Kalgoorlie Mining Company to deliver gold JORC Resource at East Lode before year end

Kalgoorlie Mining Company (ASX: KMC) continues to progress the Bullant Gold Mine in Western Australia, and has now positioned a team for development of the East Lode ore body.

Exploration will follow-up on the historic development undertaken by Barrick on the East Lode upper levels, and previous development undertaken by Kalgoorlie Mining.

Stage one development of the lode has commenced with ore being accessed from the existing Bullant Decline, which was intersected with less than 15 metres of waste access on each of the four current levels being developed.

The company said the existing decline extends to 700 metres below the surface and the current stage two and planned stage three drilling will extend to a depth of 500 metres.

This allows the potential for providing 10 more levels on this previously unexploited ore zone.
Chris Daws, managing director of Kalgoorlie Mining, told Proactive Investors today that a JORC Resource for the East Lode is expected before the end of the year, and is a high priority target for the company.

Daws added that when Barrick previously owner of the mine, they overlooked the lode due to the low gold price at the time.

Banking cash flows from Barrick ore agreement

Just last week Kalgoorlie Mining announced a cash flow generating agreement, with the company soon to bank funds generated from a gold ore agreement with the Australian subsidiary of Barrick Gold Corporation (NYSE: ABX).

Kalgoorlie Mining will receive around A$2 million by the end of the month, with the company being paid by Barrick when 18,000 tonnes of ore (175 truck movements) is trucked the 80 kilometres from Bullant to the Kanowna Belle gold processing facility.

The break down of the cash generation is Kalgoorlie Mining receives 70% of the estimated A$3 million to A$3.5 million value of the gold within the ore, with the final 30% determined on recovery rates and costs of the processing.

Now for the best bit, Kalgoorlie Mining will look to truck 20,000 tonnes of ore each month to Kanowna Belle for the next twelve months, providing the potential of over A$2 million a month - equating to A$24 million in cash.

This cash generation is actually more than the current A$21 million market capitalisation of Kalgoorlie Mining, indicating the enhanced revenue parameters are not (yet) factored into current valuation - a situation likely to change and presenting opportunities for investors.

After the twelve month period, Kalgoorlie Mining should be in the position to process the ore on-site, which will provide a boost in margins.

Adding some extra spice to the agreement, the company expects the gold ore grades to increase above 5 grams per tonne (g/t) in coming weeks, from around 3.5g/t - adding potential upside to the actual amount of gold produced.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/18967/kalgoorlie-mining-company-to-deliver-gold-jorc-resource-at-east-lode-before-year-end-18967.html