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BARTO
Taking ad
MINING | BARTON GOLD
ON GOLD
dvantage of a trio of undervalued gold assets in South Australia
Privately held Australian gold developer Barton Gold has been powering past the COVID-19 dilemma of late according to managing director Alexander Scanlon, having received its Resource Exploration and Production Permits from the Woomera Prohibited Area Coordination Office (WPACO) in mid-May. Approval of the permits will allow the company to advance its gold assets in South Australia, which include the Tarcoola open pit mine, the Tunkilla project and a mill and processing plant. Barton is majority owned by boutique investment group PARQ Capital, who facilitated the 2019 acquisition of the assets from WPG Resources, a group that fell into administration in July 2018. The acquisition, in May 2019, was exceptionally timed and followed PARQ’s global macro investment strategy and 2018 ‘conviction’ call on gold as undervalued based upon an increasingly unstable geopolitical climate, global credit quality deterioration and expectations of a new economic crisis. Since taking control of the assets, Barton has vowed to extend the mineralisation and mine plan for a restart of the Tarcoola mine, and reevaluate development options at the Tunkilla project in view of the economic options provided by ownership of the only processing facilities in the immediate region. The company is also planning an IPO on the ASX in 2021.
“Barton Gold is effectively a new entity and structure set up by PARQ – the group I represent,” says Scanlon. The purpose of that strategy, explains Scanlon, was twofold: 1) Having an optimised ownership structure to simplify government approvals and reduce ongoing compliance work and costs – a distraction from otherwise value-adding work for shareholders, and 2) A clean start, as these assets were all historically owned in a series of entities that went into administration. Rather than assume the burdens associated with a complex web of entities, contractual agreements and creditors, it was simply decided to instead form Barton as a new, forward-focused entity. “That decision helped us to expedite a transaction, reduce the cost of that transaction and reduce the cost and time wasted having to deal with the ghosts of the former structure.”
MINING | BARTON GOLD
Setting up in South Australia The transaction provided a unique opportunity to gain control of 4,735 km² tenements and rights in the low risk, Tier 1 jurisdiction of South Australia, which is heavily mineralised but flies under the radar as a gold exploration region compared to the heavily contested Western Australian market. “South Australia definitely suffers from a lack of attention compared to Western Australia. That is probably a function of the frameworks, policies and procedures for exploration and development [in WA] being a bit more systematically streamlined. It’s an exciting area but perhaps a little harder to get traction in this state,” Scanlon observes. However, this does not appear to have hindered the Barton team. Scanlon and his team have set out to change this impression, and to lead the reemergence of a large portion
Despite the existence of gold
known for previously yielding
Turning away from Challenger
globally relevant assets. The
Barton’s acquisition of WPG’s
situation deteriorated into
opportunity for success is
assets also included the
a costly downward spiral of
attested to by the existence
Challenger underground
‘exploration by development’
of BHP’s Olympic Dam – one
mine, which has historically
at Challenger, which dragged
of the largest polymetallic
produced around 1.2 million
down the former business
mines in the world – and OZ
ounces (Moz) of gold, but is
and, perhaps most ironically,
Minerals’ copper-silver-gold
not without its own difficulties
publicly obscured the high
Prominent Hill facility.
as its name coincidentally
quality nature of Tarcoola.
of a region in South Australia
mineralisation at 4 g/t, the
suggests. Asked exactly how Barton
Scanlon likens the acquisition
were able to gain traction so
The asset has complex
strategy to a conventional
quickly, Scanlon says it was a
geology and orientation
restructuring play; acquire a
matter of providing confidence that has caused headaches
suite of misunderstood but
and building trust with
for developers in the past,
quality businesses tarnished
regional stakeholders.
according to Scanlon.
by the publicly poor results of
“It requires a great deal
one specific division, close the
“We have been able to enter
of forward development
failing division, and optimise
South Australia off the back of
investment and structural
and grow those that remain.
the reputation of our technical
analysis before you go mining.
partners Mining Plus and
PARQ’s analysis indicated
the Byrnecut Group, as well
“Unfortunately when the
that the potential of the
as Primero Group, but also
former owners got started
assets were far greater than
our own private reputation
they did not have that
the ‘Challenger discount’
for taking mining assets in
forward development work
applied to all assets, and that
difficult situations and creating done and didn’t have enough
the market likely valued the
value. I think that helped build
development capital…so it
package on the assumption of
an initial relationship and
became a vicious cycle of
executing the same strategy.
trust with the South Australia
taking material out of the
Government.”
ground for the mill without
Barton will therefore
adequate information.”
defer further review of the Challenger asset, in favour
MINING | BARTON GOLD
BA RTO N G OLD
AT A G L A N C E
of focusing on restarting
extensions of the open pit
the Tarcoola open pit and
and immediate proximate
advancing the Tunkillia
mineralisation.
Project, only 80 km from Tarcoola.
A walk-up restart
PRO FORMA MARKET CAPITALISATION A$48.7 million (as of 29 May 2020)
j
The Tarcoola asset was originally modelled on a ~2.7 g/t LoM average grade
Scanlon notes that the restart
for a relatively short-term
of the Tarcoola mine – which
operation, however when
opened in December 2016
the former owners got into
but was placed on care and
the main ore zone in the
maintenance in August
body of mineralisation, they
2018 – will be a relatively
found multiple mineralised
simple process which will be
structures converging in the
determined by the structural
base of the pit and the ore
MINING | BARTON GOLD
grades jumped well over 3 g/t.
a walk-up restart,” explains
to restart the mine with a
Barton’s boss. “We’ll bring in
greater understanding of
“Actually, for the last seven
a contractor to run the open
the mineralisation and bank
to eight months of operation
pit. The pit itself is competent,
additional mine inventory.
in 2018 the pit averaged over
stable and in fact still only part
4 g/t. So, you’re looking at
way through its current mine
a relatively tidy operation
plan.”
producing 3-4 g/t of material
Tier 1 technical partners Barton’s primary technical
that is then trucked 160 km
Upcoming infill drilling
partner is Mining Plus,
and put through the existing
programmes will also target
Australia’s largest specialist
Challenger mill.
high-grade extensions of
mine geology and engineering
mineralisation to depth and
consultancy. Mining Plus
“It’s is a fairly simple logistical
along strike of the open pit,
have worked extensively with
feat to run that operation
as part of a precise mining
PARQ for the past six years
and start it up. It’s effectively
plan that will enable Barton
as an exclusive technical
service provider, and so the arrangement with Barton is a continuation of this relationship. “We have put together with them a working model where we are able to keep our corporate overheads structure and our costs quite lean by utilising their personnel as and when we need them,” explains Scanlon. The company’s strategy of employing individuals from Mining Plus on an ad-hoc basis is an efficient and costeffective one that allows Barton to leverage its partner’s broad capabilities, including geology, geosciences, geotechnical and mine engineering and operations management. “That brings these two businesses into very strong alignment and it also means that from our standpoint, when you have a group like Mining Plus with that full suite
MINING | BARTON GOLD
of capability and the ability to carry the whole workload, that is very valuable. “We’ve found it to lead to more informed decision making, both in terms of the quality of the work but also thinking about your geological objectives as informed by practical operating requirements. To have that fluidity of awareness and knowledge of back-tofront and front-to-back is surprisingly rare.”
SA’s largest undeveloped gold-only resource Barton’s second priority behind the Tarcoola restart is the extension of the resource at Tunkilla, which happens to be South Australia’s largest undeveloped gold-only resource and an asset that, like Tarcoola, was overlooked by the former owners due to working capital restrictions.
“In the case of Tunkilla,
JORC Resource in the so-
can reduce trucking distance
we think there are a few
called ‘223 Deposit’ with
by diverting Tarcoola ore
interesting optimisation
potential for extensions and
towards Tunkilla instead of
capabilities with that
regional scale confirmation
towards the current plant.
project. Certainly, the recent
of lookalike deposits on the
That might save $10 million a
innovation in the gold price
highly prospective Yerda and
year and is a valuable option to
adds a whole new level of
Yarlbrinda Shear Zones.
have.”
“If you do that, you open up a
In addition, having access
wide range of opportunities
to a 650,000 tonnes per
In particular, Barton is
because you can for one
annum plant in a region
evaluating opportunities to
downscale your processing
where several explorers are
target higher grade zones in an
plant, which offers
operating without their own
early stage open pit operation,
considerable savings and gives
processing infrastructure is a
but also the possibility for a
you more opportunities on
clear boon for Barton. In fact,
high-grade underground mine
logistics.”
the mill is the only one in the
potential attractiveness to the assets.”
using a simple box cut and decline method.
surrounding area and if Barton The logistical synergies
were to build another plant
between the assets were a
at Tunkilla, it would have the
The asset already has an
key driving factor behind the
only two plants inside a bubble
existing 558,000 ounces
company’s decision to invest
with a 600 km diameter.
in them. While Tarcoola
“We have been able to enter South Australia off the back of the reputation of our technical partners Mining Plus, but also our own private reputation taking mining assets in difficult situations and creating value.” Alexander Scanlon
distance from the mill and
A realistic plan and timeline
plant owned by Barton, the
Unsurprisingly, the COVID-19
distance between Tarcoola
pandemic has had an
and Tunkilla is only 80 km.
impact on Barton’s forward
is around 160 km trucking
development plans. However, “If you could unite high
with a focus on risk mitigation
grade ore from Tarcoola
the company had already given
with a higher grade selection itself a flexible and realistic of ore from Tunkilla at a
timeline with the ability to
single processing plant, you
absorb this type of unforeseen circumstance.
MINING | BARTON GOLD
ALEXANDER SCANLON, BARTON GOLD MANAGING DIRECTOR
Therefore, while extension
2021, which would transition
Finally, Barton has recently
drilling at Tarcoola has been
the company from private to
completed a multi-million
delayed from June to July or
public hands and expedite the
dollar capital raise and is now
August because of restrictions
development of its attractive
fully funded for upcoming
on movement, Barton is using
assets in South Australia. In
works as it continues
this time to further optimise
May, the company appointed
discussions with institutional
critical pathway items like
top-tier legal firm Ashurst as
investors for future growth
WPACO permits and for the
IPO counsel and is understood
capital.
restart of the pit during the
to be evaluating a wide range
second half of next year.
of additional corporate development opportunities.
Barton plans to begin the IPO process with the ASX in early
Published by Anderson Murray Media Ltd
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