Orbminco clears Majestic North studies as funding becomes the next test

Technical work completed, funding decision remains

Orbminco Limited (ASX:OB1) has finished the bulk of the technical work needed to take its 100%-owned Majestic North Gold Project towards a development decision, but the balance sheet now sits firmly in the foreground. The company had A$697,000 in cash at 30 September, with its Appendix 5B indicating 0.59 quarters of funding based on the quarter’s relevant outgoings.

The September quarter delivered a useful technical result. All three stages of the reverse-circulation resource drilling program were completed with assays received, while metallurgical, geotechnical and baseline environmental workstreams also reached completion. That puts the project closer to a Final Investment Decision and the proposed Mining Development and Closure Proposal, although neither has yet been completed.

Free-milling ore supports two Stage 1 sales routes

Phase 1 metallurgical testing confirmed the Majestic North ore is free-milling, with high gold recoveries through conventional gravity and cyanide-leach processing, rapid leach kinetics and very low levels of deleterious elements. Orbminco says the completed metallurgical pack is now being used in discussions with potential ore purchasers.

The proposed first mining stage focuses on a shallow, higher-grade domain containing 249,000 tonnes at 2.42 grams per tonne gold for approximately 19,300 contained ounces, using a 1.5g/t cut-off. The company is considering either toll treatment or selling the ore directly to an operating mill, avoiding the cost and permitting burden of building an on-site processing plant. Those discussions remain ongoing, however, and the Stage 1 mine plan will be finalised against the terms of a proposed ore sale agreement.

The work follows the Majestic North drilling program, which had earlier been reported as completing key drilling and metallurgical milestones. Orbminco now says the broader drilling program is complete, including structural junction and extension drilling, a deep basement hole and air-core sterilisation drilling over proposed infrastructure areas. The announcement does not report a revised Mineral Resource, and cautions that the drilling results may not lead to any change in the estimate.

Mine design and approvals move towards lodgement

Stage 1 pit optimisation and mine planning were completed during September. Geotechnical logging, testwork and stability analysis have also been completed, with the resulting wall-angle and closure-batter parameters incorporated into the pit and waste-dump designs. Flora, vegetation and fauna surveys are complete, while waste-rock and soil characterisation work has been finished for the environmental and rehabilitation components of the MDCP.

Concept engineering is progressing for access, power, water, the run-of-mine pad, haulage roads and product load-out. Heritage and stakeholder engagement continues, and consultants have been appointed to prepare the MDCP. The company says lodgement and the Final Investment Decision will follow finalisation of Stage 1 ore-sale terms and project funding.

Cash position sharpens the financing question

Orbminco spent A$824,000 on exploration and evaluation activities during the quarter. Net cash used in operating activities was A$360,000 and net cash used in investing activities was A$816,000, leaving A$697,000 at quarter-end compared with A$1.917 million at the start of the period. The company said the quarter included a number of study costs and expects expenditure to reduce as the technical program shifts towards optimisation.

That expectation is important, but it does not remove the immediate funding requirement. Orbminco said it is discussing project funding with financiers while seeking an ore-sale agreement, and bases its ability to continue operations on reduced study expenditure and completing those financing arrangements. The filing does not disclose the amount, structure or timing of any proposed funding.