Just 15km away from the powerful Victor Smorgon Group’s Stawell Gold Mine, which historically produced 5.3Moz but currently operates at around 75% capacity and mines slightly above 2g/t ore from up to 2km underground, lies Aureka (ASX: AKA)‘s orogenic analogue Irvine – a 304koz at 2.46g/t Au deposit that begins at surface and has an exploration target for an additional 280-420koz at 2-3g/t. Next year’s resource update will include the latest intercepts such as 10m at 12.1g/t Au from 413m, and AKA has a strong institutional shareholder base which includes SG Hiscock as the largest investor.
AKA’s other key Victorian Gold asset is St Arnaud, which previously produced an incredible 400koz at 15g/t Au – and the company is currently drilling high grade extensions outside of the existing 56.5koz resource, which also has an exploration target for an additional 114koz. Intercepts from earlier in the year include 6.9m at 4.24g/t Au from 422m including 0.75m at 18.6g/t Au from 422.1m, and 3.2m at 4.71g/t Au from 434.0m including 0.6m at 19.9g/t Au from 435.9m. Assays are imminent from a drillhole that hit multiple quartz veins containing 7 instances of visible gold between 115.4 and 124.1m down hole.
At a $17 million market cap with $4.24 million in cash, a $12.76 million enterprise value places an EV/Resource multiple of just $35.4/oz on AKA. This drops to an insanely low $14.2/oz when adding on the ounces in AKA’s JORC exploration target’s, which are of a relatively high degree of certainty and would take AKA’s total inventory to almost 900koz. Having found further mineralisation after stepping out over 200m down dip with precision, while hitting the highest ever grades seen at Irvine, provides AKA with a series of key upcoming catalysts that firmly pave the way for upwards revaluation.
Irvine’s resource hasn’t been updated since 2021, and all the drilling that AKA has been completing this year will be factored into the 2026 resource update. A few of the notable assays between 2017 and 2020 include 18.7m at 7.1g/t Au from 196.3m, 10.6m at 6.2g/t Au from 135.7m and 9.4m at 5.3g/t Au from 355.6m.
The hits from a few key discovery holes at Resolution were responsible for these projects rocketing from a $60 million market cap all the way to $156 million over two months at the start of 2021, when the gold price was just US$1,900/oz and there was a lot of attention around the resource extensions that AKA is currently drilling out. These assays demonstrated fantastic grades that continued down dip for hundreds of meters, with 5m at 10g/t Au from 273.9m, 9.4m at 5.3g/t Au from 355.6m including 3.4m at 9.2g/t Au, 10.8m at 4.5g/t Au from 483.6m including 4.2m at 7.5g/t, and 0.9m at 9.4g/t Au from 251.4m – with visible gold.
Our other Australian orogenic gold pick Kalgoorlie Gold Mining (ASX: KAL) recently ran to $0.085/share – up from our initiation price of $0.037 – as it continues to hunt high-grade extensions of primary mineralisation in an area with under capacity mines. We’ve seen this work before with Strickland Metals (ASX: STK), when it sold a 346koz at 1.8g/t Au deposit to NST for more than $60 million. This was in June 2023 when gold was US$1,925/oz, and is to be processed 30km away at NST’s Jundee Mill in WA which operates at 60% capacity. STK was capped around $65 million after the deal was announced, but ran to $309 million by November 2023 once the deal settled and the market got excited about what management could do with the capital generated by the project sale.
AKA’s senior management team is truly second to none, and is led by Managing Director James Gurry who has previously headed the mining research teams at Credit Suisse in London and Deutsche Bank in Australia. He was also a Non-Executive Director at Red Hawk Mining (ASX: RHK), which was acquired by Fortescue for $254 million. AKA’s Chairman Graeme Hunt has had a 35 year mining career that included being MD and CEO of Lihir Gold when it was taken over by Newcrest for $9.5 billion after multiple bids. AKA also counts Southern Cross Gold (ASX: SX2)’s star geologist Kenneth Bush as an early exploration strategy advisor, and Angela Lorrigan, also of SX2, is on the board as technical director. SX2 listed on the ASX in May 2022 at a $31 million market cap, and recently ticked over $1.3 billion after almost three solid years of drilling out its Victorian gold-antimony project, Sunday Creek.
The landscape for mining in Victoria has dramatically improved since the establishment of the Resources Victoria Approvals Coordination in 2023 – a government entity that has effectively gutted the bureaucracy previously holding up permitting processes. When we went out on a site visit to Alkane Resources (ASX: ALK)’s Costerfield mine and SX2’s Sunday Creek project earlier this year, a presentation was given by RV explaining the centralised and fastracked framework now in place that is designed to accelerate Victoria’s resources industry. We also went out to AKA’s projects a couple of weeks ago and expect a relatively smooth permitting process.
Below is a long section from Irvine, depicting the existing resources at the Resolution and Adventure Prospects, as well as the downtrending mineralisation that captures the exploration target area. It also highlights the optimised pit shell that will mine at surface ounces before an underground mining operation similar to that at Stawell will target the thick veins that AKA has continuously been hitting:
Source: AKA
Stawell Gold Mine’s Magdala Provides Perfect Blueprint for Irvine
The strike extent and down plunge continuity at Resolution is pretty much exactly what has been seen at Stawell’s Magdala deposit, and the type of mineralisation at Irvine should be easily processed at Stawell’s two stage crushing circuit, which feeds a ball mill with a closed-circuit gravity gold facility for flotation and regrind of sulphides, followed by a CIL recovery plant.
With mining at Stawell reaching extreme depths of 2km underground, and grades occasionally dipping close to 1g/t, the economics of mining Irvine and transporting the ore would likely be very compelling. If AKA can keep tracing the mineralisation – and there are hits 220m down plunge that reached depths over 700m at grades up to 4.05g/t Au – then there is serious potential for Irvine to be a million ounce deposit.
The JORC exploration target at Irvine is a high integrity estimate built on solid data. The current JORC resource is composed of 52 structurally oriented diamond drillholes and 364 aircore drill holes, for a total of 41,417m across Resolution, and Adventure – which has been used to extrapolate what is likely to be a down plunge.
Stawell’s historically mined deposits can be seen below, along with the resources that are still being explored. An exciting 1.5Moz was produced from the almost identical Resolution lookalike:
Source: Stawell Gold Mines
The Smorgon Group has been happy to own the mine for almost a decade now, and there are reports that they are actually keeping some of the gold it produces. While the group sounded out the market with a potential sale process last year, this was before gold basically doubled in price and AKA hit a litany of high-grade extensions at Irvine, making it a key acquisition target for the operation.
Smorgon has since increased its ownership of Stawell to 100%, and the 850ktpa processing plant is certainly amenable to a significant capacity boost – which will likely be undertaken by them or a buyer. US$85 billion market cap Agnico Eagle (NYSE: AEM) would be a great suitor given its presence in Victoria with the globally renowned Fosterville mine, which was recently granted a major permit that will extend mining by at least another 10 years.
St Arnaud’s High-Grade Extension Set to Flourish
Having been last mined in 1995 when gold was around US$380/oz, the threshold was pretty high in terms of what was considered mineable ore – leaving behind many mineralised areas well worth exploring at the current US$4,000/oz gold price.
The super high-grade areas that have recorded over 19g/t Au are present in St Arnaud’s Comstock’s quartz reef systems, and are associated with a sulphide assemblage of pyrite, chalcopyrite, galena and sphalerite. This round of drilling has successfully intersected the targeted extension of this system, which AKA plans on continuing to target after the remaining assays from 4 completed holes are returned over the next few weeks.
The long section below depicts the area under the historical open pit that AKA is testing, where the company has repeatedly hit high grade gold in a mineralisation that is open in both directions and at depth:
Source: AKA
AKA’s bolstered cash balance gives the company a strong base to keep drilling out Irvine and St Arnaud, and the upcoming assays from both projects will cap off a very successful exploration program that has highlighted an exciting level of prospectivity in Victoria, which the market is quite often used to seeing in WA.
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Disclaimer: This article is for informational and marketing purposes only, and does not constitute financial advice or a recommendation to invest. All opinions expressed are our own. We may receive fees or other forms of compensation in connection with the publication of this content, and may own shares in any of the mentioned companies. Please do your own research and seek professional advice before making any investment decisions.