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BARTON GOLD HOLDINGS LTD (BGD) - Transforming South Australia's Golden Landscape

• Andrew Musgrave

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Alexander Scanlon takes us deep into Barton Gold's ambitious plans to transform South Australia's central Gawler Craton into a major gold producing region. As Managing Director and CEO, Alex outlines how the company has meticulously built a 1.7 million ounce resource platform and secured the region's only processing mill to create a compelling two-stage development strategy.

The conversation reveals the remarkable economics behind their flagship Tunkillia project, where recent optimization work has delivered stunning financial projections. With projected operating free cash flow of $2.7 billion over eight years and an incredibly fast payback period, Alex explains how they've engineered a project that generates approximately $1.3 billion in just the first two years of operation. This front-loaded cash flow profile creates exceptional financing flexibility and dramatically reduces development risk.

What distinguishes Barton's approach is their commitment to innovation and sustainability with detailed plans for implementing a renewables-powered microgrid that simultaneously reduces costs, lowers carbon footprint, and hedges against energy price volatility - potentially making Barton the first mining operation in South Australia to employ this technology at scale. The discussion also explores their unexpected ultra-high-grade silver discovery at Tolmer, where intersections reaching 17,600 grams per ton hint at significant additional upside beyond their established gold resources.

Listen now to understand why this emerging Australian gold developer presents one of the most compelling growth stories in the precious metals sector today.

Andrew Musgrave Host

Welcome back to ASX Briefs, and today we're joined by Alexander Scanlon, the Managing Director and CEO of Barton Gold Holdings Limited, a South Australian gold developer that's rapidly progressing the development of its Cornerstone Tunkillia gold project. 
 
 Alex, thanks for joining me today and welcome to the ASX Briefs podcast. 

Alexander Scanlon Guest

Thank you for having me. 

Andrew Musgrave Host

Now, Alex, for listeners that may be unfamiliar with Barton Gold, can you just provide a brief overview of the company? 

Alexander Scanlon Guest

Yeah, look. The very short summary of Barton Gold is that we are a pure play gold, pure play South Australian focused developer. So, we went into the central Gawler Crater of South Australia, obviously very well known for hosting BHP's Olympic Dam, and to the west of that high OCG belt which is Carrapateena Olympic Dam in Prominent Hill, there's a chain of historical gold assets. That same basin essentially goes from being deep and coppery to shallow and goldy. We've consolidated those. We bought the only mill in the region. We've now built up a 1.7 million ounce platform and we are now starting to move through the motions to develop that or bring that back into operations in two stages. Stage one is leveraging our existing fully permitted central Gawler mill to start stage one operations targeting 2026. And then stage two would be the expansion up to 150,000 ounces per annum through the development of our Tunkillia project, which is next door and for which we've just released an optimized scoping study with some very strong numbers. 

Andrew Musgrave Host

Okay, and with that optimized scoping study for Tunkillia it shows a major leap in project economics. So, what were the biggest technical and operational drivers behind this uplift? 

Alexander Scanlon Guest

The original test of that project was an initial scoping study that we published in July of 2024. And the approach there was to essentially test our theory that the geometry of this project provided for very strong bulk open pit economics. So, we were looking for economies of scale both in capital investment and in operating costs, essentially trying to find low unit costs and high unit margins. But we did start with a pretty conservative approach to this. So, we said first, for the sake of testing the theory of scale, let us assume that the material is much, much harder than it actually is and let us assume that we choose a processing router, a crushing and grinding circuit that's fairly inefficient, so it's very energy consumptive. And that gave us a very, very strong result where we were producing around 130,000 ounces per annum at an all-in sustaining cost of 1,900 Australian dollars per ounce. That would put us in the bottom quartile of cost globally for a producer. So that right there told us okay, on conservative assumptions, this thing stands up to the theory. 

And we just spent the last eight months going through and running about a half a dozen studies actually looking at optimizing primarily around the comminution circuit and power. Power is your number one consumable intelligence like this. So, we were able to remodel the comminution circuit using the actual, accurate software or characteristics. We were able to run a number of scenario analyses on the comminution circuit. So, we now have a more efficient design which is far more power efficient. 

We saved about 30% of the power costs in comminution and we made a number of other small adjustments that reduce the capex and essentially expand the pit from a $3,000 Australian dollar pit to a $3,500 Australian dollar pit. The net takeaway from this is essentially we've allowed our costs to go up a little bit, but of course, against that other key driver of gold price, which has gone up about 40% since we published our last study, what we're getting is a still very conservative pit that is now producing around a million ounces of gold and around 2 million ounces of silver. It's about 120,000 ounces of gold per annum. But the project produces about $2.7 billion across an eight-year span in operating free cash based on a $5,000 gold price and the key driver of those economics, if you think about how the economics are constructed there, we actually have a very fast payback period. 

So, about half of that $2.7 billion is generated in the first two and a half years. So, it's a sub one year payback. We're generating over $800 million in the first year and close to $1.3 billion in the first two years. So that gives just a very strong financing profile, a very strong development profile and something we'll be very happy to expand into off the back of stage one operations. 

Andrew Musgrave Host

And just touching on that, operating free cash, how significant is this in de-risking the early phase of the project? 

Alexander Scanlon Guest

It's fairly important, right, because if you consider, you know, one of the most important elements of getting a project right, it's having not only the finance in place but the right finance. 

So obviously to our banking partners a fast payback period is very attractive because if they're looking at a five- or six-year project based facility, they have sort of you know, there's a construction period which is sort of two years of drawdown or 18 months of drawdown. Then there's the sort of the construction and trade that goes with that, but then you've got commissioning and ramp up and then you have the initial payback and that's the really kind of sweating period for a financial institution who's essentially taken your word to some degree as security that you can deliver the payback. So, the faster that payback is and the larger the quantum of that payback, the more comfortable they get. And in this case, having a payback period where essentially in the first year you're able to pay back the entire project two times over, that really, really helps. And then that helps to expedite all sorts of other project planning that you can do in advance. 

Andrew Musgrave Host

And you've already begun accelerating PFS long lead activities. So, what are the immediate next steps in terms of environmental, geotechnical and permitting work? 

 

 

Alexander Scanlon Guest

So, you touched on probably the most immediate of those next steps being the environmental. So obviously, now that we've completed an optimized scoping study and we have a very clear idea of what this project we think ought to look like in development, that essentially forms a very solid foundation for an expedited feasibility study. But that study essentially takes place within a box of time which is more or less defined by the environmental studies. So, in order to apply for a mining lease, or submit our mining lease application, that is, we need to submit environmental studies both in terms of water, flora and fauna. So, water requires 24 months of data, flora and fauna are 18 months of data, so it's sort of essentially a two-year box within which to do all of these things. So that's the really critical long lead time item we're starting. 

We've just appointed a group called Erias Group. They're based here in Adelaide with us, and they happen to be very well known for doing exactly this type of work. They've worked with several of our colleagues across the industry, both oil and gas and mining, overseas and in Australia, and so we're now going into what we call the scoping report process. That is where in South Australia we have the benefit of sitting down with the South Australian government, we agree what work needs to be done in terms of the environmental clearances and impact statements prior to doing that work. So, we have a very clear set or very, very clear terms of reference for our mining lease application and then we'll start that work right away. 

And then some of the other key things that we're going to look at doing are again going back to this sort of higher-grade starter pit or this sort of stage one pit that provides this high-speed payback. We want to basically underwrite the payback period. So, we'll go and do a staged resource upgrade drilling program or programs designed to convert our JORC resources to ore reserves, and that will give greater confidence to that payback period and really strengthen the financing conversations that we can have conversations that we can have 

Andrew Musgrave Host

OK, and the integration of a renewables-powered microgrid is notable. So how is the ESG shaping up the development of Tunkillia from the ground up? 

Alexander Scanlon Guest

Yeah, look, we're fortunate that we have the opportunity to look at this project from a completely clean sheet of paper, right? So, this project had an initial or I should say an earlier pre-feasibility, undertaken back in 2012 and 2013, when it was a much smaller project and in the hate to say it, but nearly 15 years of the past. In that time, a lot has changed in terms of the accessibility of large-scale renewables and also the ease of financing these. So, when we look at this project, obviously we're quite interested in having the most renewable or the greenest profile we can. 

I think it's pretty important actually for people to understand that with gold projects, particularly large-scale bulk projects, there is a space or an intersection for things that are both greener and more capital and risk efficient, because one of the greatest consumables we have is energy and therefore one of the greatest risks we have is energy. 

So if we can put together a renewable energy microgrid that, in the one hand, lowers our cost of energy, on the other hand, lowers our carbon footprint, but on the third hand, if you will, also essentially locks in or hedges that cost of power for the life of project, we've now hedged a good 50 to 60% of our power consumption for the life of the project, and so we sort of, everyone’s very focused on the front door, so to speak what's the revenue line, what's the price of gold? 

We also have to remember the other side of the equation what's our cost base. So, we kind of have a chance to win on both ends of that, as well as creating sort of a greener project platform. We would be the first company in South Australia to do this and really, we're taking the lead of, and we have to give a lot of credit to Goldfields. They put a project in at their Agnew mine with the assistance of an arena grant and they were able to demonstrate that, you know, at this scale or similar scale, and these types of economics could be a very attractive proposition. 

Andrew Musgrave Host

Okay, and we just if we touch on exploration and portfolio growth at Tarcoola, the Tolmer discovery has shown ultra high-grade silver zones. So, what's the scale potential here and how does it complement Tunkillia's development? 

Alexander Scanlon Guest

Yeah, it's a very good question. A lot of people have been asking us for the past few weeks. You know what is Tolmer? You know what is it? Obviously, the numbers are quite exciting, but all we can really say credibly at the moment is it's exciting and beyond that we don't really know. 

And the reason for that is we found Tolmer originally as a gold discovery last year and then we stepped up to the west about 500 meters and we drilled a single line of drill holes. So, we have some air core holes and some reverse circulation holes and the first data that came back on those was the highest grade that we've actually hit and that was 17,600 grams per ton. In a few of the other follow-up holes we've had intersections of between one and two and 3,000 grams per ton, but 6,000 gram-meter style intersections following up an initial 28,000 gram-meter intersection. So, for context, these are very high grade, not only for Australia but globally. That 28,000-gram meter intersection is six meters at 4,747 grams per ton from 46 meters depth. So, it's shallow, it's very high grade. It was, I think, the fourth highest gold intersection published on the ASX, TSX and London Stock Exchange for the first quarter of the year. 

But all of that said, that's all the data we have. We have a perfectly two-dimensional understanding of this. We have width and we have height, and we have no length. So, we've just now announced today that we're expediting a follow-up drilling program. We'll continue to go west with those holes where that mineralization appears to be sort of broadening out. Now we'll go north and south and try to add a third dimension to this and then we might be able to start answering the question of actually what is this? And you know, would it be significant? And if so, just how significant? But it's certainly exciting. Silver is not necessarily a surprise in the gold field, but silver like that is very much a surprise. 

Andrew Musgrave Host

And you also control the only gold mill in the region. So how do you envision leveraging this strategic asset as your projects mature and potentially for third party ore? 

Alexander Scanlon Guest

Correct. Yeah, so that mill was really key to our regional strategy. We bought that alongside all of these projects and put that into care and maintenance or rather kept it in care and maintenance on the view of building up a much larger strategy that we could then use that mill to unlock it. And what we're looking at now is pairing our traditional assets where our historical assets being low-grade stockpiles and some historical open pits around the existing mill, along with the Tarcoola open pit project, we have the Perseverance mine there. That's a fully permitted mine. 

We've presently got about 20,000 ounces of gold in the floor of that. Now that gold process through that mill back in 2017 and 2018. So, we have sort of proven logistics, proven infrastructure, proven metallurgy. That gives us a really simple start there and then that allows us to sort of become a self-funding company and expand into that stage two operation. So, as we think about Tarcoola, as we think about, you know, the broader discovery potential there, this Tolmer discovery that we're talking about. The interesting thing about Tolmer is, you know, while we're thinking about the mill as a stage one sort of a stage one supporting actor or leverage point, new mineralization that we're identifying at Tarcoola can go either to the existing mill or to a new Tunkillia plant, depending upon which mill we think is better to take that mineralization from time to time. 

Andrew Musgrave Host

Okay, Alex, now just to wrap things up for our listeners. You flagged an ambitious annual production, so what would a fully operational Barton Gold look like in two to three years' time? 

Alexander Scanlon Guest

I think in two to three years' time we would like to have, obviously, our existing stage one operations up and running. We are going to be publishing over the next few months our analysis of what that looks like. So what materials are we playing with? How do we want to reconfigure our mill? What will that cost and what will it produce? What we'd like to do is start with really low risk mineralization and start producing, say, 20,000 ounces per annum and then increase the grade and go to 30 and 40 and 50,000 ounces. So, we'd like to be in that range where we've gone from sort of 30 to 40 to 50,000 ounces in that range and at the same time, in parallel, essentially be getting ready to complete the final permitting and financing of Tunkillia and ready to build that. So, in summary, you know, in that 30 to 50,000 ounce per annum range, getting ready to jump to 130,000 to 150,000 ounces per annum with the startup at Tunkillia. 

Andrew Musgrave Host

All right, Alex. Well, it's been great to chat today to get an update on where the company is at, and we look forward to further updates from Barton Gold in the upcoming months. 

Alexander Scanlon Guest

Thank you, Andrew. 

Andrew Musgrave

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.