Ace History Desk – In short: Gold exploration has hit record levels in Western Australia.

The Australian dollar gold price passed $5,000 an ounce for the first time last April and has continued to rise.

Demand for drill rigs is growing as companies search for new deposits.

Geologist Karen Wellman admits she would probably find better odds at the casino. 

As one of the few female chief executives of an ASX-listed exploration company, Perth-based Dynamic Metals, she understands the realities of drilling for gold in outback Australia better than most.  

It is high-risk game, but the potential rewards are also great.   

The company that made Australia’s last major gold discovery, the 6-million-ounce Hemi deposit in WA’s Pilbara, was bought out for $5 billion. 

“Exploration is a bit like horse racing,” Ms Wellman said.  

“When you’re betting, you wouldn’t pick a random horse. 

“You study the form, the jockey, the stable it comes from, the barrier it’s running from, and use all those things to decide where to invest your money.  

“Exploration is kind of the same. You study the ground, the neighbours around it, and the company — do they have the money to drill and to continue to drill? Are they backed by a good team of people?”

Karen Wellman overseeing drilling at Dynamic Metals’ Widgiemooltha project. (ABC Goldfields: Jarrod Lucas)normal

Record exploration spend

The surge in Australian dollar gold prices in the past year is being reflected across regional Western Australia, where gold exploration has hit record levels.   

New figures from the Australian Bureau of Statistics show $380 million out of a total spend of $723 million on mineral exploration in WA during the December quarter was devoted towards searching for gold. 

It was the biggest spend since records began in 1988 and a third successive record quarter for gold exploration, up from $348 million in the September quarter and $322 million in the June quarter.

Roadside signs pointing to the location of a working drill rig are a constant reminder of increased exploration activity in the Goldfields. (ABC Goldfields: Jarrod Lucas)normal

Association of Mining and Exploration Companies chief executive Warren Pearce said investment had kept pace with metal prices.  

The Australian dollar gold price surpassed $5,000 an ounce for the first time in April last year, then hit $6,000/oz in October and passed $7,000/oz in January. 

“It really sort of flooded in around October, November last year. Capital markets reopened looking at gold exploration as a place to put money, as a consequence of uncertain global times,” he said. 

“Hopefully, with those capital raisings taking place through the end of last year and early January, we’ll be able to fund exploration operations for the next two to three years.”

Drillers working at the Widgiemooltha gold project in WA’s Goldfields. (ABC Goldfields: Jarrod Lucas)normal

Demand for drill rigs

One of Australia’s biggest drilling companies, DDH1, operates 72 drill rigs across its fleet, specialising in diamond drilling for commodities like gold.

It is called diamond drilling because industrial diamonds embedded in the drill bit cut through the hard rock to produce what is known as a core sample.  

DDH1 general manager Peter Crennan said they had sourced several rigs from interstate to meet demand from the WA gold industry.  

“We have seen glimpses of this before, but the gold industry is as busy as we’ve ever seen it,” he said.

“The drilling activity has been picking up steadily over the last 12 or 18 months … we’re not fully utilised just yet. 

“Availability is still there, but it is becoming tighter and tighter.” 

Surbiton Associates director Sandra Close was a geologist and investment banker in the resources sector for decades before founding a Melbourne-based gold consultancy. 

Sandra Close has seen the industry change immensely since she started as a geologist in 1967. (ABC Goldfields: Jarrod Lucas)normal

She said she had not seen gold exploration expenditure like current levels for decades.

“In 1987, gold exploration accounted for 70 per cent of total mineral exploration in Australia,” Dr Close said.  

“And of course, that led to considerable production and really was the run-up in the modern gold boom in the 80s through to the 90s.

“Normally, you would hope that sort of exploration certainly leads to more finds. There’s a hell of a lot of activity.”

Gold in those hills

At Widgiemooltha, 630km east of Perth, Ms Wellman’s Dynamic Metals is using investor and taxpayer funds to explore in WA’s latest gold rush. 

It is in the same backyard that produced the famous Golden Eagle nugget — the biggest found in WA.

While prospectors have combed over the ground for generations, modern explorers are more interested in the potential for large-scale mineralisation hidden beneath the surface.  

The tenements are located along the same geographical structure, known as the Boulder-Lefroy fault, which produced multi-million-ounce deposits at the nearby St Ives camp and Kalgoorlie’s Golden Mile.  

The 1,135-ounce Golden Eagle was naturally shaped like an eagle with outspread wings, and created a national sensation after its discovery near Widgiemooltha in 1931. (Supplied: National Library of Australia)normal

To test for potential riches is expensive, with four diamond holes costing about $600,000 to drill.

Each were planned to reach a depth of up to 350 metres.  

Up to $175,000 of the drilling costs is being covered by the WA government’s Exploration Incentive Scheme.  

Drill rig offsider Adrian Parise working in bushland near Widgiemooltha. (ABC Goldfields: Jarrod Lucas)normal

Ms Wellman said while there was a staged, scientific approach to exploration, there was always an element of luck.  

“You do have better odds at the casino, but it’s part of the adventure when you get your assays back and you’ve got a sniff of gold,” she said.

“It’s like unlocking a puzzle. There’s lots of little bits of information and you need to put the pieces together to find out where the gold is sitting.

“The more holes you sink, the better your chances of finding something … and there is no doubt there is the potential for more million-ounce discoveries in this region.” 

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