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Federation Mining, a privately held Australian mining company founded by industry heavyweights Mark Le Messurier and Jim Askew, is on the hunt for a buyer for its $400 million Snowy River gold project in New Zealand.
According to reports, Federation is also open to partnering with a larger ASX miner to collaborate on development toward production.
Overall, Federation believes that the capital required to fund the project to that milestone is approximately $160 million.
It’s easy to identify several ‘big miners’ that could express interest in this opportunity. However, as of now, we don’t know who might be showing interest, nor do we know whether Federation is more inclined to sell or partner up.
Snowy River overview
Now, let’s delve into the asset itself:
The Snowy River mine, situated in New Zealand, is located over the Lachlan Ford Belt in a region called Reefton, a name likely inspired by the rich history of gold mining in the area.
Together with the nearby Lyell goldfield and historical operations, the Reefton goldfield is estimated to hold a potential two million ounces of gold at an impressive 17 grams per tonne.
This project involves the reclamation of a previously productive gold mine that was closed during World War II. The company initially intended to resume production in 2024, targeting 70,000 ounces of gold annually at that time.
As of 2022, the company holds a 20-year permit and a 10-year life-of-mine business case projecting a total of 700,000 ounces of gold, with an eye-catching all-in-sustaining cost of $1000 per ounce.
However, it’s important to note that these figures were calculated in a more inflationary environment.
The key question then arises: assuming the purchaser or any farm-in partner proceeds with production at Snowy River, who else stands to benefit?
Siren Gold right next door
One company that could potentially benefit is ASX-listed Siren Gold, a small-cap gold explorer with a project portfolio also located within the Lachlan Ford Belt.
Siren Gold Executive Chairman Brian Rodan said that being right next door could have a flow-on effect on its own operations.
“Given that Siren Gold is the dominant tenement holder in the region and the close proximity of the Blackwater mine to our Alexander River, Big River and Auld Creek deposits any valuation metric applied to the Federation should have a flow on effect in valuing Sirens 1.33 million ounce gold resources,” he said.
“So the effect should be massive.”
Since its listing, Siren has drilled hundreds of holes across its tenements and has reported a global mineral resource of 939,000 ounces of gold at three grams of gold per tonne. Key to this is its Sam’s Creek and Alexander River projects, both of which share the title of Siren’s flagship assets.
The Sam’s Creek mineral resource estimate stands at an impressive 807,770 ounces of gold at 2.82 grams per tonne. Notably, mineralisation at Sam’s Creek remains open in all directions, and the company is confident that gold mineralisation extends further underground.
Alexander River boasts mineralised outcrops stretching over 1.2 kilometres comprising quartz reefs and disseminated gold. Grades of up to eight grams of gold per tonne have been recorded, well within the ‘high-grade’ range.
Further resource upgrades possible
The company recently discovered high-grade gold nearby at its separate Auld Creek prospect.
Auld Creek boasts an inferred and indicated-tier-confidence resource of 807,000 ounces of gold at 2.82 grams per tonne, similar to Sam’s Creek.
Auld Creek also encompasses a seven-kilometre-long geological target that has not yet been fully explored.
Siren’s tenements, the company notes, are underexplored in comparison to modern operations nearby and whether Federation does sell up or partner up, the region will likely come back on the radar.
The country of NZ is not particularly renowned for a laissez-faire approach to mining projects, though, a large partner – or buyer – would be better placed to navigate this environment.
Additionally, considering the overall prospectivity of the Lachlan Ford Belt, which spans from New Zealand’s west coast to Australia’s east, there is potential for the region to gain a reputation for gold similar to what James Bay in Canada has achieved for lithium, perhaps?
Siren may play a pivotal role in realizing this potential as the company is actively planning a multi-million ounce exploration target and aims to expedite progress.
