How Gibb River Diamonds Starts Gold Mining Without Spending a Dime
Gibb River Diamonds has officially started mining operations at its Edjudina Gold Project in Western Australia, leveraging a contract mining model that shields the company from upfront costs. The Neta Prospect's gold production will be processed through toll milling agreements, with profits shared equally between Gibb River and contractor BML Ventures.
- Mining commenced at Edjudina Gold Project's Neta Prospect
- Contractor BML Ventures covers all mining capital and operating costs
- Ore to be processed via toll milling agreements in the Eastern Goldfields
- Net surplus cash split 50/50 between Gibb River Diamonds and BML
- Neta Prospect holds a JORC resource of 24,000 ounces of gold
Mining Begins at Edjudina Gold Project
Gibb River Diamonds Limited (ASX, GIB) has taken a significant step forward by commencing mining operations at its Edjudina Gold Project, located in the prolific Eastern Goldfields region of Western Australia. The focus is on the Neta Prospect, which boasts a JORC (2012) Indicated and Inferred Resource of approximately 24,000 ounces of gold. This milestone marks the transition from exploration and development to active production.
Contract Mining Model Minimizes Financial Exposure
In a strategic move to mitigate financial risk, Gibb River Diamonds has engaged BML Ventures Pty Ltd as the contract mining operator. Under this agreement, BML assumes full responsibility for all mining-related capital and working capital costs, effectively removing upfront financial burdens from GIB. This arrangement allows GIB to participate in gold production without the typical capital expenditure risks associated with mining startups.
BML’s expertise in managing small to medium-sized mining projects is well established, with prior collaborations involving ASX-listed companies such as Auric Mining Limited and Horizon Minerals Limited. Their role encompasses all mining activities and the delivery of mineralised material to nearby gold processing plants, leveraging existing toll milling agreements to process the ore efficiently.
Revenue Sharing and Market Exposure
Once operational costs are covered, the net surplus cash generated from the mining operations will be split evenly between Gibb River Diamonds and BML. This profit-sharing model aligns the interests of both parties and incentivizes operational efficiency. Notably, there are no forward sales contracts in place, meaning all gold production will be sold on the spot market, exposing the project’s revenue to prevailing gold prices.
Resource and Operational Outlook
The Neta Prospect’s resource base includes an Indicated Resource of 110,000 tonnes at 2.2 grams per tonne for 8,000 ounces of gold, part of the total 378,000 tonnes at 1.9 grams per tonne. Grade control drilling is ongoing to support mining operations, though no new resource estimates have been reported at this stage. The project’s proximity to established processing facilities in the Eastern Goldfields enhances its operational viability.
Gibb River Diamonds’ Executive Chairman, Jim Richards, highlighted the significance of this development as a key step in unlocking value from the Edjudina Gold Project. The company’s approach balances growth ambitions with prudent financial management, leveraging partnerships to advance production without overextending capital.
Bottom Line?
Gibb River Diamonds’ contract mining strategy at Edjudina sets a cautious yet promising tone for its gold production journey.
Questions in the middle?
- How will spot gold price fluctuations impact GIB’s cash flow and profitability?
- What are the expected production volumes and timelines from the Neta Prospect?
- Could GIB expand its resource base or processing capacity to scale operations?
