Aureka seals mill deal to fast-track Victorian gold production

Quartz-hosted galena, sphalerite, chalcopyrite and pyrite from Aureka Limited's Comstock gold and silver project in Victoria, grading 0.3m at 1.91g/t gold and 650g/t silver from 192m.

In a move likely to de-risk its path to becoming a gold producer, Aureka Limited (ASX: AKA) has sidestepped the need to build the company’s own processing plant by signing a toll milling agreement with Core Prospecting, the owners of the Wedderburn gold processing mill in Victoria.

Just 45 kilometres from Wedderburn, the company’s Comstock deposit hosts a JORC-inferred resource of 56,500 ounces of gold grading 1.21 grams per tonne (g/t) and 100,000 ounces of silver running at 2.14g/t.

With a production licence application already lodged and toll processing now locked in, Aureka’s savvy low-capital pathway to production avoids the permitting burden and development time associated with building a standalone processing plant.

The three-year agreement with Wedderburn kicks into gear from first production and will operate under a cost-plus-margin tolling model. Spare processing capacity is readily available since the mill's existing Fiddlers Creek operation uses only a fraction of its throughput, creating an opportunity to lower unit processing costs for both Aureka and Core as utilisation increases.

The mill is equipped with gravity and flotation circuits together with wet and dry-stack tailings facilities and is already licensed to receive ore from third-party operations. Notably, the company also has the flexibility to fund future mill upgrades should higher production rates or different metallurgy require them.

A 1,000-metre infill diamond drilling program is underway at Comstock’s main deposit, dubbed Walkers Pit, to validate historical high-grade intercepts, including 14 metres at 7.2g/t gold and 2.2m at 27.4g/t gold. The drilling is designed to upgrade resource confidence and collect samples for planned metallurgical testing.

Early geological work suggests Comstock’s ore could be a natural fit for the Wedderburn plant, with encouraging similarities to material already being processed there. Metallurgical testing will now determine whether the existing mill is ready to do the heavy lifting.

After our production licence application at Comstock, it is pleasing to now lock in a project-agnostic processing option for Aureka's projects. The potential to add Comstock ore to the feed at the Wedderburn mill should boost utilisation and lower unit costs for all parties.   Aureka Managing Director James Gurry

With a processing pathway now in place, Aureka's next milestones include completing infill drilling, metallurgical testing and development studies at Comstock while assessing the longer-term processing opportunity for its flagship Irvine gold project.

Irvine lies south of Comstock and 16 kilometres south of the operating Stawell Gold Mine in Victoria's prolific Stawell Corridor. It hosts 398,000 ounces of inferred gold resources grading 2.6g/t, helping lift the company's global inferred gold inventory to 455,000 ounces.

Since the toll milling agreement with Core is project-agnostic, it may also create a potential long-term processing solution for Irvine. Lying 135 kilometres from the Wedderburn mill, Aureka is now planning a high-level concept study to determine whether trucking ore to the facility could prove commercially viable.

The company says Comstock's development plan centres on mining shallow mineralisation from the Walkers Pit before trucking ore to Wedderburn for processing. The proposed operation sits within an already disturbed mine site and is connected by existing public roads already used by heavy agricultural and industrial haulage, eliminating another potential hurdle on the road to first production.

Comstock sits within the historic St Arnaud goldfield and has historically produced about 400,000 ounces of gold at an impressive average grade of around 15g/t during earlier mining campaigns. However, the company believes the combination of modern drilling, structural modelling and access to existing infrastructure could help unlock mineralisation that the old timers left behind or could not economically treat.

By locking in a processing route before mining even begins, Aureka has quietly removed one of the biggest obstacles confronting aspiring gold producers. If the infill drilling upgrades resource confidence and the upcoming metallurgical work confirms Comstock is a good fit for Wedderburn, the company could find itself on one of the fastest and lowest-cost pathways to first gold in Victoria.

With the much larger Irvine project also waiting in the wings, today's milling deal could prove to be the foundation stone for a much bigger Victorian gold business.

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