Things are continuing to stir in the northern Murchison region of Western Australia. It’s something that should be expected in a $6,560/oz Aussie gold price environment.

There’s serious money to be made by building up resource/reserve bases at historic operations which closed when the gold price was not so favourable, or at new discoveries, and matching them up to the region’s long milling capacity.

That was the bright thought during the week by the $5.86 billion Westgold (WGX) with its move to place two gold assets in the Cue-Meekatharra area of the northern Murchison into a new exploration company – Valiant – that will make its way to the ASX in March next year in a A$65-$75m IPO.

The two former producing assets are the Reedy’s project (4.1Mt at 2.43g/t for 319,000oz) between Cue and Meekatharra, and the Comet gold project (11.5Mt at 2.40g/t for 890koz), 20km south-east of Cue.

The view of RBC Capital Markets was that the move  – Westgold will keep a 44-48% stake – is a laudable attempt to realise value for assets otherwise forgotten by the market.

“The new company Valiant should place greater exploration and project emphasis on the spun-out assets than would a broader Westgold, which already has a material pipeline of mine upgrades and development options,” RBC said.

Importantly, the pair have entered into an ore purchase agreement to provide Valiant with a fast-track to cashflow from any processing of Valiant’s ore at Westgold’s Bluebird mill (Meekatharra) and/or the Tuckabianna mill (Cue).

Neither mill has immediate needs for new ore sources but if gold prices hold at current levels, what’s not to say that they can’t be expanded to accommodate what Valiant, or what other players in the region, come up with.

And then are the mills owned by others that make the broader region one of the most truckable sources of additional gold ore in a boom gold price market.

It was against that backdrop another north Murchison player, Great Boulder (ASX:GBR)  put its hand up for some attention during the week after upgrading its resource base at its Side Well project east of Meekatharra to more than 1 million ounces at a very truckable grade of 2 g/t.

The increase from a November 2023 estimate of 668,000oz was a nice reward for the company given that it has been drilling away across a number of deposits that make up Side Well in the belief that the project has “genuine multi-million ounce potential’.

While that full potential unfolds, Great Boulder has been busy preparing mining lease applications  to be submitted in the New Year covering three of the deposits at Side Well.  And why wouldn’t it given the $6,560 Aussie gold price.

Progress with the applications and more exploration results pointing to additional resource upgrades sets the company up for a re-rate in the New Year. It last traded at 7.8c for a market cap of $82m ($15m cash) which is on the mean side of things given its new resource estimate, ongoing exploration upside, and the potential for the company to be eyed off by a regional mill owner.

Gorilla Gold:

Simon Lawson was on the money at the start of the month when he told the Resources Rising Stars Summer Series conference that a then-pending resource update at Gorilla Gold’s (ASX:GG8) Comet Vale project would hopefully impress a few people in the market.

The resource upgrade was released on Monday and impressed all right, underwriting Gorilla’s move from early December when it was mentioned here as a 42c stock up to 52.5c in Thursday’s market.

Lawson, formerly of Spartan Resources fame and now a Gorilla director, sang the virtues of creating value with the drill bit at the RRS conference, saying that he believed Gorilla had the makings of becoming a $1 a share/$720M company off the back of its three historic gold projects – Comet Vale, Mulwarrie and Vivien.

Comet Vale, 100km north Kalgoorlie, has been the subject of particular attention with the drill bit in recent times, which has enabled Gorilla to increase the resource estimate by 765,000ozs to 860,000oz at a handy 3.7g/t and a finding cost of $25/oz.

Canaccord has been following the stock and maintained its “spec buy” and $1 a share price target following the release of the resource update which was bang on its expectations.

“We view the project as benefiting from excellent infrastructure, sitting on granted Mining Leases adjacent to the Goldfields Highway and within 100km of multiple operating gold mills,” Canaccord said.

“Gorilla has added 6.5Mt at 3.7g/t Au for 1.3Moz across Comet Vale, Mulwarrie and Vivien, reflecting what we consider to have been a highly successful year of exploration-led growth.

“With three drill rigs currently active at Comet Vale and two at Mulwarrie, alongside ongoing studies and development work, Gorilla has another busy year ahead.”

Saturn Metals:

It is nice to have happy shareholders going into the Xmas-New Year break.

That seems to be the case for Saturn Metals (ASX:STN) which earlier in the week released its prefeasibility study into the development of its Apollo Hill project near Leonora at a cost of $472 million.

Hedley Widdup, MD of the listed junior resources investment fund Lion Selection (ASX:LSX), took to social media to air his response to the PFS.

“Huge reserve of gold, fat ore zones and bulk economics. Stunning numbers. Go STN,” Widdup said.

Lion has been a long-term backer of Saturn and holds about 14% of the stock. So there was an element of Widdup talking his own book.

But the PFS did impress using a base case gold price of $A4,300 and was doubly impressive using a rounded spot market price of $A6,200/oz. As it is, gold has continued to do its thing and was last quoted at an amazing $A6,555/oz.

The PFS outlined a 14 year-life based on a 1.77Moz production target. A 14-year mine-life is unusual in the WA gold space where 10 years is generally considered a heroic achievement.

But then again, Apollo Hill is not your usual WA gold development. It is a low-grade heap leach project, so the production target included a “drain down” of the leach pad in its final years.

Given rigs will be drilling away in 2026 for reserve confirmation and growth in the resource from exploration drilling, including drilling out the high(er) grade Iris trend, 14 years it is likely the start of the story.

Apollo Hill’s maiden ore reserve grades 0.47g/t, again a novelty in WA but not so in the US where successful low-grade bulk tonnage heap leach projects are common.

The Apollo Hill PFS certainly demonstrates the same sort of potential. Using the base case $A4,300/oz gold price, the 106,000oz of annual production generates free cash flow of $1.89 billion, a NPV of $973m, an IRR of 51% and a 2.3 year payback.

At the current spot gold price, the NPV takes off to $2.38 billion.

Saturn was covered back in August when it was a 43c stock, In Thursday’s market it was a 51c stock for a market cap of $285m. It has cash of $60m to deliver the definitive feasibility study in the December quarter next year.