Paterson begins drilling to test Grace gold resource upside

Grace drilling moves from approval to execution

Paterson Resources Limited (ASX:PSL) has moved its Grace Gold Project into its most consequential drilling phase yet, with diamond drilling beginning on 21 October after the September quarter. The approved campaign covers 40 holes and 9,200 metres, designed to test whether the project’s 200,000-ounce Inferred Mineral Resource can become larger and more geologically defined.

“Regional location of the Grace Gold Project (E45/4524).”

“2026 RC and Diamond Drilling Campaign at Grace Gold Project.”

Caption and image © Paterson Resources Ltd. From “Quarterly Activities/Appendix 5B Cash Flow Report”, 30 Oct 2026.

The program follows the September drilling approval, which set out the same 9,200 metre campaign. FORACO Australia is handling six diamond holes totalling 1,200 metres, while Stark Drilling will complete 34 reverse-circulation holes across 8,000 metres.

Diamond and RC holes have different jobs

The diamond component is intended to support a partial conversion of Inferred material to Indicated status and provide core samples for metallurgical test-work. The RC component will pursue shallow, high-grade mineralisation along the project’s 1.3 kilometre strike and test interpreted structures at depth.

Grace currently contains a JORC 2012-compliant Inferred resource of 3.46 million tonnes grading 1.79 grams per tonne gold for 200,000 ounces, reported above a 0.5 grams per tonne cut-off within optimised pit shells. No Measured or Indicated resources have yet been defined. The resource includes 1.01 million tonnes of fresh rock grading 2.12 grams per tonne, but the filing says the estimate itself did not change during the quarter.

The campaign follows the earlier 200,000-ounce resource upgrade, which lifted Grace from 69,000 ounces. That earlier increase provides the current base for drilling, but the next resource update will depend on results that have not yet been reported.

Cash runway faces a more demanding exploration phase

Paterson finished the quarter with A$1.44 million in cash and cash equivalents, no debt and no financing facilities drawn. It spent A$168,000 on exploration and evaluation during the period, alongside A$216,000 of net operating cash outflows. Based on those quarterly outgoings, the Appendix 5B estimates 3.75 quarters of available funding. That calculation predates the full cost profile of the new drilling campaign, so cash use will become an important measure as field activity accelerates.

Former contractor dispute remains unresolved

Paterson is also defending proceedings brought by former drilling contractor iDrilling Australia over amounts allegedly payable for the Phase I drilling program at Grace. The claim is estimated at $0.5 million to $0.7 million, plus interest and costs. Paterson disputes the claim, while its legal adviser does not currently expect the proceedings to have a material impact on operations.

The immediate test is therefore twofold: whether drilling produces the geological evidence needed for a partial resource upgrade, and whether the company can fund that work without materially shortening its stated cash runway. Paterson’s next planned steps include assay releases, geological interpretation, metallurgical test-work, an updated resource estimate and a scoping study.