Adyton Resources' Tim Crossley on Feni project: Lihir similarities and updated MRE due in '27

0:00Thank you.

0:30with reserves of 15.8 million ounces at 2.41 grams per tonne. So how similar is Fenni and Lahir? Tim Crossley, he is Managing Director. Tim, welcome to Mining Stock Daily. Yeah, thanks for having me, Michael. Tim, you've been drilling since 2025 at Fenni Island Project on Papua New Guinea. Can you outline the similarities between Fenni and Lahir? Yeah, sure. Look, well, it obviously sits in the same island chain. That island chain starts with a Sinbiri mine, which is a substantial operation on resource in its own right, about 8 million ounces, and then continues south-southeast to Lahir, Tanga mine, and then Fenny, and then you continue on to Bougainville and obviously the giant Panguna operation.

1:22so I guess building on that similarity the key which effectively sets the scene on the on the you know fundamentally the geological underpinnings or drivers of the system it's the age of the mineralization the same the age of the rocks the same it's the same style of mineralization it's and it collapsed at Caldera. And it's, although it's different to Simbiri, but similar to Lahir, it's also hosted in quite a geothermally active environment. So, you know, you put all those things together, similar style of mineralisation, same age rocks, you know, hosted in a geothermally active environment, it does set the scene of a very, very similar opportunity.

2:18The one point of difference being that about a quarter of a million years ago, post-mineralisation, this is, if any, had a subsequent volcano, so some of our mineralisation is undercover. So, yeah, we fundamentally believe that's probably why a significant discovery hasn't been made yet, because your kind of traditional old-school methods of identifying and prospecting through rigid spur sampling, you know, rigid soil samples isn't really going to work when part of your oil body is undercover. Now, you have an updated mineral resource estimate that you're expecting in early 2027. You were hoping to get it out early for Fennie, but you were telling the same story that a lot of people are right now, that this is backup with the assay labs.

3:09you did have a 2021 Fennie resource 1.46 million ounces at 0.7 grams per ton can you talk about what you're actually doing with this mineral resource estimate that's going to be different than 2021 how much in terms are you doing in terms of proving the resource also what you've done in terms of exploration yeah sure Mike I mean there's kind of two key objectives of the current drill program. One is we've obviously done some infill drilling to reconfirm some of the historical drilling, but also to enable a conversion of inferred to indicated. And we're very positive about that with any of the twin holes we've done, either returning better results or similar results.

3:59and then the second part or objective is to understand where the deeper high-grade zones that might be feeding the Kabang system and where does the Kabang system go because it's really only constrained by lack of drilling. So we're now drilling extensionally to the north, northeast and we're very confident that we've got the structural maps a lot more accurate now and we've identified the northern structural corridor and we've been drilling that for the last sort of three or four months and still pending some assays but some of our visuals and XRFs are showing very positive results around this northern extension and if you looked at a map of Fenny from our you know on our website for example this is in the direction towards dome and saddle where there is some old historic drilling which returns some very good grades so there is a thesis there that perhaps this this actually connects right through to there yet to be proven by further drilling so that's super exciting for us that would add substantial ounces to the to the FENI resource if if it all assays and then the other part is to test the southern extension and particularly the thesis that perhaps the Fenny Kabang resource is being driven from an offset porphyry system under Dan Margle which you'll also see on our on our whole of island maps and that's also returning some very positive results around visuals and and also from some of the more recent surface mapping I think we've got a much better understanding of the structural controls there, but again, pending assays.

5:53So what I guess in summary, Mike, is, you know, one, I think we'll definitely achieve our objectives of conversion of inferred to indicated of a material quantity. Two, I think we're very advanced in our understanding or much more advanced in our understanding of the extensions to Kabang in the north-northeast direction towards Doman Saddle and in the south-southwest direction heading towards Dan Margal and probably sort of south-east of Dan Margal, I should say. When you're moving into Indicated, are you looking also further ahead for further studies, advanced studies on Fennie? Yeah, look, I mean, if I think of a roadmap for Additon, you know, the current roadmap is let's, you know, the sprint to cash flow to get Wapala up and running.

6:55and we're very confident about achieving that by quarter four this year and then moving, which we already are, moving straight into permitting and landowner mapping and a consent for Gameta with a targeted first production in quarter one, 2028. And then pending assays at FENI and a good conversion of inferred indicated at Fenny, I see no reason why we wouldn't maybe switch our efforts straight from gameter once gameter mills up and running and doing the same thing at Fenny. So you're sort of looking at a roadmap of three mines in the next three and a half years. Have you done any metallurgical work on Fenny?

7:43Now, Newmont, I hear uses her refactory autoclave circuit. You did mention in your project page that you both share geothermal energy sources, which Newmont has developed for doing the processing at Lahir. I believe that that type of rock can be an energy-intensive process. Yeah, look, I kind of have probably a different model to what Lahir did. I mean, I think fundamentally what's changed, and I suspect if Lahir had a market that we've got today where you're seeing such a small discount for selling precious metals in concentrate versus Doure, you wouldn't build an autoclave circuit in a remote island in PNG.

8:33I mean, I think it's a case of keep it simple. so our model would be a very simple process you know mine crush grind float and sell a gold rich and copper rich concentrate into the refining market in Asia we already know from our LOIs with Wapalo that you're now seeing the payabilities of sulfide hosted cons well north of 90%, whereas five years ago they might have been low 80s. So there's not much of a discount for selling a concentrate, and I can only see that market improving with the shortage of sulfuric acid because parts of Asia and certainly parts of the world are pivoting from maybe traditional ways of getting sulfur out of oil and gas and other methods to actually extracting the sulfur out of a sulfide-hosted precious metal concentrates and putting them into an acid plant.

9:41So the combination of the shortage of sulfuric acid in the world and the huge refining capacity in China has kind of led to a perfect storm for us where we've got extremely strong demand for sulfide-hosted concentrates in our part of the world. uh at the start of this uh before we started this interview uh we were talking about boats you do have um a boat transport that's close to fenny yeah i mean uh fenny like the the development of fenny you know once you get through the the um expiration phase um would be um a combination of refurb i'm talking about access here sorry michael would be the refurbishment of the bassy airstrip which was built by SA when they did an exploration program in the 80s.

10:33That would be sort of for crew changes. And then we would support operations through large barges and then ship your concentrate out on it using a barge to ship transfer, which is very common globally and particularly in our part of the world. So you'd bring your export vessel into the island anchor in an appropriate draft position and then load your concentrate onto barges and then do a barge to ship transfer, which is actually very similar to what the Octetti mine does in Benji. Let's talk about that Ferguson Island project. That's your near-term production project and that encompasses Gamiti and Wapalu, which you have been mentioning.

11:23In your early August news release, you updated some key activities underway. Phase one, project plant modules, mining lease application. Can you talk about these dependencies as you get towards production and what you're managing? Yeah, sure. Look, we've received the environment permit and we made an amendment to an exploration license to enable a bulk sample, including testing of the flow sheet. We saw one of the biggest risks at Wapolo and we believe why Wapolo was shut down in the mid-90s was two factors really the collapse in the gold price was a big contributor but also they'd effectively built a processing circuit for an oxide ore body where the cut off from oxide to sulphides was not well understood.

12:20So we're actually building fundamentally a sulphide recovery system but we are also going to build a small scavenged oxide circuit as well. So in terms of where we're at We've commenced construction for the bulk sample flow sheet. We're well into that, probably about 75 % complete. And in terms of permitting, we really only have one outstanding permit, and that's the grant of the mining lease. And we're expecting that in September or early October. Now, the financing arrangement is a joint venture, and that's with East Vision Investment Holdings. Can you talk about, you know, and you've had recent announcements indicated resources jumping 131 % of Gametea, Walpole resources more than doubling.

13:16Can you talk about what the financing is and then also what potential upsides are for firm Additon? Yeah. So the Cavanaugh and Wapolo projects are owned under a structure which sits under a 100 % known Singaporean subsidiary, which ultimately will be an incorporated JV between Addison and EVIH. So currently the arrangements on financing is that EVIH, as part of their equity earn-in, are required to undertake all the preliminary permitting drilling works and include fund the Waipolo processing plant for a 300 ,000-rom tonne-a-year plant, commission it and get it operating at nameplate capacity.

14:11and that will be their final earning step to create that 50-50 incorporated JV at the Singapore subsidiary company. So that's a standalone pillar in our structure. It doesn't affect FENI, which is owned under a different structure. So once EVIH achieved that milestone, the JV, in a sense, is consummated And we move forward as joint ventures. And as a joint venture, we develop Gameta. But what we've also got in place with EVIH's parent company is a line of like a bridging loan, I guess you might want to call it, to fund the Gameta CapEx. Well, any of the shortfalls in the Gameta CapEx that we're not able to fund through our own cash flows at an 8 % interest rate, which effectively means that both those projects have a full financing solution to production.

15:18Lastly, Tim, is it a copper story? Is it a gold story? Gold has been, well, you know, gold is at a really nice leg up since hitting those lows last month. Also, copper has had its strength for years right now. Looking ahead to these projects, Where does Aditon sit? Yeah, interesting question. I mean, so Wapolo, I'll just go through each of the projects one by one. Wapolo is fundamentally a gold project. Gamera has gold and silver. You know, the silver credits are relatively small, but sort of$50 or$60 an ounce, it becomes a little bit interesting, but it's fundamentally a gold project. And then Fenney, still the dominant payable mineral at Fenney is definitely gold, but we are seeing and have seen significant intercepts of copper.

16:11You know, and I draw people's attention to ADK4, which was a hole we drilled in 2021 where we hit over 6 metres, I think it was 6.5 metres at 5.1 % copper within an 85 metre half percent copper, all coming with about a gram gold. So there's copper in that system. We saw a lot of copper in hole ADK3. In fact, that hole terminated in copper. I think the copper upside story is definitely not fully understood for Fenny. And, you know, pending, you know, we've still got about 8 ,000, 9 ,000 metres of assays pending, Michael. So, you know, I think people need to watch as those get released, you know, what they're going to tell us about the copper opportunity.

16:56The other thing I'll say is I'm actually on my way to Feni now with five geophysicists from Oztai, and we're about to embark on a 25-square-kilometre brown geophysics program. It's a huge program. It'll cover a large portion of the island. And a lot of that is about understanding where or if there's a deep-seated offset pour fruit to the system as a future upside drill target. Tim Crossley, I appreciate that you're somehow being held down in your project just because of what's happening with the weather, but I do appreciate you making time for Mining Stock Daily. Thanks. Thanks for having me, Michael.

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