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Orminex looking to replicate Comet Vale gold project success

Orminex Ltd.'s partnership with underground mining contractor GBF Mining Pty. Ltd. is in advanced due diligence to expand a model, which enabled the Comet Vale project in Western Australia's Goldfields to be fast tracked to first gold in August despite the company having only relisted on the ASX in May, to another near-term production gold mine.

The aspiring miner announced on Oct. 11 that a number of projects suitable for its Mineral Ventures model are under due diligence.

Orminex also told the ASX that mining development had advanced significantly at Comet Vale and 1,000 meters developed to a depth of 100 meters from surface, with a low profile production fleet now established on site and operational.

The company is focusing on decline development to access the higher grade and largely unmined resource below the fourth level underground, while also evaluating remnant mining opportunities above the third level to identify short term production opportunities.

Executive Chairman Daryl Henthorn said that with mine development already advanced to the third level and on target with the mine plan, the Mineral Ventures model's capacity to bring stranded assets back into production had been demonstrated.

"We are also reviewing a number of suitable new projects that, if successfully concluded, will demonstrate that the Mineral Ventures model is scalable and repeatable," he said.

Ideally Orminex wants high grade projects, preferably 10 g/t at least plus dirt, with a 100,000 ounce horizon of producible gold, all leveraging off GBF's 30 years' experience in underground mining, with Orminex and the contractor paying half each of the working capital costs.

The company took a 51% stake in Comet Vale with privately owned joint venture partner Sand Queen Gold Mines Pty Ltd. holding the rest. At the same time, GBF directors Ross Graham and Michael Foulds collectively hold 42% in Orminex.

Taking 51% at the project equity level was in line with Orminex's stated strategy, though Henthorn said that "if we really like the project and we think it has a 10-year-plus mine life, we'll negotiate more equity or buy it outright," referring to all the mines in which the company chooses to invest.

The high-level criteria involves not necessarily needing a JORC resource or a bankable feasibility study due to the comprehensive nature of the venture's due diligence process, and because "we don't need funding as we're well capitalized ... which takes out an enormous amount of lead time for us to get these assets into production."

Expanding the concept

"Since we started to deliver and people can see the concept of the model works we've had a lot of inquiries from public companies and private asset owners to do deals with them, to provide capital for mining resources," Henthorn told S&P Global Market Intelligence.

"On a conventional mine we might need 80 or 90 staff; we're using less than 15 at Comet Vale and mining with a four-man crew," he said in an interview, and hinted at other options for the mine.

While Orminex is using a toll milling plant at Maximus Resources Ltd.'s Burbanks mill near Coolgardie for Comet Vale, Henthorn said the venture wants to manage the whole supply chain, including ore sorting, mining and processing, and is looking at building its own portable plants of low-capital size, targeting around 20,000 tonnes to 30,000 tonnes per month, both for Comet Vale and any other projects in which it invests.

"With our ore sorters we're getting results of up to 50% ore and 50% waste, and 95% recovery in that ore, which means incredible efficiency gains in terms of costs and we're limiting our plant to match the mining size. So we're not building a 1 million tonne per annum plant and having to feed it, but building a portable or modular plant," Henthorn said.

"Around Comet Vale we've had a couple of inquiries and been negotiating with some guys with assets they want to take into production, so if that happens there's all the efficiency gained with GBF in terms of allocating plant machinery and equipment."