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Alba Minerals Up 10% On St David’s News – Could This Work?

Tim Worstall
Tim Worstall trader
Updated 21 Mar 2022

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Key points:

Alba Minerals (LON: ALBA) hares are up 10% this morning on a news release about work at the St David’s, or Clogau, mine. Investigation of the waste tip for remnant gold is finding fairly decent concentrations, including visible gold in the concentrate.

The last news we had from Alba was about another of their projects. GreenRoc, which is a 54% owned operation. The difference here, with the St David’s work, is that this is directly owned. Clogau St David’s is an old Welsh gold mine which has been mined historically. Contrary to what we might think this is always an interesting place to go mining.

Our first thought would probably be, well, they stopped mining there in the past, right? The ore ran out, or it all got too expensive, or something made it uneconomic. Which it did, that’s obviously why they stopped mining. But technology always does do that marching-on thing. Exploration technologies get better, it’s possible to track mineral veins much more accurately. Further, extraction technologies improve. What used to be gangue (waste, not worth processing) can, 50 or 100 years later, become a rich ore again.

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It’s this second that is being explored at Clogau. There’s a waste pile, actually called the “Waste Tip”. This has at least occurrences of what is worth treating for the gold content using current techniques. Techniques that didn’t exist when this rock was first mined and therefore dumped.

Alba Minerals is finding at least occurrences of up to 11.35 grammes of gold per tonne material. In and of itself that’s definitely worth processing at current gold prices, using modern techniques.

But do not that in and of itself there. If a few thousand tonnes of such material exist then, well, that’s a difficult one. Because while it may be rich enough to process there’s not enough of it to be worth creating the processing plant. So, the continued work on evaluating that gangue, or waste tip, pile. Not just how rich in gold content is some of it but also how much of it is there which is that rich?

This is an old story in gold mining. Once a new processing technique has been devised then the first place to go and apply it is to the waste piles of old gold mining operations. This has worked again and again over generations of new technologies.

There is though a limitation to it. Precisely because it is old waste piles – and not the exploration of some new mineralisation of unknown size – there’s a natural limit to how large the find can be. That limit being the size of the waste tip of course.

Re-mining waste piles can therefore be a highly profitable enterprise but it’s always one limited in size. What we’ll have to wait for from Alba Minerals is how big that opportunity is – what’s the grade and size of the waste tip, not just some parts of it?

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.