorting – can potentially transform a marginal deposit into one that adds considerable mine life and production pro le to an operation.

“I think that’s another encouraging thing that really gives the gold industry an edge.”

Image: Middle Island’s Sandstone gold mill and conveyor.

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