A drill rig is turning again at Mt Egerton in central Victoria. The goldfield produced 1.29 million ounces of gold before water flooded the workings in 1906.
Gold explorer Black Horse Mining (ASX: BHL) has started the first of up to 10 holes in a program of about 4,000 metres.
BHL’s managing director David Frances told us in December it was a simple story.
“We’re looking for gold in Victoria where there’s plenty of gold and we hope to find some more.”
David Frances, managing director of Black Horse Mining
We named BHL our 2025 Small-Cap of the Year on the back of it, and we’ve waited longer than we expected for this drilling.
Black Horse Mining Restarts Mt Egerton Drilling
We’ve waited since March for BHL to drill deeper at Mt Egerton. A deep rig arrived in June and heavy winter rain cut access to the drill sites within weeks.
The rig left in July and BHL rebuilt the tracks for all weather.
BHL used the wait to reopen the Sister Rose adit. It’s a tunnel into the hillside and it had been sealed for more than a century.
Inside, the crew sampled a quartz-filled fault the miners of 1906 had tunnelled through and left behind, and it returned 1.3 metres at 10.79 grams of gold a tonne.
An old drill hole hit the same fault 14 metres further down and returned two metres at 5.13 grams. BHL calls it the Sister Rose No1 Splay and this program will drill it deeper and along its length.
The first hole runs about 400 metres and cuts across the rock layers east of the old workings, where the mine’s own records mark a lode called the Coopers Lode. BHL has drawn the hole onto a plan of the mine a government geologist made in 1906.
In central Victoria the gold tends to sit at the crests of folds in the rock and along the faults beside them, and BHL wants to find as many of them as it can before it drills deeper.
The other holes take in the old shaft locations and the deeper ground below the workings. BHL expects the program to run over the coming months and says it will update shareholders as it goes.
What a Deep Gold Hit Could Do for BHL
Mt Egerton is one of only eight Victorian mines to produce more than a million ounces from hard rock underground.
The last company to mine it was the Black Horse United Company, and today’s BHL shares its name. Its shaft was the deepest on the field at about 550 metres.
Frances told us water and the cost of mining stopped it, with gold still in the ground.
The miners of 1906 were selling gold at about US$20 an ounce, and BHL is back drilling with gold above US$4,100.
More than 90% of the drilling done at Mt Egerton since has stopped above 150 metres. The rig BHL has brought in can reach 1,000 metres.
The miners at Mt Egerton averaged about 12 grams a tonne across 1.29 million ounces, and the Sister Rose sampling returned double-digit grades from a structure they left behind. A drill hole carrying grades like those from below the old workings would show the gold keeps going at depth.
Fosterville sits in the same corridor of Victorian goldfields, and its richest zone turned up only after drilling pushed past 800 metres.
BHL built the first hole to map the rock as much as to find gold, so its assays may be modest and the hole can still do its job. The holes aimed at the Sister Rose No1 Splay and the deeper ground carry more of the weight.
Why We’re Holding Black Horse Mining
BHL shares ran to 67.5c earlier this year ahead of the first assays. The first program hit gold close to surface, including a hit at 46.2 grams, and the shares have since drifted back under the 20c float price while the rig sat idle.
BHL trades at 18.5c for a market cap of roughly $12 million. It had $5.2 million in the bank at the end of June.
Take out the cash and investors are paying about $7 million for a goldfield with more than a million ounces of production behind it. We see that as good leverage.
We think one good hole at depth could move a company this size a long way, and the drilling starts now.
BHL’s September quarterly is due by the end of October and will show how much cash is left after the adit work.
We bought at 20c for the ground under the old mine and the shares are below the price we paid. We’ve waited a while for this one to start drilling, and we’re excited to see what lies beneath.
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