A massive resource upgrade that has thrust eyes back on 2025 gold IPO Ballard Mining (ASX:BM1) is just the start, its managing director says.

The gold developer, which spun out of Delta Lithium (ASX:DLI) with a massive head start last year – 1.1Moz of gold in the heart of the WA Goldfields, with approvals in place to mine and build a processing plant – has invested heavily in drilling, with $50m committed to the task this year.

It’s been rewarded with not one, but two resource upgrades, the latest a 56% lift that has taken its bounty to 20.4Mt at 2.8g/t for 1.84Moz, with its key Baldock deposit up 35% to 12.2Mt at 3.5g/t for 1.36Moz gold.

But boss Paul Brennan says after adding those ounces at just $36 a pop, a 2Moz target is in the company’s line of sight.

“There have been two milestones that we’ve been talking about or guiding to for some time,” Brennan said.

“One was the 1.5Moz and that would equate – if you use a standard industry conversion rate from resource to reserve – to an eight-year mine life with our top-down goal of 100,000 ounces (per annum).

“The board said the minimum they wanted to see for us to roll through to a feasibility and FID was eight years.

“So the 1.5 million ounces would have ticked that off and then the 2 million ounces equates to a 10 year mine life.

“The result is good for two reasons. We’re well north of the 1.5Moz, so that will equate to a mine life beyond that initial eight years.”

The current update also only includes drilling data up to June 30, Brennan noted.

“So we’ve done another 60-odd thousand metres of drilling since June 30 with 40,000 assays in the lab, and as that comes through, potentially we’re already there.”

Drilling blitz

Ballard’s board and management have ensured they don’t die wondering.

The recent update incorporates ~125km of reverse circulation and diamond drilling.

Another could be on the cards for the March quarter, Brennan says, with a feasibility study, reserve and potential final investment decision planned for mid-2027.

It’s been a rapid rise, with the old Red Dirt Metals (later rebadged Delta Lithium) starting with 141,000oz in resources in 2021.

More than 1Moz has been added in the past two years.

Outside Baldock there’s 147,000oz at West Knell, up 258% on the previous update, 124,000oz at Golden Vale, up 359%, 29,000oz at Jupiter, up 164%, and over 100,000oz at a swathe of smaller deposits.

The 3.5g/t resource grade at Baldock is another key factor in Mt Ida’s attractiveness as a future development.

The portion of Ballard’s resource in indicated that is considered amenable to open cut mining sits at 3.53Mt at 3.9g/t for 437,000oz. Strong open pit grades in the modern day, when such deposits often run sub 1g/t. 85% of Baldock’s open pit resource – 516,000oz at 3.5g/t – sits in the indicated category.

With ~$62m in the bank in the middle of the year, another 115,000m of infill drilling which will convert inferred resources to indicated – necessary to table a reserve – is due to be completed by Christmas.

Brennan says leading a gold development is not easy. But he is confident the level of work going into exploration and resource definition will pay off in the form of a robust project ahead of financing.

“(Even) some of the little things that non-mining people and non-mining investors wouldn’t understand. One of the scars I wear is water, so just having enough water to make sure that your processing plant is operating where you need it to,” he said.

“We’re just trying to do that sensible de-risking in the background.

“That’s come from some of those hard lessons learnt.

“We’ll make sure we’ve got plenty of diamond drilling that informs our resource models, not just all RC.

“We’ve got the money we need to do that. We’ve got a mature board … they’re are all seasoned mining guys and they get it.”

And Ballard plans to drill much deeper to expand the 847,000oz of underground resource at Baldock, with renowned structural geologist Dr Sarah Jones comparing Mt Ida to Gold Fields’ +10Moz Agnew camp.

That operation runs to 1.4km deep, suggesting there could be upside as Ballard drills deeper.

Great expectations

Of course, it may not get to that point, such is the M&A potential around Ballard.

The most obvious deal would be a tie-up with Aurenne Group, the privately-owned gold miner which owns the Bottle Creek gold mine and plant just 6km down the road. Aurenne took a 9.6% stake in its neighbour in October last year.

And surrounding both in multiple directions are established listed gold miners Genesis Minerals (ASX:GMD), Ora Banda (ASX:OBM), Gold Fields and more.

It’s the sort of optionality that professional investors like – there are multiple exit and growth opportunities.

“We continue to talk to (Aurenne), they’re our neighbour, we share an aerodrome, they’re currently giving us water, we’re undertaking a public road diversion so there’s a good relationship,” Brennan said.

“We can’t control that process, we’re not even sure if Aurenne is indeed a seller.

“All we can do is just stay in our wheelhouse and that’s just continuing to grow our resource to genuine standalone scale.

“Of course, we’d love a deal with Aurenne because that just brings everything forward by 18 months to two years. But we still think there’s a compelling standalone option.”

Expectations of gold developers have ramped up in recent years amid a gold price boom. Bullion is now running at US$4161/oz (A$5930/oz).

While sentiment has been knocked about by the Iran War and a US rate hike, the economics of a gold mine like Mt Ida are extraordinary compared to, say, a decade ago, when prices were closer to A$1650/oz.

Back then Brennan was the general manager of the Carosue Dam gold mine as it poured its millionth ounce under the ownership of Raleigh Finlayson’s Saracen Mineral Holdings.

In the early days Brennan recalls the target was for the mine, now in Northern Star Resources’ (ASX:NST) vast Kalgoorlie portfolio, to generate A$40m in free cash flow.

Should gold prices hold around spot levels Ballard’s Mt Ida would generate multiples of that. Modelling from Canaccord Genuity suggests an eight-year ‘base case’ mining scenario would generate an average A$463m in FCF, producing ~96,000ozpa.

“We’re in a pretty good position, I think,” Brennan said.

“We won’t be rushed. People ask us about toll treating, ore purchase agreements and those sorts of things. You’re just giving away value.

“We’ll just continue to prosecute the standalone option because it is so compelling on … those free cash flow metrics.”

Unlocking value

Ballard currently runs at a market cap of around $343m and while it’s been a wobbly ride for gold developers this year, currently sits around 35% above its 2026 lows after a recent lift in its share price.

There is an overhang, with around 34% of its shares held under escrow by Delta until July next year. Large shareholders Mineral Resources (ASX:MIN) and Gina Rinehart’s Hancock Prospecting also entered the spin-off via their investments in the lithium developer.

Add in Aurenne and other instos and around 70% of the register is sticky.

But Brennan is confident Delta will be a responsible steward of its stake, with any selldown once it comes out of escrow bringing the promise of enhanced liquidity.

With that in the background, Brennan believes Ballard’s growing resource base and advanced permitting status justify optimism that it will grow from here.

“Ballard’s a pretty simple story. One of our key strengths, apart from the grade is our fully permitted status,” he said.

“So we’ve got everything we need to start mining. And as we’ve been talking about, we’ll just continue to patiently build up the resource base in the background for that standalone option.

“The grade, the permitting and the optionality are the three things that we’re very fortunate to have.”

Analysts agree.

Argonaut’s Patrick Streater has a spec buy rating on Ballard and lifted his price target from $1.20 to $1.30 last week, almost double the firm’s current share price.

Canaccord Genuity’s Paul Howard maintained a $1.50 price target.

Read the full Stockhead article here.