Mining Approval Pending: What’s Next for Lunnon Metals’ Lady Herial Deposit?

Resource Update and Strategic Significance

Lunnon Metals Limited (ASX, LM8) has announced a significant update to the Mineral Resource Estimate (MRE) for its Lady Herial gold deposit, located within the Kambalda Gold & Nickel Project (KGNP) in Western Australia. The updated resource now stands at 0.56 million tonnes grading 2.0 grams per tonne gold, equating to 36,300 ounces. Notably, the Measured Resource category has expanded to 0.23 million tonnes at 2.6 g/t Au, representing 19,200 ounces, reflecting increased confidence following extensive, close-spaced drilling campaigns.

This resource upgrade is a critical milestone for Lunnon Metals, as it satisfies a key condition precedent under the Ore Purchase Agreement (OPA) with Gold Fields Limited, the company’s major shareholder holding a 30.15% stake. Gold Fields’ endorsement of the updated MRE validates the geological and modelling approach undertaken by Lunnon Metals and paves the way for the next phase of project development.

Geological Context and Drilling Strategy

Lady Herial is an outcropping, high-grade gold deposit characterized by thick mineralized zones within the Defiance Dolerite host rock. The deposit comprises multiple stacked structures, the Upper, Middle, Lower, and a recently identified Northwest Prospect (NWP), with mineralization remaining open down plunge, suggesting potential for further expansion.

Lunnon Metals’ drilling strategy focused on achieving grade control spacing (approximately 8m x 6m), enabling robust geological modelling and de-risking of the resource. Over 400 drill holes, including reverse circulation and diamond drilling, totaling nearly 17 kilometers, have informed the updated MRE. This close-spaced drilling has allowed for refined sub-domaining of high-grade lenses and improved resource classification.

Economic Viability and Mining Plans

Whittle open pit optimisations and detailed mine design studies confirm that Lady Herial offers robust economics with a high potential for eventual economic extraction. The optimal pit shell captures 92% of the Measured Resource ounces, underpinning confidence in near-term mining feasibility. The deposit’s shallow depth, proximity to existing haul roads, and adjacency to the Lefroy Gold Plant, operated by Gold Fields’ subsidiary SIGM, further enhance the project’s attractiveness.

Commercial terms under the OPA stipulate that all mined ore grading above 0.5 g/t Au will be sold to SIGM for processing, with Lunnon Metals receiving 70% of free cash flow after cost recovery. Metallurgical test work indicates a high gold recovery rate of 91%, supporting the processing strategy. Regulatory approvals, including mining proposals and vegetation clearing permits, have been submitted and are expected imminently, enabling the company to commence site pre-development activities promptly.

Historical and Regional Significance

The KGNP sits within the prolific Kambalda-St Ives gold camp, a region with a rich history of gold and nickel production dating back over a century. While Lady Herial itself has not seen modern production, historical workings from the 1920s indicate the presence of high-grade gold mineralization. The current resource update and development plans position Lunnon Metals to capitalize on this legacy with modern exploration and mining techniques.

Managing Director Edmund Ainscough highlighted the rapid progression from discovery to near-production readiness, emphasizing the strategic timing amid strong gold prices. The company plans to update its Scoping Study incorporating the new resource data and proceed to a final investment decision upon receipt of regulatory approvals.