David Lenigas, chairman of Riversgold Ltd (ASX:RGL), explains to Proactive why its Northern Zone prospect is the perfect project as the gold price soars
David Lenigas: The Northern Zone project was one of those things that Riversgold wanted to have for when the gold price started really to move.
We got involved with this project when the Aussie dollar gold price was around $2,500 an ounce. It’s now floating around $3,700 an ounce.
I'm an old Kalgoorlie boy, and a project like this, so close to Kalgoorlie, is heaven-sent. You need a project like Northern Zone to keep the fires burning in a little exploration company like ours.
We've got a geological exploration target of somewhere around 3 to 5 million ounces of low-grade gold in a big, massive porphyry system.
It's a potential big heap leach operation, not dissimilar to Apollo Hills that Saturn Metals is working on up the road.
What we've discovered as part of the drilling program—drilling into these massive porphyries that go around 0.5 to 0.6 grams per tonne of gold—is that we now appear to have some very good grades in the oxide in the supergene zone, which sits above the porphyry. And that's really what this drilling is all about.
Proactive: You say that it's exceeded your initial expectations. Can you give us an example of some of the grades that you're seeing there?
David Lenigas: It looks like we've got, from about 30 meters in depth, a supergene horizontal blanket of enriched gold that sits on top of our big sort of hard rock porphyry system.
We’re seeing grades up around the 14, 16, and 18-meter mark at anything from 2 to 5 grams of gold, which is phenomenal.
The focus for us at this point in time is how much of this supergene, open-pittable, high-grade gold we can identify as we drill this out.
It's a great drilling project for a company like ours. It's small. These are vertical holes that are typically 70 to 90 meters in maximum depth. The assay lab is 25 kilometers away from the project.
Drilling costs are very, very cheap. We’re looking at another drill program, hopefully starting within the next couple of weeks, for another 30 holes at around A$120,000 all in. That includes our site costs.
This is all JORC-style drilling. Our plan, before we start drilling the big porphyry again, is to see if we can identify enough oxide transitional supergene-type material to start a high-grade open pit on top of the Northern Zone project before we look at a monster low-grade porphyry scenario.
Proactive: You're talking about Kalgoorlie, and you also have infrastructure there, including third-party processing plants. Tell us who else is active on the ground around you.
David Lenigas: Black Cat Syndicate has just announced that they’re starting their operation just up the road from us. It’s a fairly similar sort of operation.
They’re talking about 55,000 ounces at just over 2 grams per tonne. They’re going to be putting their dirt through a third-party processing plant. It won’t be long before they’re actually processing.
To my knowledge, there are three third-party processing plants that we could look at for toll-treating this initial material.
It’s not like it’s a stranded type of resource hundreds of kilometers from anywhere. To get to Northern Zone is literally 20 kilometers along a bitumen highway and five kilometers to the south of John Jones’s Hampton Downs station.
Logistics, location—it’s excellent. Access to engineers, drillers, and geologists is perfect, and it’s well-serviced from our offices in Perth.
We can do a lot of drilling here in a hurry, very cheaply. That’s really the focus that we’re looking at right now.
Proactive: And you say very cheaply, which looks good when you have a gold price of US$2,500, never mind the A$3,700 you were talking about a while ago. It really looks good for the economics of the project?
David Lenigas: Well, the Aussie dollar gold price is $3,700 at the moment. I’m a gold price going to US$5,000 an ounce bull.
If you look at the Australian dollar gold price from 2000 to where it sits right now, it’s pretty much linear.
As long as the Chinese central bank keeps buying gold and other central banks continue to change their whole philosophy on gold buying, that seems to be where a lot of the impetus for gold is going.
You've got inflation rates starting to soften in the US, with interest rates forecast to drop. I think you're going to see a really rosy period for gold, and we want to start adding JORC resources pretty close to Kalgoorlie in a project that we control. So, we're pretty excited about it.