Terrain Minerals – executive interview

In this interview, Terrain Minerals executive director, Justin Virgin, discusses the recent metallurgical test-work results at its Lightning gold project in Western Australia. He also discusses the company’s recent, premium equity fundraising, anchored by Gandel Metals, and its forthcoming 1 for 14 share consolidation and more.

Terrain Minerals is a Western Australia-based diversified exploration company on a mission to discover the next generation of technology-critical minerals. Its exploration strategy provides investors with early exposure to high-potential flagship projects in addition to an advancing pipeline of large-scale opportunities in key commodities critical to the global energy transition. With a diversified focus on critical and precious metals, Terrain is de-risking its portfolio through a staged, cost-effective exploration strategy across multiple projects. Its focus is on high-value commodities including gold, gallium, rare earth elements, copper and lithium – the building blocks of tomorrow’s innovations.

With the fundraise and metallurgical results from both Larin’s Lane and the Lightning prospect at Smokebush to discuss, where would you like to start?

Justin Virgin: Probably our gold metallurgical results, which are really exciting. We put out our maiden resource a couple of months ago, and we’ve announced we’re rolling out a 10,000-plus-metre RC [reverse circulation drilling] campaign, infill, extensions and new IP [induced polarisation] targets we’ve identified, which is one of the controlling factors for gold and silver on our mining lease, and those are the new targets we’re drilling. The metallurgical studies have confirmed that this gold is not refractory, and it can go into pretty much any mill nearby, which really opens up the options for some early cash flow.

What are the likely timelines for reaching early cash flow?

Justin Virgin: 18 months to two years is not unrealistic. The next drill campaign will move the resource from inferred to indicated, and we’ll be able to publish the real mining numbers. It starts to get exciting from that point. We’ve already got a granted mining lease, which has really sped things up. That was granted last November.

In terms of size and scale, are you looking to grow the maiden resource or simply upgrade its confidence category?

Justin Virgin: We want to make it bigger, and we want to lift the categories up. There are five structures pushing out in various directions that we need to chase, and it’s still open at depth – and then there are all these new targets. These are just the ones on the mining lease, let alone the ground to the south, which is all in the same geological setting and looks like a Lightning-style deposit at an earlier stage. It’s really exciting that we’ve got a handle on how the geology works here, and I think the goal is to try to make this as big as possible.

Would you say your geological model here has now been validated?

Justin Virgin: That’s the exciting thing. It’s been six years of hard work trying to figure things out with not much money, and a bit of validation is Gandel Metals coming in and raising above market, which is really positive for us and has underwritten this capital raise. It’s been very positive for the last six months since the MRE [mineral resource estimate] came out. We’re now restructuring the company too, to set us up for 2027: there’s a 14-for-1 consolidation, which will bring the share count back down. It’s about getting the company match fit, so we’re ready to run out to the field next year. We’re getting our house in order, now that we’ve got the resource, and we’re growing it.

Informally, what scale of resource would you ultimately like to develop here?

Justin Virgin: Waratah Resources, which is now being taken over by Capricorn Metals, had about 31 pits within the area. Most of these pits held 200,000–300,000oz, so that gives you an idea of what this area typically produces – there are some big ones around.

We’ve pushed our resource down to about 300 metres in depth, and it’s still very strong down there. All the mines in the area go down to one and a half to two kilometres and keep punching, and we’ve seen no geological reason why ours would change at depth, so that’s exciting. All the mines to the north of us at Capricorn, or ex-Waratah, are 200,000–300,000oz ore pits, and they keep punching down.

We’ve also got multiple other targets that are nice IP targets, with drilling and soils that are looking the same. If a couple more of these other targets come in, you can probably start doing the maths from what I’ve just said – can we build a decent-sized standalone project here? I think it’s possible.

What’s the drilling timeline looking like?

Justin Virgin: The more money I have, the more drill rigs I can run. I expect we’ll be cranking up within the next month or so. We’ll probably take a couple of weeks off over Christmas, but we’ll likely be drilling until late February. So probably four months of drilling ahead of us, testing seven IP targets plus all the extensional and infill drilling.

When can investors expect an updated mineral resource estimate?

Justin Virgin: Yes, an updated MRE: Q1 is possible, but realistically it’s more likely to land in the second quarter, sometime between March and June.

Will a scoping or pre-feasibility study follow the updated resource?

Justin Virgin: We’ll do something straightaway, because the moment we move the resource from inferred to indicated, we’re allowed to put some numbers out, and I think that’ll be the exciting part. It’ll take a few months. Once we have the data back, we can get the people working in the background doing their thing before everything is calculated, because they don’t need the calculation, just the raw data. The model’s already there, so it’s just a case of adding extra holes to it.

Looking further ahead, when might we see a move towards development funding?

Justin Virgin: Let’s see what the scoping study says first. There’s potential for partners to come in and help fund mining, so we could get ore to a mill up the road somewhere. We’ve had several discussions with several groups, and there are a few different possibilities, but they want to know when we can deliver before they get too serious.

Subject to the results and these new targets, we may go back and do a lot more drilling – that would be my preference. I’d like to have a few drill rigs here going nonstop. But yes, I think it should be quite exciting. I think the company is putting its house in order, and gold in WA [Western Australia] is high-grade – our grade runs around 2.5g/t here – and the small starter pit we have is 3.5g. That’s quite valuable to us, and it’s very truckable.

In a best-case scenario, when might we see first gold production?

Justin Virgin: There are a couple of ways we could do this. One group we’ve spoken to would do mine-gate sales. They’d simply buy from us every month. We have ore at surface, so that’s attractive from a cash flow perspective. Another group we’ve spoken to, who have a mill, want a 150,000t parcel. So, the exact timing and scenario for first gold could vary a little, but again, it’s not unreasonable that within a couple of years we could have cash flow. And if we’re getting really good results, and it keeps getting bigger and better and the market’s kind to us, we might be able to keep drilling and go standalone.

How should investors think about Terrain Minerals as a whole? Are Smokebush and Lightning very much the lead asset?

Justin Virgin: Absolutely. This is what we’ve become. We’re still doing work on the other projects, and we will continue to, but it’s probably 85% Smokebush and 15% these other projects. We’re proving them up to the point where we’ll make a decision: do we keep them, or do we float them off? But we’ve always wanted a real project, and now we’ve got one.

The Larin’s Lane project, which you mentioned, is where our metallurgical studies have come through. That’s also part of Smokebush, about five or six kilometres away, in a different geological setting to the gold. Those studies are good, but we need more metallurgical work to advance it, because rare earths are all about metallurgy and processing costs. It doesn’t cost us much, and there’s a lot of government support there. We’re just slowly getting things done. It’s not very exciting doing these metallurgy reports and studies, but no one’s done it before. So, there’s a good chance we can unlock it – we think we can. The rare earths themselves will potentially go elsewhere.

Our Pilbara project, Carlindie, is really exciting. There were 10Moz discovered close by using machine learning, and we’ve done the same machine learning study. We’ve announced we’ve completed some soil sampling. We’ve got some really big areas with nice trace elements of gold, and we’ve just gone back and completed more soils. So, we’ve potentially found a new greenstone belt, with potentially three areas of machine learning studies lining up with big structures that are all under cover. That’s also very exciting. No one’s really looked in the Pilbara before, so we’ve got a pretty exciting package there, though not all granted quite yet.

And our Queensland project is copper-gold. That’s also quite exciting, and we’re slowly getting onto that as well.

Larin’s Lane sits right next to Lightning and Smokebush on the same licences. What did the metallurgical test results using methanesulfonic acid show?

Justin Virgin: I heard it’s manufactured in Germany by Bayer, I think. We just use organic acids because they’re readily available, and that’s the important part. It’s also not super dangerous to use. It just makes things easier in terms of cost, corrosion and safety. We’ve had really good results: we tested eight different types of organic acid, and methanesulfonic acid is the one that came out best.

Could Larin’s Lane end up using a high-pressure acid leach process?

Justin Virgin: I’m not sure – there’s a fair bit more work to go. We’ve started doing some size-fraction work on the other commodities. We’ve picked up some gallium as well, and there’s scandium coming out at high grades. So, we don’t fully understand it yet, and there’s more work to be done.

Where are things at with the current fundraising, and how can investors get involved?

Justin Virgin: It depends on your jurisdiction. We’ve done a capital raise of A$1m with Gandel Metals, who have come in and cornerstoned it. We’ve also done a rights issue to our shareholders, and the prospectus should be lodged very shortly – though only Australian and New Zealand holders can participate. If there’s enough interest, there may be a shortfall, and we’re interested in placing that. So, anyone interested in being part of it should get in touch. And if anyone’s interested in becoming part of the company more generally, we’re always happy to talk – we could always do something on the side.

What will the A$2.5m raise fund?

Justin Virgin: That covers this next drill campaign in full. It’ll pay for the soil sampling we’ve just completed up in the Pilbara at Carlindie, and it’ll get the mining studies, or first-pass studies, done and all that news out into the market. So, it’s a drilling and resource upgrade programme. It’s a pretty exciting place to be with new capital.

Can you explain the mechanics of the 14-for-1 share consolidation?

Justin Virgin: Yes. Basically, whatever percentage of the company you own before is the same percentage you’ll own afterwards. It’s just a matter of timing with our registrar. There are a lot of algorithmic traders who have unfortunately kept the stock stuck in a holding pattern, and it’s been very hard to break out of that: there are too many shares in issue, so we’re just pulling that back. It makes a lot of sense, and everyone’s been pretty positive about it. They’ve all been telling me to do it for a long time, but I’ve been very conscious that for most companies that do reconstructions, within six months the share price has halved.

All the ones I’ve seen done well have an asset that they’re growing, they’ve brought some new people in and there’s a lot of exciting newsflow heading towards cash flow. Those are the ones that typically see the share price increase. So, I was a bit cautious about timing, but I think now is spot on for us.