Chasing the next Fosterville

Chalice Mining recently spun-out its gold assets into new company Falcon Metals, which will oversee the fancied Pyramid Hill project near Bendigo in Victoria.

Chalice Mining has been in the spotlight a lot lately, and it’s not just because of the company’s recent history-defining resource at the Julimar project in Western Australia.

Chalice has been active in the boardroom, fine-tuning its business model to ensure Julimar has the best opportunity to become the Tier-1 project it’s poised to be.

In December 2021, Chalice completed a demerger of its gold assets into new company, Falcon Metals, which listed on the ASX in the same month.

Falcon will be the new face of Chalice’s Pyramid Hill, Viking and Mt Jackson gold projects in Victoria and Western Australia, with the former project a particular focus for Falcon in the early going.

Located near Bendigo in the same region as Kirkland Lake’s Tier-1 Fosterville gold mine, Pyramid Hill spans more than 5000 square kilometres of licences and will see Falcon hold the largest exploration holding of any company in this prospective region.

Falcon managing director Tim Markwell says prior to making the discovery at Julimar, Pyramid Hill was Chalice’s main priority.

“Pyramid Hill was applied for by Chalice in 2017, just when noises were being made about Kirkland Lake’s discovery at Fosterville, and Chalice started picking up ground around the northern Bendigo, Fosterville region because the company realised there was going to be a bit more interest here,” he says.

“So Chalice picked up ground and Pyramid Hill became quite a valuable asset – this is pre-Julimar – and then in 2020 the world changed when Chalice drilled a hole at Julimar and made a world-class discovery of nickel, copper and platinum group elements

Pyramid Hill spans more than 5000 square kilometres of licences.

We’re taking it each day as it comes but each drill season, you think this is the one that’s going to turn a prospect into a deposit, and I think we’ve certainly got the right ground and the right people, the right time in the cycle to make this work and make a discovery.

Falcon Metals managing director Tim Markwell.

(PGE) 70 kilometres from Perth.”

With COVID-19 stringing out company resources and redirecting priorities, Chalice had to revise its gold game plan.

“As you can imagine, the Julimar discovery changed Chalice completely and not only was the board focussed on this project, COVID-19 limited travel around Australia. So it was very hard at that point in time for the Chalice team to put their minds to Pyramid Hill, given they had a world-class asset at Julimar that needed feasibility work and drill-outs, etc,” Markwell says.

With competitor interest in the Fosterville gold mining region increasing and a sustained desire to elevate Pyramid Hill into the project it has the potential to be, it was time for a reshuffle.

This is where the foundations of Falcon Metals were established, resulting in a new entity to represent a burgeoning gold portfolio.

“So Chalice decided that the best thing that they could do was spin-out Pyramid Hill, give it a life of its own, give it a dedicated Victorian-based management team and raise an initial amount of money to properly continue the work,” Markwell says.

Falcon would raise $30 million as part of an initial public offering (IPO), before listing on the ASX shortly after.

Launched in December, the IPO was oversubscribed and saw Falcon issue 60 million shares at $0.50 per share alongside the 117 million shares distributed in specie to Chalice shareholders upon the demerger.

This gave Falcon an indicative market capitalisation of $88.5 million upon listing, which at the time of writing had increased to $115.93 million.

Markwell says the IPO was an important step to ensure Falcon was able grab the Pyramid Hill opportunity by the horns.

“I think the IPO is what was needed. The tenement spans over 5000 square kilometres in Victoria and I think the traditional IPO you get in the mining space – where companies raise $5-6 million – I think that would’ve probably been insufficient to do this properly,” he says.

“I think for a large ground position you need to hit it hard; you’re looking for a very high-value prize if you can find another Fosterville – these are extremely valuable assets if you find them – so the IPO really gives Falcon the capacity to do this properly, to drill aggressively and seize the moment here.”

So what’s the situation at Pyramid Hill as it stands?

Leading up to the demerger, Chalice had already completed foundational exploration work at the project, leaving Falcon with a good head start to realise its potential.

“In the two-and-a-half to three years that it was working at Pyramid Hill, Chalice did all the first principles regional scale exploration, soil sampling, original aircore (AC) and gravity anomalies and they managed to find four prospects,” he says.

Chalice would identify the Ironbark, Karri, Banksia and Wandoo prospects within the Pyramid Hill tenure, with the first

Ironbark and Karri are the most advanced prospects at Pyramid Hill.

two considered the most advanced.

“Ironbark and Karri have had a lot of AC drilling and some diamond drilling, especially at Karri. Karri’s already got a couple of nice intercepts that need to be drilled around, we need to vector in on where the high-grade goes and try to turn it into an orebody that can be drilled out to a resource level,” Markwell says.

“So there will be quite a lot of diamond drilling to be done at Karri. Ironbark is a little bit earlier stage but there has been a couple of diamond holes done to take a look at the rocks, and in the meantime some AC drilling at Ironbark East turned up some very nice air-core hits.”

Falcon will complete follow-up AC drilling around Ironbark East as it looks to elevate the prospect to a diamond drill level in time for the 2022 drill season.

Ensuing diamond drilling will then take place with Falcon hoping to convert Ironbark East to a resource level when possible.

Falcon is also looking to further realise Banksia and Wandoo, while further regional exploration will occur in the background as the company looks to identify more prospects at Pyramid Hill.

“The earlier-stage prospects are Banksia and Wandoo and the objective of those is to complete more AC drilling,. There are some nice hits but there’s not much context to those hits, so we need to do more AC drilling around those to find out where’s the best place to put the diamond rig next year,” Markwell says.

“In the background, there will be a bit more regional scale work. The idea would be that next drill season we’ll have another one or two prospects that we can put on the map. All in all, it’s important to keep things moving, to keep working hard until we get something that hopefully leads to an infill drill program.”

Chalice’s Viking and Mt Jackson gold projects in Western Australia were also passed onto Falcon in the demerger, with both to become the focus of drilling at some stage.

“The Viking project is more advanced; that’s got four prospects that have already had quite a bit of AC drilling done on them, and they’ve returned high-grade hits – clear anomalies there,” Markwell says.

“So we’ll be sending in a reverse circulation (RC) rig to Viking sometime in 2022 to do some targeted drilling and test what’s under those oxide anomalies that were drilled quite a few years ago now.

“Viking is a fairly simple, walk-up target to do the unfinished business that wasn’t done a few years ago. Hopefully by the time the RC rig arrives there, the borders will have changed which would allow us to go over to WA and do the work ourselves.”

Falcon is involved in an earn-in agreement with ASX-listed Metal Hawk at Viking, whereby it can spend a minimum of $200,000 over two years as part of a $1 million earn-in and acquire an initial 51 per cent interest in the project.

If it achieves the 51 per cent stake, Falcon has the option to earn a further 19 per cent (70 per cent total) in Viking by investing an extra $1.75 million into exploration over 30 months.

Falcon’s wholly owned Mt Jackson project is at an earlier stage than Viking, and Markwell sees the company also completing some exploration work there in 2022.

Markwell is joined by the likes of Alex Dorsch as non-executive director, who has been instrumental in elevating Chalice Mining to the ASX 200 company it is today, while highly experienced geologist and mining executive Mark Bennett has been appointed non-executive chair of Falcon. Andrea Betti serves as Falcon’s chief financial officer and company secretary.

With an esteemed panel, fancied assets and an unwavering motivation to explore the size of the treasure chest, Falcon could be onto the next Fosterville in the years to come. Markwell is optimistic of what’s ahead.

“We’re taking it each day as it comes but each drill season, you think this is the one that’s going to turn a prospect into a deposit, and I think we’ve certainly got the right ground and the right people, the right time in the cycle to make this work and make a discovery,” he says.