Kristie Batten: Victoria punching above its weight in modern gold rush

It receives just a fraction of the cash spent on drilling in Australia, but stats show Victoria punches above its weight in gold discoveries.

Victorian gold explorers are outperforming when it comes to new gold discoveries. Pic: Getty Images

• Australia's high grade Fosterville gold mine is printing $1m of free cash a day

• The gold price boom has more explorers chasing new high-grade deposits nearby in Victoria

• Bubalus closing in on drill program at underexplored Crosbie project

The allure of finding the next ultra high-grade gold deposit continues to draw explorers to Victoria.

The Australian Gold Rush kicked off in 1851 in Victoria and while the bulk of Australia’s gold production now comes from other states, recent evident suggests there’s more to be found in the Garden State.

The Fosterville mine near Bendigo was a struggling operation until the discovery of the Swan Zone in 2016, which had a reserve grade of 58.8 grams per tonne gold.

The discovery transformed Fosterville into a 500,000 ounce per annum producer, in turn elevating then-owner, Canada’s Kirkland Lake Gold, into a market darling.

Fosterville now produces around 150,000ozpa but still has resources of around 3.3Moz at roughly 4g/t gold.

The mine is now owned by major Agnico Eagle, which remains bullish on its exploration potential, based on its exploration budget of US$30 million this year.

Agnico chief financial officer Jamie Porter told this month’s Mining Forum Europe in Zurich that the company’s geologists believe the potential for another super high-grade zone like Swan remains.

“At these gold prices, we’re still generating about a million dollars a day of free cashflow and as our VP of Australia likes to put it, it's the single best gold exploration option in the world that happens to generate a million dollars a day of free cashflow,” he said.

“It's a very profitable operation, and we've got a potential lottery ticket in the event that we hit something.”

Bang for buck

Recent research from Melbourne-based MinEx Consulting shows that explorers can get real bang for their buck working in Victoria.

In a presentation last month, MinEx managing director Richard Schodde said Victoria had accounted for 8% of all discoveries in Australia over the past 180 years.

In the decade to 2023, Victoria accounted for 4% of the total spend on exploration, resulting in 7% (by number) of the country’s discoveries and roughly 13% of the estimated value.

On a value/cost basis, Victoria was the top performing state in Australia, with a “bang-per-buck” of 4.16 versus a national average of 1.26.

Schodde acknowledged that a large proportion of the value in Victoria was associated with the discovery of the Swan Zone, leading to a 6.6x increase in spend between 2016 and 2021.

However, even when excluding Fosterville, Schodde said Victoria still outperformed the other states.

Over the past three decades, gold has accounted for 72% of total exploration expenditure in Victoria, though Schodde noted the increasing focus on mineral sands and critical minerals, as evidenced by VHM's (ASX:VHM) Goschen project, which was recently granted a mining lease.

Big programs underway

Outside of Fosterville, the company to have experienced the most gold exploration success in Victoria is Southern Cross Gold (ASX:SX2).

Southern Cross has an exploration target of 2.2-3.2Moz at 8.3-10.6g/t gold equivalent for its Sunday Creek project, 60km north of Melbourne.

The company recently bolstered the number of drill rigs at the project to eight, with seven rigs to continue expansion and infill drilling in the 1.5km long core drill area and the other to drill regional targets along the 12km mineralised trend and parallel trends.

An induced polarisation survey over 6km of strike is underway, while Fleet Space Technologies is undertaking an orientation real time ambient noise tomography passive seismic and gravity survey over the core drill area.

Meanwhile, S2 Resources (ASX:S2R), run by two-time AMEC Prospector Award-winner Mark Bennett, won a hotly contested ballot for exploration ground around Fosterville in 2021, even beating out Kirkland Lake.

In just the first eight holes last year, S2 identified a discrete mineralised structure, the Blackadder Fault, which it said broadly lined up with well delineated structures containing gold and being mined to the south on Agnico’s mining lease.

At the end of March, S2 started aircore drilling to test two of three coincident anomalies in the Rasmussen’s area.

The company said the anomalies were considered gold targets because they could indicate the presence of disseminated sulphide haloes, which are known to occur around the gold mineralised lodes at the Fosterville mine itself.

Results are due next month.

Fosterville nearology still a draw

While the Swan Zone has been mined out, the potential of finding another one remains attractive for explorers.

Bubalus Resources (ASX:BUS) recently entered Victoria via the acquisition of more than 2000km2 of ground across the state, including the Crosbie project, which is within 20km of Fosterville.

Bubalus managing director Brendan Borg told Stockhead that it was a common misconception that all of the gold had been found in Victoria.

“I say, ‘well, all the easy gold has been found’ – of course, it has,” he said.

“All the stuff that's at surface, and all the high-grade reefs that outcrop and things like that. They've largely been mined.

“But Fosterville is a perfect example of where they were scratching around, hardly making a dollar for so long, and then they made that high-grade discovery at depth.”

Borg said Sunday Creek was another good example.

“They're getting some really good results in a long-standing goldfield,” he said.

“Sunday Creek has been around for ages, and people would have almost said the gold's gone from there, but then you do some deeper drilling, and Southern Cross has proven, and certainly Agnico has proven that at Fosterville, that you spend the money doing some deeper, more extensive exploration, and you can certainly get the rewards for that.

“Where we're located is really close to both of these projects. We're obviously at the very early stage and we have to prove we've got anything, let alone something as good as that.”

Amazingly, Crosbie has never been drilled, something which Bubalus will change in the coming days, with plans to kick of a program to follow up rock chip results of up to 19.1g/t gold.

Victoria-based Borg said he had reservations about projects in the state due to poor perceptions of permitting, but has been pleasantly surprised in the four months since acquiring the ground.

The previous project owner had taken Crosbie through the land access agreement process and engagement with Traditional Owners to the point where the project is ready for drilling.

“I didn't want to get caught in a permitting vortex for a year or two years or three years before we'd be able to drill,” Borg said.

“So part of the attraction for me getting involved was that we were going to be able to drill this Crosbie target pretty quickly.”

Others also busy

A number of other juniors are also active in Victoria.

Shares in Advance Metals (ASX:AVM) surged last week after it reported high-grade gold from its Myrtleford project.

Also a new entrant to Victoria, Advance reported an intersection of 7.5m at 47.9g/t gold, with a peak grade of 446g/t gold.

Yesterday, North Stawell Minerals (ASX:NSM) reported a hit of 2.3m at 29.2g/t gold from 108.2m, including 0.8m at 82.3g/t gold at its Darlington Project, 6km north of Stawell.

Stawell executive director Campbell Olsen said if the intercept was proven to be part of a larger, coherent mineralised zone, it had the potential to focus some of the strong interest in high-grade Victorian gold systems to western Victoria.

Adelong Gold (ASX:ADG) is kicking off an exploration program at its Apollo project, adjacent to Sunday Creek, to follow up high-grade gold and antimony results.

Aureka (ASX:AKA) is drilling across two projects, Irvine Stawell and St Arnaud, after completing a program at Tandarra, near Fosterville, last month.

Earlier this month, First Au (ASX:FAU), acquired the remaining 20% it didn’t already own of the Victorian Goldfields project, and is planning drilling to follow up its initial 2023 program.

Late last month, Infinity Lithium (ASX:INF) acquired a portfolio of gold tenements in eastern Victoria and plans to start exploration shortly.

At Stockhead, we tell it like it is. While Bubalus Resources and VHM are Stockhead advertisers, they did not sponsor this article.

Originally published as Kristie Batten: Victoria punching above its weight in modern gold rush