|Historical mine entrance at the Šturec mine in Slovakia.
Source: MetalsTech Ltd.
MetalsTech Ltd. is transitioning from lithium to gold as it exercised its option to acquire the advanced Šturec gold mine in central Slovakia, which it believes can be resurrected using Australian processing technology piloted by Barrick Gold Corp. in Nevada.
MetalsTech's ASX stock rose by as much as 12.8% on Dec. 30 on the same-day announcement, having already soared to an 18-month high of 12.5 Australian cents per share when it first declared it would buy Šturec from Arc Minerals Ltd. on Nov. 20.
|MetalsTech Ltd Chairman
Source: MetalsTech Ltd
MetalsTech Chairman Russell Moran attributed the marked increase on both announcements to the weak lithium market and investor excitement over gold, which has soared in 2019 and is expected to continue doing so in 2020.
At least one major South American lithium producer has visited MetalsTech's Cancet property in Quebec, where it has spent about A$4 million, with an eye to forming a joint venture; while its Sirmac-Clapier project, also in Quebec, is adjacent to the Whabouchi project, where Nemaska Lithium Inc. has experienced delays.
While Moran is a "big bull" on lithium longer term, he said there is no benefit in a junior having an equity profile in lithium given spodumene concentrate prices have fallen so heavily to the point where producers are not making money unless running at full capacity, which many of them are not.
Slovakia is largely off analysts' radar as it is not covered in the Fraser Institute's annual risk survey, but Moran said Šturec is a "phenomenal asset" given it has had 1.5 million ounces of gold mined, which he estimates would be worth more than A$3 billion in current gold prices of more than US$1,500 per ounce. The project has also produced about 6.7 Moz of silver.
"Although there is a 1.3 Moz resource now, there is potential for there to be multiples of this subject to exploration success, particularly in light of the significant 1.5 Moz historic production which was shallow and not to a modern standard," he told S&P Global Market Intelligence.
Mining started at Šturec in the 8th century, then in the 1980s the government undertook exploration before state-owned company Rudne Bane SP produced just over 50,000 tonnes from 1987 to 1992 averaging 1.54 g/t gold.
Argosy Mining Corp. and Tournigan Gold Corp. subsequently drilled Šturec before Ortac Resources Plc acquired the project in 2009, but a 2014 parliamentary ban on cyanide use adopted by other European countries provided what Moran called a "fatal flaw" to the asset.
New hope for Šturec
However, Moran now believes Šturec can be resurrected thanks to a cyanide-free Australian-developed technology that helped Barrick produce the first gold bar using a thiosulfate process in 2014 at the Goldstrike plant in Nevada, in the hope of recovering gold from 4.3 million tonnes of stockpiled ore deemed uneconomic to process by traditional methods.
Moran said MetalsTech has started discussions with the Australian government's science agency — the Commonwealth Scientific and Industrial Research Organisation, or CSIRO, which owns the thiosulfate technology rights — about commencing test work on Šturec ore.
A technical report Barrick issued in March on Goldstrike's recoveries using CSIRO's technology revealed recovery rates of up to about 87%, according to Moran, adding that achieving similar rates could mean all-in sustaining costs of around US$700/oz. SRK Consulting's 2013 pre-feasibility study on Šturec modeled US$630/oz in all-in sustaining costs on a 92% recovery rate using cyanide.
Šturec also benefits from a strip ratio of less than 3:1, which is half of what is typically seen in Western Australia's prolific Kalgoorlie gold region for an equivalent grade.
An optimized pre-feasibility study is due in six months on Šturec, on which US$30 million has already been spent. SRK's 2013 study suggested a JORC 2004 proven and probable ore reserve of 873,000 ounces at 1.9 g/t gold equivalent.
MetalsTech is focusing on encouraging more strategic investor relationships to avoid the equity capital markets, particularly an engineering, procurement, construction and management, or EPCM, group to help build a mine.
Moran likes his chances of attracting such a deal, given Shenzhen-listed hi-tech fine chemicals manufacturer Wuxi Baichuan Chemical Industrial Co. Ltd. took a 10% stake in MetalsTech in 2017 with a A$1.8 million investment at a 200% premium on the junior's trading price at the time.
Moran said Šturec's existing reserve enables MetalsTech to potentially attract innovative financing structures, like an EPCM company offering a redeemable note with a view to refinancing it out into an equipment finance package.