Kairos prepares to grow Pilbara Gold Project in 2020

Kairos Minerals Ltd (ASX:KAI) has commenced a 1,500 metre reverse circulation (RC) drilling program, targeting extensions of the Iron Stirrup gold deposit, part of the 643,000 ounce Mt York Project within its Pilbara Gold Project in Western Australia.

Management is targeting depth and strike extensions of the existing Iron Stirrup Mineral Resource of 1.07 million tonnes at 1.94 g/t gold for 67,000 ounces.

The program is expected to take approximately two weeks to complete, with assay results expected to be reported early in the New Year, possibly providing share price impetus at the start of 2020.

This news comes on the back of a $1.35 million capital raising which will provide funding for the group’s extensive exploration campaign in 2020 with a major focus being the Pilbara Gold Project.

Funds will also be used to complete a review of the current Mineral Resource, commence mining studies and undertake initial exploration activities at the newly-identified gold target at the Croydon Project.

The location of the Pilbara Gold Project can be seen in the following map with the 486,000 ounce Mt York deposit accounting for much of the resource.

Large exploration program planned at Mt York

In providing some background on Iron Stirrup and where it sits in the company’s broader exploration strategy in 2020, Kairos executive chairman Terry Topping said, ‘’The current program will target extensions of the higher grade Iron Stirrup deposit that was last mined in the 1990s in a much lower gold price environment as part of the historical Lynas Find operation.

‘’The two-week program will target extensions of the mineralisation at depth and along strike below the historic open pit, with results expected early next year.

“The Iron Stirrup drilling program is expected to form part of a much larger exploration push at Mt York next year.

‘’The results of the current drilling will be incorporated as part of a review of the current 643,000 ounce Resource that is already underway.

‘’This will, in turn, underpin mining studies commencing in the March quarter next year.

‘’In addition to reviewing the mining potential at Mt York, we plan to return to the Croydon Project next year to test the large gold-in-soils anomaly identified recently and advance other recently identified opportunities at the Kangan Project and elsewhere.”

Will Mt York become a production hub

From a broader perspective, management will continue to review the current 643,000 ounce mineral resource in light of the substantial increase in the Australian dollar gold price since the resource was first released in May 2018.

Indeed, there is a significant difference as the Australian dollar was fetching US$0.76 at that time, and the gold price was hovering in the vicinity of US$1300 per ounce.

This implies an Australian dollar gold price of $1710, well below the current price of approximately $2150 per ounce.

The Australian dollar gold price has been well above $2000 for about the last six months, suggesting this isn’t a blip.

Most brokers are forecasting the precious metal to continue to trade around the US$1400 per ounce mark, and with global equity markets looking toppy, along with a continuation of geopolitical uncertainty it could trade north of that level.

Meanwhile, it is hard to identify any catalysts on the horizon that would trigger a significant strengthening in the Australian dollar.

Consequently, if Kairos were to crunch the numbers on a prospective production centre at Mt York, it would be safe to say that the economic returns based on the Australian dollar gold price assumptions would be far superior than was the case some 18 months ago.