Stonewall marching towards gold production

Nestled in the heart of South Africa’s historic north eastern gold province lies Stonewall Resources’ Pilgrim’s Rest gold project. The project lies in the centre of a gold mining province that produced more than 6.3 million ounces of gold between the 1870s and 1970s.

Many of these old gold mines haven’t been in production since the end of the Second World War, when ore was mined using a pick and then hand-sorted, with the high grade ore brought to surface for processing and the remaining residue ore carefully packed away behind handmade retaining stone walls in the underground voids.

This residual ore, called “Pre-Mined Residue” (PMR), remains in place and is abundant throughout the company’s project area. As the name suggests, the PMR comprises the gold-bearing ores left behind from previous mining operations. In effect the PMR is an underground stockpile of pre-mined gold-bearing ore that has the potential to host a very substantial amount of gold. The PMR is currently has a conceptual resource status, with a potential 2.4moz resource.

Between 2014 and early 2015, Stonewall undertook testing of this PMR material as the technical basis of evaluation and establishing the project.

This work concentrated on two old mines close to the processing plant being the Beta and Ponieskrantz mines.

The detailed results and conclusions of this work were announced to the ASX on 17 October, 2016. The bulk sampling work at Beta and Ponieskrantz confirmed and re-enforced the commercial potential of the PMR project to provide material at an average grade of 2.0g/t gold or better for minus 17 mm material (most of the gold in the PMR is contained in the finer fractions).

This work led to the current basic design criteria to screen all the mined PMR material to produce a minus 17 mm size fraction for processing through the central carbon-in-leach (CIL) processing plant. Follow-up work is planned in early 2017 to extend the range of sampling, to increase the start-up ore to JORC status and to provide more detailed design criteria to be used in designing the plant re-establishment.

There are also significant underground hard rock resources, including unmined areas adjacent to the PMR within these old gold mines, with a reported combined measured and indicated resources of 8.7mt grading 2.59 g/t gold for 724,600 oz of gold, and 19.35mt of inferred resources grading 3.64 g/t gold for 2,266,000moz totalling 2.99moz.

Within these hard rock resources are significant areas of higher than average grades, such as Rietfontein, which are currently being assessed as part of a development restart scenario.

The advantage of Stonewall’s Pilgrims Rest gold project is that a restart of operations based initially on PMR is readily achievable.

There is already a core management team in place led by South African George Jenkins, trial mining has been carried out on the PMR, all of the mines are very shallow and easily accessible through existing adits, and most importantly, the project has granted development approvals already in place.

There is a CIL gold plant and associated infrastructure on site, which Stonewall will refurbish prior to recommencing production. The site is connected to grid electricity and there are abundant supplies of water for processing. The Pilgrims plant and equipment have been on care and maintenance since 2015, when trial PMR mining completed following a phase of retreatment of tailings.

Rob Thomson is a veteran of some of the world’s best gold projects and has a track record of successfully developing gold and base metal production assets around the world.

Thomson recently joined the company as managing director to drive it forward and get into production and recently returned from his first visit to the Pilgrim’s Rest gold mine in South Africa.

“I have over 30 years’ experience in developing and building gold mining operations all over the world, and this project ticks all the boxes to generate wealth for our shareholders,” Thomson said.

“Pilgrim’s Rest is analogous to some of the recent WA gold success stories, which have essentially redeveloped historical mines and resources on a district approach using modern techniques and approaches to refurbish existing process facilities – that sounds like Pilgrims to me!

“There’s a substantial endowment of gold in these mines and I’m confident that the project has the potential to commence with the PMR project as the starter, and then bring in high-grade hard rock mines.

The PMR represents the “low hanging fruit” to help get us into production at low cost, but for me the real value driver for the project is the redevelopment of the high-grade hard rock that lies adjacent to the PMR.

“I mentioned Rietfontein previously and the reason we have our eyes on this old gold mine that closed in 1945, is that it closed with residual resources of over 400,000 oz of gold grading at 8g/t.

There had been only token exploration for depth extensions below the working levels, so I see plenty of upside here. Rietfontein entry is straight-forward via existing adits so we want to open it up early next year and see if it can be rapidly re-developed as a separate stand-alone operation and provide additional production optionality to the PMR and other hard-rock high grade areas adjacent to the PMR.

The PMR projects ticks all the boxes and represents very low risk for investors. Everything we need to quickly get into production is already there – the people, the plant, the permits and, most importantly, the gold,” Thomson said.

Thomson is well aware that the project still requires a lot of work to get into production and that is part of his extensive experience base in delivering projects through to operations at this stage of development.

“We need to do more PMR sampling, we need to commission development studies, we need to confirm our expectations about Rietfontein and the other high grade resources as the driver over and above the PMR to take production towards 100,000 ozpa.

In addition we need to fund studies to develop a plant refurbishment program that will ensure the plant is capable of handling the PMR material and hard rock ore from other mines. The key to optimising the plant is to get the mill configuration right and ensure that it has sufficient capacity to meet our targeted production rates. This work will be a big focus for the first half of 2017, and our on-site management team is already engaged with local consultants in South Africa to prepare the studies necessary to secure project financing,” said Thomson.

The Pilgrim’s Rest gold project is situated approximately 70km north of Nelspruit, the regional capital city of Mpumalanga province, which is 330km east of Johannesburg. The project lies in the heart of a historic mining province, which has reliable power and water supplies, good local roads and a strongly supportive local community.

“The Pilgrim’s Rest project sits in the centre of a large historic gold mining province that stretches for over 60km, and has been actively mined since 1872. The province has a very substantial gold endowment and the local community are very supportive of our efforts to bring the project back into production. There’s so much upside for investors and for the local people over the coming years,” said Thomson.

“I’m looking at this company with fresh eyes, and I can see the potential that lies within. We’re focused on generating wealth for our shareholders and getting into production and generating cash flow as soon as possible. It’s been some time since I was so excited by a gold project and where I see so many great opportunities. I have no concerns about the South African jurisdiction, I believe all the in-country issues can be effectively managed by our strong incountry management team and through positive and pro-active engagement with the local community, who are very supportive,”
said Thomson.

For investors seeking exposure to gold through a low capex, lowrisk mining project with a strong local management team, all the necessary approvals and infrastructure already in place and a focus
on getting into production quickly, Stonewall Resources ticks all the right boxes.

Stonewall will be showcasing the Pilgrims Rest gold project at the 121 Conference in Cape Town 6-8 February 2017 and is worth following closely. Watch this space!