Benz, which is also listed in Toronto, had a successful Diggers & Dealers, with a Monday morning exploration announcement triggering a 31% rise in the company’s share price over the week.
As a result, the company raised the funds at 98.5c per CHESS depositary interest, equal to Friday’s closing price.
The placement introduced two unnamed offshore long-only institutional funds and leaves Benz with around A$40 million to maintain the momentum at Glenburgh.
Drilling to step up
Benz has been drilling at Glenburgh with two reverse circulation rigs but the placement will allow it to double its capacity to four rigs.
The project has an existing resource of 16.3 million tonnes at 1 gram per tonne gold for 510,100 ounces and sits on a granted mining lease.
The company has described Glenburgh, a project previously owned by Spartan Resources, as a “frontier” gold project with multimillion ounce potential.
The project covers 80km of strike on the northern margin of the Yilgarn Craton though only around 20% has been explored.
Benz has defined outcropping targets over 18km strike extent.
Work to date has identified two mineralisation styles identified: shallow, bulk, moderate-grade mineralisation at Icon and a high-grade, discrete underground shoot at Z126.
Last week, the company reported that new step-out holes targeting a large gap under previous drilling at Icon returned thick, high-grade gold intercepts, with all holes ending in mineralisation.
Results included 154m at 1.1g/t gold from 76m, including 5m at 22g/t gold; 134m at 1g/t gold from 66m, including 44m at 2.2g/t gold; 206m at 0.5 g/t gold from 194m, including 19m at 0.9g/t gold and 43m at 0.9g/t gold; 272m at 0.5 g/t gold from 157m, including 41m at 1.6g/t gold; and 306m at 0.4 g/t gold from 222m, including 39m at 1.3g/t gold and 10m at 2.8g/t gold.
Mineralisation is interpreted to link with the nearby Tuxedo deposit in a synformal geometry, outlining a potential 400m-wide mineralised envelope comprising up to three broad higher-grade zones, interconnected by a continuous lower-grade halo.
Benz CEO Mark Lynch-Staunton said the intercepts would turn heads in any global gold district.
“Every metre we drill here, we’re getting more and more confident that we’re onto something big,” he told Diggers & Dealers last week.
“What we’re seeing here is not normal. We don’t think this is a standard orogenic gold system.
“If you missed out on Hemi and you missed out on Gruyere, I truly believe this will be the next multimillion ounce gold district and we’re just getting started.”
The next Tropicana?
In a note published last Thursday, Euroz Hartleys analyst Kyle De Souza upgraded Benz from speculative buy to buy and lifted his price target by A20c to A$1.01 on the basis Glenburgh could be the next Tropicana.
AngloGold Ashanti and Regis Resources’ Tropicana gold mine in WA is a top 10 Australian gold mine, producing 139,000 ounces in the first half.
The mine has produced more than 400,000oz per annum previously but has been transitioning from open pit to underground.
De Souza said grades and thicknesses seen recently at Glenburgh were most recently seenat Spartan Resources’ Never Never discovery “except this has a halo zone that is well mineralised and multiple repeat structures yet to be tested”.
“The Glenburgh project would have been mined 50 years ago had it ‘looked’ like all the other gold deposits in WA. But thanks to its metamorphosed geology (like Tropicana) it is hard to identify visually,” he said.
“It is why no one has drilled it in the 10 years prior to Benz’s ownership.
“With an 18km long mineralised corridor – could this also apply to the other known deposits?”
Lynch-Staunton didn’t shy away from the Tropicana comparison during his Diggers presentation last week.
“We believe Glenburgh is going to repeat that success,” he said.
“We want to build something big.”
Promising economics
Glenburgh could be fast-tracked into production as it sits on a granted mining lease.
“I can’t stress enough how valuable that is,” Lynch-Staunton said, adding that it shaved several years off the development timetable.
The project has approved Native Title and approvals for water extraction.
“This really is shovel ready – but management understands there is a bigger opportunity here in the near term through the drill bit,” De Souza said.
De Souza said historical test work had demonstrated a high gravity recovery of up to 98% which could lead to lower capital and operating costs.
He’s already modelling a seven-year operation to produce 102,000ozpa, based only on the current resource.
“The real value in exploration is picking companies with assets that have the potential to sustain production profiles over 100,000ozpa for more than 10 years,” he said.
“In our view, Benz is one of them and their recent announcement of a discovery should not be overlooked (particularly in the context of the existing 500,000oz resource) which underscores the current valuation.”
