Kitcogold have been watching carefully the Gold market and in particular seemingly underperformers in the share market. We look behind the reasons for some of these “market dilemmas”. The first Company, we report on, is a small cap hopeful Ausmex Mining Group Ltd. ASX:AMG and next Meteoric Resources Ltd ASX MEI. Kitcogold has interviewed a number of prior employees, both from Cloncurry and Mt Isa. We visited the Mt Freda Mine site to see for ourselves and talk to the man of the moment, Ausmex MD, Mr Aaron Day. ” WE WILL REBIRTH MT FREDA GOLD MINE TO THE PRIDE OF CLONCURRY” To say we were impressed, is an understatement. Only 30 minutes by bitumen highway and then 20klms by a fully formed 100kph haul road, we arrived at Mt Freda for our Ausmex cover story.

Ausmex, Mt Freda Story: 1936 – 1941 Partner Underground; 1985-1986 O’Keefe Mining, small heap leach; 1986-1991 Diversified Mineral Resources Open Cut CIP Processing.

Our Gold story today, is discussing the pro’s and con’s of Ausmex Mining Group Ltd who own, among other historical high grade producing mines, the historical Mt Freda Gold Mine in the NW Queensland regional mining town of Cloncurry. History reveals, Mt Freda mine was originally operated as an underground high grade Gold Mine that was mined from 1936 to 1941 with average grade of 18g/t Gold. Our investigations reveal the processing of the ore were very basic but super effective. In 1986 a small private Cloncurry miner, Mr Albert O’Keefe opened a small open cut at the Western end of Mt Freda at the Western end and operated a tiny, but successful 5,000 tonne heap leach process using small carbon columns and recovering over 7g/t Au. The original 1936-1941 Mt Freda Gold recovery process used 10 head stamp battery. The process battery located at Mt Freda, also processed Gold from nearby high grade mines including, Comstock, Falcon and Shamrock. These three mines were part of a group of 8 parallel North/South striking Gold mines spread across a 2klms wide zone. The average grade of Gold from the three mines above is reported by the Queensland Mines Department as a production grade of 50 grams per tonne. The three historical mines are located 500m metres North of Mt Freda. Investigations reveal all of the above tenements are owned by Ausmex. Mining ceased on Comstock, Shamrock and Falcon in 1945 on all of these mines. History shows that mining ceased, due to the ongoing of world war II. These historical mines were re-discovered by a wandering Ausmex geologist, who found a number of old shallow shafts and mullock heaps, in thick undergrowth in 2018


Mt Freda Gold Mine 1989 CIP Processing Plant


After firstly arriving at Mt Freda we noticed remnants of mining from years gone by. The original DMR 300 tonne fine ore bin sits proudly in the same place it was in 1987, located next to the old foundations for the ball mill and the crushing and processing plant. The original Gold Room building is still standing on its concrete foundations, be it, with some sheet iron missing, now being restored. The concrete helicopter pads have become the foundations for the newly installed office complex, that will house the contractors and consultants. The place looks clean and neat with the noise of diesel pumps dewatering the Mt Freda Open Cut with an excavator forming evaporation ponds. A diamond core drill has began drilling in the open cut for the upgrade for resource estimations.

Kitcogold, spoke to the MD Mr Aaron Day, who informed our reporter that Ausmex is redefining and upgrading the recent resource estimations with infill drilling and twinning some of the original drill holes drilled by DMR. This new drilling is designed Mr Day said, to fill the gaps in the drilling, so that the historical holes being twinned and if matched, can be aligned and used with the current resource wireframe and block model. The original DMR Resource was independently completed, by Wardely James Capel, a subsidiary of Wardley Australia Ltd, a subsidiary of HSBC.

Shareholders today, not in for the long haul and multiple share prices

Ausmex who has for the past 3 years, (since merging with now defunct, Eumeralla Resources (EUM)), have been reporting multiple, exceptional drill results, particularly Gold results, with some spectacular Gold/Copper as well. However, in todays world, shareholders seemingly are more interested to take 5% and 10% quick profits. It dioes seem, shareholders will, in lieu of analysing the drilling and exploration results and having patience or waiting for Gold production, just cannot wait for the results that historically give the multiples of share prices. For the modern trader, is a life of sitting in front of a tiny screen all day. Shares to the modern traders today, are like a hot brick, can’t wait to drop them. As Warren Buffet said, ” only the long term holder ever makes money from equities, the trader just spins the stock, they never really get rich”. The same, unfortunately, can be said for today’s Gold analysts and stockbroking firms. Today a stockbroker seems to judge a company by its share price and its market cap and makes no reference to the actual assets of the Company. Its called “instant analysis”. Maybe today’s shareholders can learn something from the former shareholders of Diversified Mineral Resources. After listing in 1986 and within 12 months DMR, constructed a 200,000 CIP plant and commenced production with their stock on listing at $0.20c was off to the races, trading within 8 months at $1.68c. Ausmex at this time, own all of the DMR mining tenements that gave DMR a market Cap of $270m. Its the oldest story in the book, “need to know when to hold and when to fold”. The DMR CIP plant operated 24/7 and former DMR MD said, “the only reason for shutdown was for maintenance.”

THE REAL MT FREDA RESOURCE: Resource Estimation Mt Freda (Wardley James Capel) subsidiary of HSBC. 1989

There is no doubt from industry insiders, that Ausmex hold some of the best Gold prospects in Queensland and indeed Australia and all within the Cloncurry mineral field (with the exception of the Burra tenements in SA), but have received little or no recognition. As one geologist said when interviewed, in one of Ausmex video’s, ” the Gold is oozing everywhere we look and drill”. The Mt Freda Gold Mine mine, had laid dormant for the last thirty years, that is until Ausmex purchased and recommenced drilling.


Download: Wardley James Capel Resource Statement Report 1989

In 1989, an independent resource estimate report on the Mt Freda mine was completed by Wardely James Capel in 1989 (subsidiary of HSBC) after the mine ceased production. The mine ceased production due to the collapse in the Gold price. From “qualified information” from our investigations, after Wardley resources estimation was completed, non more ore was mined from the open cut. Only ore that was processed was from the stockpiles. So it appears that none of the resource mentioned in the Wardely James Capel resource estimates, was processed. The ore resources of (Measured and Indicated: 600,000 tonnes @ 5.65g/t Au and 497,340 tonnes @ 4.96g/t Au.) remains to be mined and processed. Production we are told DMR continued using only ore stockpiled. The end result is that around 200,000 ounces of Gold is there to be mined, at an average grade of over 5g/t Au down to 200m. Gold ore has been intersected to over 300m. With the pit mined to only 50metres, this would allow the Portal for the decline to be constructed at the 50m level in the current open cut. With the Portal, being so close to the surface to commence, the decline, indicates the ore will commence coming to the surface almost immediately. We have been advised by the management of Ausmex that the company is following the DMR original plans, with the decline mining option (which was the DMR preferred option). Mining would be with the decline being situated on the Northern side of the open cut, mining at the start to the West and parallel to the orebody with cross cuts to the south to intersect and mine the Mt Freda orebody.

DMR MARKET CAP $270m…. Ausmex Market Cap $20m

History shows, Diversified Mineral Resources, purchased the Mt Freda Gold mine from 1986 and operated after building a 200,000 CIP plant from mid 1987 to 1989 with an average head grade of 4.5g/t Au. The low grade ore of over 100,000 tonnes was stockpiled that was too low to process, assayed more than +2g/t and less than -4g/t Au ore. (not payable at that time with Gold under $300), Ausmex, at the time of purchase of Mt Freda were not aware of the ore stockpile. The story goes that, DMR after stockpiling the “low grade ore” had flattened it so it was not visible and intended one day to return, if ever the Gold price increased. After being told by the former Managing Director of DMD, of this windfall, Ausmex conveniently sold the stockpile to Round Oak Minerals in 2018 for $2.5m. In the deal Ausmex, as part of the consideration also received two EPM bocks to the North of Mt Freda, known as the Golden Mile. On top of that as consideration a further condition of the sale, was that Round Oak Minerals “must” process, all of the ore won from the Golden Mile EPM’s. The processing to be completed at Round Oak’s CIP processing plant in Cloncurry. The Wardley James Capel resource estimations, in today’s money values the inground value of Mt Freda now of approximately $500,000,000 give or take a few pennies.

Even more astounding, is that Ausmex with all the prospective ground it holds, in multiple prospects, including the resource alone at Mt Freda, has a market capitalisation of just $25m. When owned and operated by Diversified Mineral Resources (DMR) the Company’s main asset, Mt Freda, carried a market capitialisation tag of $270m. Even more surprising, is that when DMR’s market Cap was $A270m, the Gold price was between $300 and $400 an ounce. One ponders in amazement now, with Gold at $A2600 an ounce, how Ausmex could be rated at $25m? Maybe the spring is undersprung?


Mt Freda Gold Mine in Production 200,000 tpa. Head grade +5g/t Au

The Mt Freda Gold mine, when operating in the late 1980’s, was grade of 5.5g/t Au, but with dilution, reported a head grade to the mill at the CIP process plant, of 4.5g/t and a processing recovery using CIP, of 98% of the Gold. The Mt Freda CIP plant processed the ore using a 24 hour slurry retention time and a grind size of -100 microns. Kitcogold, managed to talk to one of the former metallurgists, John McClean, who operated the 200,000 tpa CIP plant at Mt Freda. He very quickly, acknowledged that the metallurgy and mineralogy, at Mt Freda was like he had never seen before or since. He said, “Mt Freda is a textbook orebody that has everything that a Gold processor requires for a Carbon in Pulp Gold process plant. Mr McLean said, “the Gold literally fell out of the ore during the simple process”. He said that the leach processing circuit, consisted of a 300m3 pre leach tank and 6 x Carbon cone bottomed tanks that operated with down draft tubes with Lightning motor and gearbox driven shaft with bottom impellers, together with low pressure air agitation”. He said ” the tails were going out with zero gold and if there was any Gold left in the tails, it was undetectable.” He said “cyanide consumption was less that 1 Kg per tonne and the natural pH of the water from underground was +pH9 so only small doses of lime was needed to increase the pH to 10″. He went on to say, ” Mt Freda is the Gold Mine that every metallurgist dreams about, on the processing side, it basically run itself, just add lime, add cyanide, carry out SG tests every 4 hours, thats it”. The Gold pours were over 98-99% Gold content, with only a minuscule amount of silver, he said. He remembers that the Gold from Mt Freda was sent to the Perth mint using the Cloncurry Post Office by registered mail in a re-enforced Jiffy bag type envelope, he said, “how things have changed”. He said,” I scratch my head and wondered why that Mt Freda wasn’t bought into production years ago”. He went onto say that he is watching with interest the restarting of Mt Freda.


Ausmex, have revealed they are determined to bring Mt Freda into production in 2021, using decline mining technique. They have advised the market that geotechnical survey, mine planning, upgrade resources update, dewatering, metallurgical testwork, cost studies are all underway. “The commencement of mining at Mt Freda will be immediately followed by production from the Golden Mile by open cut method”, Mr Day said.

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