Could Grade Smoothing in Agate Creek’s New Model Affect Near-Term Mining Selectivity?

Resource Update Highlights

Savannah Goldfields Limited (ASX, SVG) has announced a significant update to the Mineral Resource at its 100% owned Agate Creek Gold Project in Far North Queensland. The total resource now stands at 15.5 million tonnes grading 0.8 grams per tonne gold, containing 422,000 ounces of gold at a 0.3 g/t cut-off grade. This update notably increases the confidence in the resource, with the Measured Mineral Resource category expanding from a mere 15,000 tonnes to 400,000 tonnes at a higher grade of 1.7 g/t Au.

The Indicated Mineral Resource remains relatively stable at 9 million tonnes grading 0.9 g/t Au, while the Inferred category accounts for 6.1 million tonnes at 0.7 g/t Au. Together, the Measured and Indicated resources total 9.4 million tonnes at 0.93 g/t Au, containing 282,000 ounces of gold.

Methodological Shift and Geological Insights

This resource update incorporates extensive new geological data, including over 750 exploration drill holes and more than 2,800 sampled blast holes, alongside mining depletion adjustments up to January 2024. A key technical change is the transition from the previous Multiple Indicator Kriging (MIK) estimation method to Ordinary Kriging (OK). While OK is a more traditional and robust approach, it tends to smooth grades, potentially reducing short-term selectivity but providing a more reliable global estimate.

Geological interpretation has been enhanced with detailed structural analysis, allowing the resource to be constrained within 34 individual vein domains. This structural control supports the improved confidence in the resource classification and better reflects the complex epithermal and intrusion-related gold system characteristics of Agate Creek.

Regional Context and Project Scale

Agate Creek is part of the Etheridge Goldfield, a historically prolific gold-producing region that has yielded over 10 million ounces of gold. The project lies approximately 100 km south of Savannah’s Georgetown Gold Processing Plant, which processes ore from both Agate Creek and the Georgetown Projects. The combined Mineral Resource across these projects now totals 16.4 million tonnes at 1.02 g/t Au, containing 541,000 ounces of gold, underscoring Savannah’s growing gold inventory in the region.

Mining and Metallurgical Performance

Mining at the Sherwood and Sherwood West deposits has been ongoing, with recent campaigns delivering milled ore grades between 2.2 and 7.3 g/t Au and gold recoveries averaging around 95%. Metallurgical test work confirms that the ore is amenable to cyanide extraction with low reagent consumption, supporting the feasibility of both heap leach and CIL processing routes.

The updated resource accounts for mining depletion from recent operations, and the company is progressing towards defining its maiden Ore Reserve at Agate Creek. This step will be critical in advancing the project towards potential development.

Future Exploration and Growth Potential

Savannah’s geological team is actively reviewing historical exploration data and planning follow-up drilling at several prospects within the broader Agate Creek project area, including Nottingham, Little John, and Iron Hill. These targets represent promising opportunities to expand the gold inventory further, leveraging the enhanced geological understanding and structural models developed during the resource update.

CEO Brad Sampson emphasised the importance of the increased Measured and Indicated resources, noting that it strengthens the company’s position as it moves towards establishing a formal Ore Reserve. The company’s strategic focus on both resource growth and operational optimisation positions it well for the next phase of project advancement.