Alloy Resources expecting big things to come at Horse Well

THE INSIDE STORY: Gold producers, and near-term producers, are enjoying a buoyant run at present, which means if you have an appealing exploration play it is certain to attract some attention.

Alloy Resources (ASX: AYR) is one company fortunate enough to have such a project – the Horse Well gold project in the located in the Warburton Mineral Field of Western Australia.

The project is in a Joint Venture with Doray Minerals (ASX: DRM), a company that has taken its Andy Well gold mine to production hitting the upper end of guidance for 2016FY of 78,000 to 85,000 ounces and, more recently, developed the Deflector mine where it completed a first gold pour.

Doray has displayed a strong commitment to the Horse Well project where it has already earned 60 per cent interest following a two year exploration spend of $2 million.

Under terms of the Joint Venture agreement the project must have a further $2 million spent during the 2016 calendar year, with Alloy electing to contribute it’s 40 per cent.

There is little surprise Doray would be interested in the Horse Well project as it sits in a good neighbourhood in the northern most part of the Yandal/Millrose Greenstone belt that hosts a number of multi-million ounce gold projects, such as the Jundee, Bronzewing, and Darlot-Centenary gold mines.

The Horse Well portion of the greenstone belt has seen limited exploration, mostly along the southern part, where Alloy and previous owners have identified JORC gold resources in near surface deposits.

This has resulted in a current JORC 2012 gold resource at Horse Well of 846,000 tonnes at 2.76 grams per tonne gold for 75,100 ounces.

Alloy’s landholding is impressive at one thousand square kilometres of contiguous tenements fifty kilometres north of Northern Star’s five million ounce Jundee mine.

The company controls some sixty strike kilometres of the Millrose Greenstone Belt, which is essentially the northern arm of the Yandal Belt.

“We have big slabs of land that have never had a drill, soil or rock chip sample taken,” Alloy Resources managing director Andy Viner told The Resources Roadhouse.

“Because of the sand cover there is going to be lots and lots of systematic aircore drilling covering kilometre after kilometre of the greenstone belt – that’s just what we have to do.”

Alloy recognised the early potential for the unexplored country along this belt to yield new discoveries.

All that was required was for it to put the drill holes in the ground at the correct places.

This occurred in 2014, when drilling carried out by Doray, hit promising drill intersections at the Dusk til Dawn prospect of up to 65 metres at 2.6 grams per tonne gold, including 13m at 8.17g/t gold.

Further RC drilling confirmed Dusk ‘til Dawn to be a new greenfields gold discovery by intersecting thick zones of gold mineralisation.

Encouraged by the drilling results the JV undertook a round of regional work, which identified a number of promising new targets within the project, including the Django, Warmblood South and Celia Shear areas.

Of these targets, Django in the northern part of the project, has emerged as a contender and was subsequently subjected to a program of infill air-core drilling over a three kilometre long plus-100 ppb gold anomalous area, on 200 metre spacing lines that confirmed the existence of the trends the JV had identified.

The drilling indicated the original understanding of the trend had changed slightly, insomuch that instead of the anomaly being one trend it has broken into two – being the east trend and the west trend.

The key significance the JV took from these air-core results was that they were similar to what had been achieved at Dusk til Dawn, which ended up being a new gold discovery.

“We have just completed a total of 25 RC holes for 4,738 metres at the Django prospect,” Viner said.

“We have a very willing Joint Venture partner in Doray Minerals, who are extremely keen on the prospectivity of the project and are going to keep testing promising targets like Django as they emerge.

“I think the next 12 months will be a very exciting period for Horse Well as I anticipate there could be a very concerted effort to complete the first pass geochemical drilling of the entire project.”

The RC drill testing of Django air-core anomalies is just the initial part of an aggressive exploration campaign the JV has planned for the Horse Well project, as part of the required $2 million in JV expenditure during the 2016 calendar year.

The earlier drilling at Django proved the western trend extends over a strike length of at least 1.5km and a width of 300m.

Alloy’s interpretation of the results determined there to be two anomalies, which it described as ‘pods’, situated within the trend.

Of these the southern one came out stronger returning results of:

HWAC 112
22 metres at 1.4 grams per tonne gold;

HWAC358
12m at 0.2g/t gold from 48 metres downhole (mdh);

HWAC396
4m at 1.1g/t gold from 44mdh; and

HWAC633
8m at 0.4g/t gold from 52mdh.

Drilling showed the eastern trend breaking up into three subparallel zones within the larger three kilometre long zone with results including:

HWAC395
8m at 0.5g/t gold from 60mdh;

HWAC636
4m at 0.5g/t gold from 60mdh; and

HWAC688
8m at 0.3g/t gold from 72mdh.

“Everywhere we go we are getting gold – so I guess the way the Joint Venture is looking at it is that there could be a big deposit anywhere out there,” Viner said.

“We are still concentrating on the northern part of the project at this stage, which is the Dawn prospect areas

“We have already shown from aricore drilling carried out at Django that here is gold mineralisation present over a number of strike kilometres.

“But when you look at the drill coverage and the fact we are getting anomalies starting to be found on the margins of this area, I think that indicates there is a big gold system out there – so we have a lot of ground we still need to cover.”

Alloy is confident the Horse Well project will continue to behave as it has to date, in that it has thrown up very few exploration surprises to the JV with everybody staying on script.

“The exploration has been very straight forward,” Viner assured The Roadhouse.

Viner remains confident Doray will continue to fund aggressive exploration programs on the Joint Venture after this year.

This confidence could be well-placed with Doray Minerals managing director Alan Kelly telling The Roadhouse his company spent around $11 million on exploration last year and, pending budget approval, is looking at spending in the realm of $15 million this year.

“They now have 60 per cent of the project and I’m fairly certain that their target is to establish a standalone million ounce area that would support a new one hundred ounce per year gold project,” he said.

“That’s good by us, because that’s what we’re here for too and we think we are well on the way to reaching that goal.”

Alloy Resources Limited (ASX: AYR)
…The Short Story

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DIRECTORS and MANAGEMENT
Andrew Viner, Kevin Hart, Andre Marschke

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