Though Silver Lake Resources is still 100 per cent focused on gold production, a $20 million copper and base metals exploration program offers intriguing possibilities, according to managing director Les Davis.
In the past three days, Silver Lake has released results from drilling campaigns from two base metals prospects within 20km of its newly established Murchison operations, 600km north of Perth.
Results from Hollandaire and Mount Eelya include respectable grades of copper, silver and zinc, along with gold.
Mining began at the Murchison mine in October, with first gold expected in the first quarter next year.
Silver Lake said this week it would kick off a pre-feasibility study on mining at Hollandaire, which already has a resource count including 45,100 tonnes of copper, grading 1.2 per cent; 457,800 ounces of silver, grading 5 grams/tonne; and 34,100oz gold at 0.4g/t.
Mr Davis told WestBusiness that, though firm numbers from the feasibility study would not be available until the middle of next year, copper and silver credits from a mine at Hollandaire could bring costs at Murchison down considerably.
“For every $30 million worth of margin that this project can bring to our gold business in the Murchison, over the planned 100,000oz per annum gold production profile, that $300/oz benefit on the cash cost, which is very compelling,” he said.
“You don’t need that much to get that $30 million margin, but it’s where it is.
“If it was 400km away it may be different, but given it’s right on our back doorstep — it’s 4km away from where we just spent $70 million establishing our next gold production centre, it comes for marginal capital and operating costs, so it doesn’t get much better than that.”
Mr Davis said processing facilities to produce a concentrate could be easily added on to the plant at Murchison.
The ore crusher at Murchison has additional capacity, and additional grinding, flotation and filtering circuits could be easily added, he said.
“And it does bring more gold to book. I think the market may be missing that.
“Even though you’re going to get credit for copper and silver and everything else, but assume that you had a million tonne throughput, and the grade of the gold was at one gram (per tonne), that’s another 30,000oz gold a year you are getting for nothing because you are paying to mine the other minerals.”