Laconia’s Peruvian exploration continues to deliver

THE INSIDE STORY: Anybody suggesting a decline in mineral exploration activities by junior companies should be careful not to do so near the offices of Laconia Resources (ASX: LCR).

Recent data from the Australian Bureau of Statistics has shown a decline in the exploration efforts of the junior sector.

However the ABS also said, “The largest contributor to the fall in the trend estimate this quarter was Western Australia.”

Laconia’s major focus is its Kimsa Orcco project in Peru, which is the amalgamation of Laconia’s 100 per cent-owned Rasuhuilca project and the Huaco Cucho project, over which it has an option to earn an 80 per cent indirect interest.

The project consists of two large areas of alteration zones, which Laconia has identified as the Northern Kimsa Orcco prospects and the Southern Kimsa Orcco prospects.

 

All of Laconia’s Patacancha permits plus the 80 per cent Earn In Option Huaco Cucho permits No 1, No 2 encompass the Southern Kimsa Orcco prospects.

The balance of the 80 per cent Earn In Option Huaco Cucho permits surround the Northern Kimsa Orcco prospects.

The project currently has an Inferred Mineral Resource estimate of 360,000 tonne at 1.97 grams per tonne gold and 179g/t silver at a 2.5g/t gold-equivalent cut-off.

Laconia has recently announced a non-renounceable entitlement rights issue to raise approximately $1.7 million.

The company indicated it intends to do what the ABS claims its WA-focused peers are reluctant to do, which is to use the proceeds of the raising for exploration drilling and on-going exploration of the Kimsa Orcco copper-gold-silver project.

“We are not exploring in the Fraser Range of WA, which at present does make us reasonably unfashionable, however we are sitting on top of a highly-mineralised system,” Laconia Resources managing director Ian Stuart told The Resources Roadhouse.

“We know we are because of the consistently high-grade results we are generating from the review work we are conducting.

“To put that fashion into context, it is only unfashionable to those who aren’t interested in investing beyond local sentiment.

“The only exploration ground BHP Billiton currently has left is in the Central Andes, and Laconia is pleased to be as unfashionable as one of the world’s largest mining houses. That’s why we are in Peru.

“The country has a history for producing large copper-gold-silver systems, and we believe we could possibly looking at the next one.”

Laconia has been busy all over the Kimsa Orcco project this year producing a steady flow of news from all corners of the tenements.

The company collected surface channel samples at the Española 1 and Fortuna prospects, located within the southern portion of the project, in April this year, which confirmed historic high-grade copper-gold-silver mineralisation hosted by enargite-quartz-pyrite veins and breccias.

 

The channel sampling followed the compilation of a database of results from surface and adit sampling by previous companies, such as Cominco Peru SA and Buenaventura Ingenieros SAC.

The historic results highlighted the prospectivity throughout the Southern Kimsa Orcco prospects for copper-gold-silver mineralisation.

Channel sampling of surface outcrops by Laconia at the Española 1 and Fortuna prospects returned grades that validated those in the existing dataset.

Surface sample results at Española 1 prospect include:

0.87 metres at 8.12% copper, 4.96 grams per tonne gold, and 142g/t silver;

0.83m at 7.07% copper, 7.12g/t gold, and 80g/t silver;

0.85m at 2.38% copper, 2.43 g/t gold, and 63 g/t silver; and

0.52 m at 1.88% copper, 7.02g/t gold, and 94g/t silver.

Surface sample results at Fortuna prospect include:

1m at 8.19% copper, 4.43g/t gold, and 338g/t silver; and

1m at 3.63% copper, 0.98g/t gold, and 257g/t silver.

Further review of historic surface channel sampling of mineralised breccias and additional gold-silver vein systems east of Española 1 prospect concentrated on three different mineralised structures sampled during previous explorer, Buenaventura’s 1999 field campaign.

These included:

The Pebble Dyke, a breccia zone that can be traced for 500m from the Española adit with minimal sampling.

The Pebble Vein, a 700m system of gold-silver veining along the ridge line above the Española 1 prospect; and

Breccia 18, a poly-metallic, hydrothermal breccia at the intersection of the Pebble Vein and the Pebble Dyke.

The Breccia 18 samples are notable for the high content of base metal mineralisation (in particular lead hosted in the mineral galena) and outstanding gold and silver values.

There are additional breccias nearby that require priority sampling based on these results.

The Pebble Dyke, Breccia 18 and Pebble Vein prospects lie within Laconia’s 100%-owned tenement, Patacancha 3.

“The identification of this intensely mineralised gold-silver-copper-lead-tellurium breccia is very exciting,” Stuart said.

“Hydrothermal breccias are often associated with the intrusive process of porphyry copper bodies, and are typically situated on the margins of porphyry systems.

“The presence of these breccias further support Laconia’s view a large porphyry system exists at the Kimsa Orcco project.”

Laconia identified parallel vein sets at Barita, which it incorporated with new sampling results from Fortuna and Española 1 into a near-surface model of mineralisation at the Favi Vent Zone.

So far this has identified over 850m strike of high-grade copper-gold-silver veining, which Laconia considers to open many possibilities for future development of the project, including open cut potential.

“Being able to identify the presence of such high-grade copper and precious metals is particularly pleasing,” Stuart said.

“The scale and high-grade near surface mineralisation within the expanding Favi Zone bodes well for a stand-alone deposit in its own right.”


Laconia Resources Limited (ASX: LCR)
…The Short Story

HEAD OFFICE
Suite 2, Level 1, 47 Havelock Street
West Perth WA 6005

Ph:  +61 8 9486 1599
Fax: +61 8 9486 7899

Email: info@laconia.com.au
Web: www.laconia.com.au

DIRECTORS
Matthew Howison – Chairman
Ian Stuart – Managing Director
Matthew Edmondson – Non-Executive Director

MAJOR SHAREHOLDERS
Josephine Patoir             4.3%
Slade Technologies Pty Ltd    4.3%
Ian Stuart                            2.9%

SHARES ON ISSUE
483.7 million

MARKET CAPITALISATION
$2.9 million (at 4/9/14)

Gold, Gruyere and Toto

THE INSIDE STORY: For those unfamiliar with the journey of emerging gold miner Gold Road Resources (ASX: GOR) it is worth taking a quick look back at how the company has reached its current value.

Gold Road owns a healthy percentage of the Yamarna greenstone Belt, covering approximately 5,000 square kilometres of the Yilgarn Craton, located 150 kilometres east of Laverton in Western Australia.

 

The company has always considered the Yilgarn Craton to be the region most likely to become Australia’s next major gold region.

Its confidence in the region was heartened in 2010 when a report by Geological Survey of Western Australia found geology of the north eastern Yilgarn Craton – especially the Yamarna Terrane – to be similar in age and character to the Kalgoorlie Terrane.

There’s really no need to dwell on the success of Kalgoorlie as a gold producing region, except to acknowledge past gold production from the Kalgoorlie greenstone belt exceeds one hundred million ounces and continues to deliver new discoveries 130 years after its initial discovery.

Gold Road wasted little time in getting down to business at Yamarna and quickly established a JORC Mineral Resource of over 1.3 million ounces gold that subsequent studies demonstrated could be mined economically.

The company identified a pipeline of more than 100 gold prospects encountering grades up to 2,500 grams per tonne gold.

From this, six high-priority Gold Camp Targets were earmarked for prioritised exploration.

Drill testing of the first two of these Gold Camp Targets in late 2013 has resulted in four new discoveries.

In early 2013 Gold Road had entered an exploration joint venture with Sumitomo Metal Mining Oceania (a subsidiary of Sumitomo Metal Mining Co. Limited), in which Sumitomo Metal Mining can earn up to 50 per cent interest in Gold Road’s South Yamarna tenements, approximately 2,900 square kilometres.

The first Gold Camp Target Gold Road drilled tested in 2013 was the South Dorothy Hills Trend which yielded the YAM14 and the recent Gruyere gold discoveries.

The Gruyere discovery is situated some 25 kilometres north-east of the more advanced Central Bore project, and exhibits two different mineralisation styles not seen before in the Yamarna Belt.

Gold Road considers, that the results it has achieved so far at Central Bore and Gruyere confirms the potential for the Dorothy Hills Trend to host further substantial gold deposits.

It could be said the company has been almost solely responsible for keeping the resource drilling sector alive with up to seven drill rigs operating at any given time, providing a constant flow of drilling results encountering a succession of high-grade gold intersections.

 

Recent drilling identified a 3km long and up to 1.2km wide geochemical gold anomaly grading over 10ppb gold between the Gruyere deposit and the YAM14 prospect that is coincident with the Toto prospect area.

The anomaly sits along the trend of the Dorothy Hills Shear Zone, which hosts the Gruyere deposit that is only 2km north.

Internal to the greater anomalous zone are three parallel north‐south zones at greater than 15ppb gold of equivalent dimensions and gold intensity to the initial Gruyere discovery, which was identified using the same Interface RAB techniques.

“We have taken a great deal of confidence from the identification of this anomalism,” Gold Road Resources executive chairman Ian Murray told The Resources Roadhouse.

“It was identified during an Interface RAB program we recently carried out at the Toto prospect and it appears to be larger than both the original anomalies over Gruyere and YAM14.”

Although Toto has generated a great deal of excitement Gold Road has maintained a strong focus on working Gruyere up with the aim of announcing a maiden Mineral Resource estimate in the upcoming September quarter.

The company recently completed three deep diamond holes along strike of the deposit, which were successful in determining a south plunging orientation to the higher grade mineralisation located along the central/eastern zone of the Gruyere Tonalite.

“The holes did achieve what we had designed them to,” Murray said.

“That was to test the continuity of mineralisation along the strike of the deposit and to determine potential for deep extensions down plunge of the higher grade mineralisation we had previously identified between the North Zone of the deposit and the previous deepest intercept.”

“The exceptional grade continuity and scale of the Gruyere deposit continues to be demonstrated.”

Total mineralised intersections in these most recent diamond drill holes include:

14GYDD0012A
243.3 metres at 1.2g/t gold from 45m;

14GYDD0012B
302m at 1.31g/t gold from 139m; and

14GYDD0013B
339.9m at 1.54g/t gold from 135.1m.

All holes ended in mineralisation.

“The continued expansion of the Gruyere deposit and the recent discovery of the Toto geochemical anomaly nearby have strengthened our belief in the large potential gold endowment of the South Dorothy Hills Trend,” Murray continued.

“We look forward to releasing the Gruyere deposit maiden Mineral Resource Estimate.

“We also can’t wait to get in and drill test the new Toto anomaly.”

In order to gain a deeper understanding of the hardness and competency of the different ore types present in the Gruyere deposit, Gold Road carried out a comminution test program earlier this year.

Approximate 500 kilograms of selected drill core samples from Gruyere, including samples of whole drill core representative of Oxide, Transitional and Fresh ore types underwent Unconfined Compressive Strength (UCS) determinations.

While this was happening samples of drill core representative of Saprock, Transitional and Fresh ore types underwent a comprehensive comminution test program consisting of:

Bond Abrasion Index determination;

SAG Mill Comminution Test, including SG determination;

Bond Rod Mill Work Index determination; and

Bond Ball Mill Work Index determination.

The test results demonstrated the Gruyere mineralisation host rock (Gruyere Tonalite) possesses rock properties that are amenable to conventional crushing and grinding circuits with no considered major risk or flaws.

This was just the results Gold Road was hoping for and armed the company with further confidence to progress to a Scoping Study.

“These results confirmed our understanding of the likely behaviour of the Gruyere mineralisation under processing conditions,” Murray said.

“They will play a very important role as a vital component of the information required for the Scoping Study.”

“We are determined to develop the Gruyere deposit into a major gold producing project and we will continue to diligently work through, and publish, the essential technical details required to develop an attractive business case for the continued progress of the Gruyere project to our loyal shareholders.”

Presently there aren’t too many junior exploration companies offering as much to look forward to as Gold Road.

The company’s immediate focus is the Gruyere project and the completion of a maiden Mineral Resource estimate scheduled for the September 2014 Quarter.

Once that has been ticked off the company expects to start a detailed Scoping Study on the project, incorporating metallurgical test work, geotechnical studies, environmental studies, and mining assessments, all of which it has already commenced.

Gold Road aims to have the Gruyere Scoping Study completed by the March 2015 Quarter.

There will be scarcely time for the company to catch its breath with further regional exploration already underway within the South Dorothy Hills Camp.

Regional scale reconnaissance program have been completed over two structural trends to the south (Gruyere Corridor) and southwest (MCS) of Gruyere.

And, of course, then there is Toto…

Gold Road Resources Limited (ASX: GOR)
…The Short Story

HEAD OFFICE
22 Altona Street
West Perth WA 6005

Ph: + 61 8 9200 1600
Fax: +61 8 9481 6405

Email: perth@goldroad.com.au
Website: www.goldroad.com.au

DIRECTORS
Ian Murray, Ziggy Lubieniecki, Russell Davis, Martin Pyle

MAJOR SHAREHOLDERS

Van Eck    6%

SHARES ON ISSUE
Approx. 515.42 million

MARKET CAPITALISATION
Approx. $142 million (at 10/7/14)

 

Nickel shines as Rox stars

THE INSIDE STORY: Rox Resources (ASX: RXL) has timed its run nicely to discover the nickel project all other junior nickel explorers are chasing.

The nickel market has emerged from a five-year hiatus with LME nickel futures recording a 15 percent gain in April, the biggest monthly gain since September 2012.

Most analysts credit the run to price pressures caused by increasing supply tightness thanks to the implementation of Indonesia’s export ban on unprocessed ores and Russia’s activities in Ukraine.

Australia’s current nickel romance began in July 2012 when Sirius Resources (ASX: SIR) discovered its Nova and Bollinger deposits and was duly anointed as the Prince Charming of the Fraser Range region of Western Australia.

Soon every company along strike and within cooee began to flirt with the market extolling their respective virtues and demanding an invitation to the Fraser Range dance.

That’s not to say all companies in the area are to be compared to the Ugly Sisters, but there are probably too many not likely to replicate the success of the region’s hero.

Like all good stories, however, this one does have a Cinderella, it’s just that she lives some 900 kilometres to the north in the North Eastern Goldfields region and is better known as the Mt Fisher gold-nickel project of Rox Resources (ASX: RXL).

“We are really excited about where Rox, as a company, is at the moment,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.

“We have a couple of really strong projects, including the Mt Fisher project and the Reward zinc project in the Northern Territory.”

The Mt Fisher gold-nickel project is located 500km north of Kalgoorlie and covers an area of 658 square kilometres, 488sqkm of which is 100 percent-owned by Rox with the company holding an option to purchase 100 percent of the remaining 170sqkm.

Rox’s original target at Mt Fisher was gold, however its focus shifted after its discovery of nickel sulphides at the Camelwood deposit in December 2012 proved too significant to ignore.

Rox has since established a JORC 2012 Mineral Resource at Camelwood of 1.6 million tonnes at 2.2 percent nickel.

The Resource consists of an Indicated Mineral Resource of 0.6 million tonnes at 2.4 per cent nickel and an Inferred Mineral Resource of 1Mt at 2.1 percent nickel for 34,600 tonnes of contained nickel.

“Our main focus in on the Fisher East nickel project, which is really all about trying to define a big enough resource to start thinking about developing a mining operation there,” Mulholland said.

“We only discovered the nickel 18 months ago, and the first thing we did was complete the drilling that allowed us to define the mineral resource of about 35,000 tonnes of contained nickel.

“Our focus now is on increasing the amount of contained nickel at the project.

“The grade is there, we have already established that, but it is important now to establish 100,000 tonnes of contained nickel to enable us to develop this project into a mine with a ten year mine life producing 10,000 tonnes of nickel per year.

“That would entrench us firmly in the top five nickel sulphide producers in Australia, placing us aside companies such as BHP Billiton, Western Areas, Independence Group and Panoramic.”

 

Subsequent exploration by Rox identified the Musket and Cannonball deposits.

Early drilling at Musket has returned results including:

15 metres at 2.7 percent nickel from 264.7m, including 0.9m at 19.5 percent nickel;

17m at 2.2 percent nickel from 227m, including 8m at 3.3 percent nickel, including 2m at 8.1 percent nickel; and

16.2m at 2.8 percent nickel from 305.1m, including 0.8m at 19 percent nickel.

Recent results from a current diamond drilling program underway at the Musket nickel sulphide prospect have confirmed a coherent body of nickel sulphide mineralisation down to 300 metres depth, which the drilling has yet to close off.

Rox is confident these latest results will contribute to the estimation of a large maiden resource for Musket later this year.

“The mineralisation we are seeing at Musket is much thicker than we have encountered at Camelwood, which is only two kilometres away,” Mulholland said.

“Musket is shaping up to add significant new tonnes to our overall project resource.

“Reaching that critical mass of 100,000 tonnes of contained nickel – it will probably be bigger – will allow us to get into production and then we can fund future exploration.”

Although drilling at Fisher East has only reached 500m depth, it has indicated a mineralised system over 3km, which remains open along strike and at depth.

The mineralisation is typical of komatiite-hosted nickel sulphide deposits, similar to those found at Kambalda, with mineralisation at all three deposits occurring at the basal contact of a highly altered ultramafic lava with underlying sulphidic felsic sediments.

A series of sighter flotation tests on a number of composite drill samples achieved promising nickel concentrate grades of 11 to 15 percent nickel, at recoveries ranging from 40 to 97 percent.

Metallurgical test work is anticipated on samples from the Musket prospect in due course.

Because of the higher tenor of the Musket mineralisation compared with Camelwood, Rox believes better recoveries and concentrate grades could be achieved.

“We are completing some preliminary metallurgy test work – the results of which so far have produced good quality concentrates with no penalty elements,” Mulholland said.

“Everything looks pretty much stock standard, which has provided us with a great deal of encouragement.”

Across the border in the Northern Territory, Rox’s JV partner, Teck Australia, is planning a program of around 4,000 metres of diamond drilling at the Reward zinc project (Rox 49%, Teck 51%).

The bulk of the drilling is to be carried out at the Teena prospect where diamond drilling in 2013 defined two distinct lenses of mineralisation and encountered impressive intersections of sulphide mineralisation over a 1.5 klometre strike length.

 

Recent drilling at Teena intersected:

26.4m at 13.3 percent zinc and lead, including 16.2m at 17.2 percent zinc and lead, and 20.1m at 15 percent zinc and lead, including 12.5m at 19.5 percent zinc and lead.

Rox had already defined a JORC 2004 Mineral Resource of 43.6Mt at 5.04 percent zinc and lead at the Myrtle deposit, some 15km south of Teena.

Teck has earned a 51 percent interest at Reward having already spent $5 million.

It has recently opted to increase that interest to 70 percent by spending a further $10 million by 2018.

“The Teena zinc prospect is shaping up to be a world class deposit,” Mulholland said.

“When we end up with 30 percent of this project we will have 30 per cent of a world class deposit with significant value.

“We’re hopeful that by the time Teck earns its 70 percent we will have completed enough drilling to have a resource there.”

“Teena, potentially, is worth a lot more than what the Fisher East nickel project could be worth – this is our “Tropicana.”


Rox Resources Limited (ASX: RXL)
…The Short Story

HEAD OFFICE
Level 1, 30 Richardson Street
West Perth WA 6005

Ph: +61 8 9226 0044
Fax: +61 8 9322 6254

Email: admin@roxresources.com.au
Web: www.roxresources.com.au

DIRECTORS
Jeff Gresham, Ian Mulholland, Brett Dickson

MAJOR SHAREHOLDERS
National Nominees   3.7%
Rox Directors        2.8%
Ram Kangatharan 2.2%
Siat Yoon Chin     1.9%
Teck Australia      1.3%

SHARES ON OFFER
745 million

MARKET CAPITALISATION
$32.8 million (at 17/6/14)

Laconia keeps both eyes on Peruvian prize

THE INSIDE STORY: Actions, they say, speak louder than words and the recent actions of Peru-focused junior exploration play Laconia Resources Limited (ASX: LCR) has a few of the bigger industry players taking notice.

The attraction has come about due to the dual-focussed approach Laconia has taken with its Kimsa Orcco project in Peru.

While keeping one eye firmly focused on assembling a jigsaw puzzle of historic data into an impressive geological model, Laconia has trained its other eye on establishing close relationships with local communities and the Peruvian government.

The Kimsa Orcco project is the amalgamation of Laconia’s 100 per cent-owned Rasuhuilca project and the Huaco Cucho project, over which Laconia has an option to earn an 80 per cent indirect interest.

 

The Kimsa Orcco project consists of two large areas of alteration zones, which Laconia has identified as the Northern Kimsa Orcco prospects and the Southern Kimsa Orcco prospects.

All of Laconia’s Patacancha permits plus the 80 per cent Earn In Option Huaco Cucho permits No 1, No 2 and Once encompass the Southern Kimsa Orcco prospects.

The balance of the 80 per cent Earn In Option Huaco Cucho permits surround the Northern Kimsa Orcco prospects.

The project currently has an Inferred Mineral Resource estimate of 360,000 tonne at 1.97 grams per tonne gold and 179g/t silver at a 2.5g/t gold-equivalent cut-off.

When Laconia initially acquired the project in 2011 it knew it held potential to be a worthwhile silver-gold project. Stuart said ‘we always thought there was potential for a mineralised porphyry system driving the gold silver resource, and that was in our longer term thinking,

However, we didn’t expect the project would display such significant copper exploration scope and scale and so quickly

“The project was brought to our attention as a silver-gold project,” Laconia Resources managing director Ian Stuart told The Resources Roadhouse.

“However the more data that emerged and was included by our chief geologist, the more it began to evolve into a porphyry copper project, which has just got better with each lot of additional data.”

After it acquired the project, Laconia set about compiling a database of more than 3,000 channel samples from approximately five kilometres of underground development and adits, and more than 40 diamond drill holes, plus associated survey and assay data.

This systematic review of data highlighted the copper potential of the project area in addition to the project’s already developed existing gold-silver epithermal vein systems.

The review revealed a high fully-intact high-sulphidation copper-gold-silver system with strong potential for an underlying mineralised copper porphyry system or associated deposits.

The results Laconia has achieved haven’t gone unnoticed and the company has recently been kept busy answering knocks on its front door from a number of companies, some much larger and knocking louder than expected.

These unsolicited approaches from entities seeking to conduct due diligence on the Kimsa Orcco project led Laconia to create a virtual data room in late 2013, which allows interested parties to access its technical data under relevant confidentiality agreements.

The idea paid off very quickly with the company recently announcing it has entered into confidentiality agreements with a number of international copper-focussed groups, several of which have conducted sites visits to further evaluate the project and complete due diligence.

One of these site visits has moved to initial discussions on potential corporate activity.

“Due to the restraints of the confidentiality agreements we are unable, at this stage, to identify any of the companies that have demonstrated a very keen interest in what we are achieving at the Kimsa Orcco project,” Stuart said.

“However, what we can reveal is that the level of corporate interest and technical expertise of the interested parties strongly validates our geological assessment and belief that the Kimsa Orcco project has extremely large exploration potential.”

As important as assembling the data base has been to the progress of the project, Laconia has also been busy finalising the necessary Social Licence required for work to begin on the Kimsa Orcco.

Changes to the approvals process for the mineral exploration industry in Peru were effected in September 2011, which means exploration companies must obtain signed agreements from community groups before commencing exploration activities.

Earlier this year Laconia Resources reached agreement with the community of Tintay, the third of three community groups Laconia needed to consult in order to gain social licence within the immediate area of impact of Kimsa Orcco and the contiguous Huaco Cucho concessions.

The Tintay agreement followed community agreements and executed access and infrastructure agreements with the nearby Yanama and Huacana communities.

“Forging the final community agreement with the Tintay formalises Social Licence over the project area and enables us to move forward with our planned drilling campaign,” Stuart said.

“This has taken a lot of hard work, as well as a diligent and considered approach on our part, ensuring we have done everything correctly and in the best interest of all parties involved.

“Community issues are an important part of operating in Peru and after a lot of hard work we have delivered in that regard.”

The strategic nature of Laconia’s dual-focused approach is apparent with the formalising of the agreements with the community groups being just as important as the information the company has put together in the virtual data room to the company’s numerous suitors.

“Our approach to community agreements, gaining Social Licence and all permissions required to drill has without doubt, been of significant importance to the outside corporate interest we have been receiving,” Stuart continued.

Quickly on the heels of finalising its social licence, Laconia received formal permission to drill (Ordene Initio) at Kimsa Orcco by the Peruvian regulator, the Ministry of Energy and Mines (MINEM).

The company wasted no time in getting exploration activities underway, kicking off with sampling and geological mapping programs.

“We now have Social Licence, permission to drill, and we have also been granted a DIA [Declaración de Impacto Ambiental], which is an environmental statement,” Stuart said.

“These aren’t trivial matters, they are what the Peruvian government requires us to do and that’s what we have done.”

“Now what people should be asking is why have we bothered to do all that”?

“The reason is that we believe we have a quality project, which we consider to be worthwhile persevering with in, what many people say is, the toughest market they can recall.”

The Kimsa Orcco project is situated on the collapsed rim of the Ccarhuaraso strato-volcano within a highly-visible zone of secondary argillic alteration.

 

The company has used modern exploration technology and processes to become the first explorers to systematically collate all available information and construct three-dimensional models of mineralisation at Kimsa Orcco.

Laconia believes its work supports views of previous explorers, who compared the style and nature of the mineralisation at the Ccarhuarazo Epithermal System to the high-grade El Indio deposit in northern Chile.

With all permits and licences now in place the company’s future work will target the high-grade copper-gold-silver targets within buried intrusive stocks, as well as copper-gold-silver-zinc mineralisation in skarns surrounding buried intrusive stocks.

Laconia Resources Limited (ASX: LCR)
…The Short Story

HEAD OFFICE
Suite 2, Level 1, 47 Havelock Street
West Perth WA 6005

Ph:  +61 8 9486 1599
Fax: +61 8 9486 7899

Email: info@laconia.com.au
Web: www.laconia.com.au

DIRECTORS
Matthew Howison – Chairman
Ian Stuart – Managing Director
Matthew Edmondson – Non-Executive Director
 

MAJOR SHAREHOLDERS
Josephine Patoir             4.3%
Slade Technologies Pty Ltd    4.3%
Ian Stuart                            2.9%

Cassini bags BHP bundle

THE INSIDE STORY: Junior exploration play Cassini Resources (ASX: CZI) recently caused a minor tremor on the boards of the Australian Securities Exchange.

The excitement followed the company’s announcement it had executed a Sale and Purchase Agreement to acquire 100 per cent of the West Musgrave project in Western Australia.

While the acquisition of such a project by a junior company is fairly common, what cast this particular deal into the spotlight was the identity of the vendor.

Cassini secured the property from BHP Billiton Nickel West and BHP Billiton Minerals, two subsidiaries of global mining powerhouse BHP Billiton (ASX: BHP).

The West Musgrave project contains the Nebo and Babel sister deposits, commonly referred to as Nebo‐Babel, the Succoth copper exploration prospect plus a number of prospective exploration targets.

 

The crucial element of the deal for Cassini is all these deposits and targets come under the company’s control with a great deal of exploration and development work already completed.

Nebo‐Babel, the project’s pivotal prospect, was first discovered by Western Mining Corporation (WMC) in 2000, when drilling intersected mineralisation of 26.55 metres at 2.45 per cent nickel, 1.78 per cent copper, 0.74 grams per tonne platinum group elements (PGE) plus gold.

BHP arrived on the scene by swallowing up WMC in 2005, after which time Nebo‐Babel was subjected to a healthy amount of exploration activity, which mainly focused on developing the deposits as a large‐scale, low‐grade production model.

Nebo‐Babel currently has an Inferred resource 446 million tonnes at 0.33 per cent nickel and 0.35 per cent copper (0.2 per cent nickel cut‐off) for 1.47 million tonnes of contained nickel and 1.56 million tonnes of contained copper.

“Because of the way BHP originally approached the project, the high-grade ore body within the deposits was never really domained,” Cassini Resources managing director Richard Bevan told The Resources Roadhouse.

“They intended it to become a large large‐scale, low‐grade production model.

“We intend looking at the project differently, as a high-grade opportunity – as a smaller project than what BHP originally envisaged.

 “So we have some work to do over the next six to twelve months to really get in there and define that high-grade ore body.”

Cassini is confident Nebo‐Babel has the characteristics necessary for it to become a smaller, higher‐grade operation.

This confidence stems from the results of the due diligence the company carried out over the deposit, which revealed its substantial production potential.

Cassini’s due diligence demonstrated the existence of discrete higher‐grade zones within the Nebo‐Babel deposit, which have yet to be fully delineated by drilling.

Both deposits are suitable for openpit co‐development as they are very close to the surface, with the Babel deposit outcropping.

Nebo‐Babel also revealed favourable ore‐body geometry as a flat dipping deposit, which Cassini considers shows potential for an openpit operation with a very low stripping ratio.

Another vital aspect of the acquisition is the reasonably small consideration of $250,000, ten per cent of which has already been paid by Cassini as a deposit.

BHP will be paid a two per cent net smelter royalty, which will apply to the net proceeds from future production from the tenements within the project.

Cassini will also pay a production milestone payment due 12 months after production from the project commences, amounting to $10million in cash.

Cassini considers such a minimal up-front cost de‐risks the project considerably and allows it to focus on assessing future development options.

“It is better than drilling the discovery hole in many ways,” Bevan said.

“BHP has spent a significant amount of money on the deposit to bring it to where it is now, which means we don’t have to.

“For us that means we are moved a considerable way along – a lot of the risk is gone – in the sense that we are not out there trying to find something – it’s already been found.

“For the cost of a drill program [the $250,000 consideration] we have got a project with high-probability for an economic deposit.

“However, there are a couple of things we need to do in order to confirm that is the case.”

 

Using what it has learned from the extensive work already undertaken on the project, and the $10 million proceeds from a subsequent share placement, Cassini proposes carrying out resource definition drilling to infill known higher‐grade zones to build a higher‐grade subset to the overall Nebo ‐ Babel Mineral Resource.

It will also conduct metallurgical testing to ensure it can achieve acceptable recoveries within higher‐grade ore at Nebo‐Babel.

“BHP has already conducted a fair bit of metallurgy testing,” Bevan explained.

“However, they approached that in a similar way to which they approached the project itself – by taking bulk composite samples.

“They didn’t actually look at the recoveries for the higher grade, or the recovery for the different types of ore present.

“That’s the work that needs to be done. That’s the opportunity for us – to approach it as a junior company would – and within that greater project area is a smaller valuable subset.”

Cassini’s acquisition of the West Musgrave project demonstrates that, even though the market may currently be experiencing some tough times, when a junior mining company is prepared to take a chance it can still be handsomely rewarded.

The overnight success of the deal started some 18 months ago when Cassini boldly approached BHP to gauge whether it may be interested in divesting the projects. As it turned out BHP was interested.

There was also a great deal of interest in the projects from a number of Cassini’s contemporaries in the junior sphere, all of which were just as eager to augment their own projects in the West Musgrave region.

“One of the criteria BHP had was that the project would go to a company with existing relationships in the area and would develop the project so the communities in the region would actually see some benefit from the project,” Bevan said.
 
“Fortunately we have worked hard developing an existing relationship with the communities and the traditional owners in the region.”

Another differentiating factor that shouldn’t be overlooked is the personnel who sit around Cassini’s Boardroom table.

The company’s chairman Mike Young with his exploration to production experience with BC Iron, demonstrates the ability to take an asset and bring it through to production in a reasonably short time frame.

John Hronsky has been consulting to Cassini through his consulting group Western Mining Services and was previously with BHP Billiton Minerals Exploration and WMC Resources.

He was a key member of the targeting strategy and exploration team that led to the discovery of Nebo‐ Babel, which does qualify him to be a very handy man for Cassini to have on its team at this time.

“We consider the West Musgrave project to be a truly significant set of assets, and being able to acquire them is a great result for Cassini,” Bevan said.

“Nebo‐Babel is widely regarded as a world‐class deposit and, as a smaller company, we look forward to applying a different, innovative approach to these assets, focussing on higher‐grade opportunities, with the aim of progressing their development to production as a priority.

“We are confident we can hit a number of major project milestones within the next six to twelve months.”


Cassini Resources Limited (CZI)
…The Short Story

HEAD OFFICE
945 Wellington Street
West Perth WA 6005

Phone: +61 8 9322 7600
Fax: + 61 8 9322 7602

Email: admin@cassiniresources.com.au
Web: www.cassiniresources.com.au

DIRECTORS and MANAGEMENT
Mike Young, Richard Bevan, David Johnson, Dr Jon Hronsky, Phil Warren, Greg Miles

MAJOR SHAREHOLDERS
Directors         12.2%
Cornela Pty Ltd     5.5%

Top 40        49.6%

 

Sheffield Resources fires up Thunderbird

THE INSIDE STORY: Minerals sands developer Sheffield Resources (ASX: SFX) recently reached a major milestone for a junior mining play, as the company’s market cap hurdled over the $100 million mark.

The rise in Sheffield’s share price flowed on the back of results from a Scoping Study conducted on the company’s 100 per cent-owned Thunderbird deposit, located near Derby in northwest Western Australia.

 

“It seems we released the results at just the right time and we are hoping that run continues to enable us to catch the forecast upswing in mineral sands commodity prices,” Sheffield Resources managing director Bruce McQuitty told The Resources Roadhouse.

“There was a boom in mineral sands prices in 2011, which has come off to what appears to be a floor level, with many analysts now forecasting improved demand and subsequently improved prices.”

The Scoping Study has determined Thunderbird to be a world-class, long life mineral sands project, which is anticipated to provide exceptional financial returns with modest capital requirements.

The Study results and subsequent share price movement are important milestones for Sheffield as it demonstrates the market’s recognition and appreciation of the significance of the Thunderbird project to the Australian minerals sands industry.

“We consider Thunderbird to be a company making project,” McQuitty said.

“It has shown itself to be so since the early days, and everything we have achieved there so far has done little to change our thinking.”

What Sheffield has achieved so far at Thunderbird has shown just because such a project is being developed by a junior mining company doesn’t mean it can’t be of significance on a global scale.

The company acquired Thunderbird as part of the Dampier project in late 2010 after Rio Tinto (ASX: RIO) had let ownership of the title slip due to difficulties associated with the GFC.

“At the time our technical director David Archer recognised the project’s potential and put an exploration target on it based on the Rio drilling, which consisted of just eight holes,” McQuitty said.

“He estimated an exploration target of between 450 to 850 million tonnes at five to ten per cent Heavy Minerals.”

Sheffield raised $10 million on the back of that target, which it has since put to good work.

The release of the Scoping Study followed a Resource upgrade completed earlier this year, when Sheffield doubled the Resource at Thunderbird, placing a lot more in the Indicated category.

The Resource at Thunderbird now sits at 2.62 billion tonnes at 6.5 per cent heavy minerals (HM) (Measured, Indicated and Inferred) for 170Mt of contained HM, including a high-grade component of 740Mt at 12.1 per cent HM.

The Scoping Study concluded projected and estimated production and financial parameters for the Thunderbird deposit to include:

An initial mine life of 32 years, targeting first production in 2017;

Life of mine (LOM) revenue of $10 billion;

LOM operating cash flow of $5 billion ($204 million per annum for first 10 years of production);

Average LOM annual EBITDA of $140 million ($187 million per annum for first 10 years of production);

Pre-production capital expenditure of $257 million plus $37 million of contingency, with identified opportunities that may reduce capital expenditure with capital payback in two years; and

Average annual production of 118,200 tonnes zircon, 545,000 tonnes ilmenite, and 21,700 tonnes of HiTi80 leucoxene.

Notably the Study has only incorporated Thunderbird’s Indicated and Measured Mineral Resources.

The high-grade Inferred segment of the Resources remains open in several directions and provides Thunderbird with a healthy amount of upside potential.

Sheffield has commenced pre-feasibility studies with completion anticipated Q1 2015, which according to a research note from Hartleys has potential to improve on the strong economics outlined by the Scoping Study.

The potential improvements identified by Hartleys include: A reduction in the start-up capital expenditure; reducing operating expenses; and increasing the current 32 year mine life.

“There is a lot of work associated with the pre-feasibility and feasibility stages such as groundwater, geotechnical, and infrastructure studies along with further metallurgical work to enhance our recovery rates and the associated process design,” McQuitty explained.

“We also anticipate undertaking a lot more drilling during the upcoming field season as we work towards moving more of the current Resource into the Measured category in the up-dip region where we plan to commence mining.

“There is more exploration to be done, simply because we have yet to fully close off the deposit, so there is a lot more drilling to do and a lot more news to come.

“The Scoping Study was quite thorough and some aspects are already at a pre-feasibility level, such as the process design and the metallurgical work.

“Other aspects of the Scoping Study, of course, were more educated assumptions, based on analogies with other projects – so we need to balance those up for the pre-feasibility study to ensure we have – not definitive data – but, more refined data.”

The Scoping Study has demonstrated Thunderbird is a global-scale deposit with potential to generate consistently strong cash margins from globally significant levels of production of ilmentie and zircon over a 32 year mine life.

The real excitement, however, is generated from the project’s current modelled production rates, from which Thunderbird is expected to supply approximately eight per cent and four per cent of the global zircon and ilmenite markets respectively.

Zircon is a high-value commodity. With the current zircon price around US$1200 per tonne.

Ilmenite is a staple feedstock of smelters, which enjoys a particularly higher demand from Chinese sulphate plants.

One major positive aspect of ilmenite is that even when markets tighten, demand for it doesn’t dissipate, whereas the market for the higher value, high-titanium feedstocks such as rutile, or synthetic rutile, does dry up.

Most of the major deposits around the world, in Africa and Sri Lanka, tend to be high in titanium minerals but not so high in zircon while others may be high in zircon, but not in titanium minerals.

The contained zircon in the total Resource at Thunderbird is more than any other deposit around the world at the present time.

The key to the project is its ‘high-grade zone’.

Modelling of the Thunderbird deposit resembles a layered sponge cake with the high-grade zircon and ilmenite zone being the jam and cream sitting in the middle as a coherent high-grade layer just below surface.

 

“This high-grade zone we are focussing on at Thunderbird has one of the highest grades, both in terms of zircon and titanium minerals of any deposit globally,” McQuitty said.

“We have a good balance at Thunderbird in terms of the mineral commodities represented.

“The bulk of the value within the Thunderbird deposit is tied up in the levels of zircon present, which account for some fifty per cent of the revenues defined in the Scoping Study, with around forty per cent coming from the ilmenite.

“Mineral sands is a bit of a blank box for many people and as such are something of an unknown quantity for many market watchers.

“We are very happy to finalise the Scoping Study and get the results out as we feel they fully explain the value of the high grades encompassed in the deposit in both dollar and production terms.”

Sheffield Resources Limited (ASX: SFX)
…The Short Story

HEAD OFFICE
Level 1, 57 Havelock Street
West Perth WA 6005

Ph: + 61 8 6424 8440
Fax:   +61 8 9321 1710

Email: info@sheffieldresources.com.au
Website: www.sheffieldresources.com.au

DIRECTORS and MANAGEMENT
Will Burbury, Bruce McQuitty, David Archer

MAJOR SHAREHOLDERS
Will Burbury            6.4%
Bruce McQuitty        6.4%
David Archer        6.4%

SHARES ON ISSUE
approx. 119.6 million

MARKET CAPITALISATION

$117.79 million (at 24/4/14)

 

 

Savannah discovery widens Panoramic’s outlook

THE INSIDE STORY: Panoramic Resources (ASX: PAN) has discovered a new zone of nickel mineralisation, which could significantly extended the current mine life of Savannah.

Nickel enjoyed a buoyant beginning to 2014, thanks to the Indonesian Government’s ban on the export of nickel laterite ores.

Before the ban Indonesia was the world’s biggest exporter of nickel and the main supplier of low-grade nickel laterite ores to China’s nickel pig iron industry.

“I don’t want to comment on Indonesian politics but I do understand the rationale for the decision they have made,” Panoramic Resources Managing Director Peter Harold told The Resources Roadhouse.

“I will, however, say we are very happy to see the impact that decision is having.

“Combined with the weaker currency there has been a significant improvement, in Australian dollar terms, in the nickel price.

“That means we are making good money now from our existing operations as our margins have recovered.”

Panoramic Resources operates two 100%-owned underground nickel sulphide mines in Western Australia, the Savannah project in East Kimberley and the Lanfranchi project near Kambalda.
 
The company produced 19,561 tonnes of contained nickel in FY2013 and recently increased its guidance, forecasting to produce between 21,500 and 22,000 tonnes in FY2014.

One troubling aspect of any mine is that every tonne of ore produced moves it closer to the end of its life.

Panoramic could have recently discovered the elixir of mine life in the form of the Savannah North mineralised zone.

Drill hole KUD1525 was the first of a new drill program Panoramic designed to explore for the faulted continuation of the Savannah Intrusion to the north of the existing mine.

As far as first holes go, it couldn’t have been better with initial results returning assays of:

89.3 metres at 1.6% nickel, 0.76% copper, 0.12% cobalt from 704.9 metres, including:

13.2m at 2.1% nickel, 0.72% copper, 0.15% cobalt from 741.8m; and

17m at 2.28% nickel, 1.16% copper, 0.17% cobalt from 777m.

 

“The Savannah story is very much now about maintaining record production levels, keeping costs down, the recent discovery at Savannah North and its potential in regards to our ability to increase reserves and extend mine life, given that we are now down to three years based on the current reserve,” Harold said.

“First and foremost Savannah North is a wonderful discovery by our geological team, led by John Hicks, who had the foresight and the knowledge to look in that area.

“He really had nothing more than a blank sheet of paper, yet was able to develop a theory of the potential existence of a fold, which if correct would mean the orebody could continue to the north.

“He wasn’t basing his assumptions on any particular EM targets, aeromagnetic surveys or such; it was based purely on his intimate knowledge of the ore body above the 900 fault, the drilling below the 900 Fault and what may have happened as a result of a geological event.

“It was really good geological detective work to anticipate a possible continuation in what was a totally untested area.”

The Savannah North discovery has to be one of the better examples in recent times of the courage and faith required for successful exploration.

Courage initially from Hicks to approach the Board with what he considered to be the best option for him to follow; faith displayed by the company in Hicks’ knowledge of the geology to support his assumptions; and both by very supportive brokers, a significant new investor in Zeta Resources and the marketplace, which rallied to raise the money giving Panoramic the confidence to carry out an aggressive exploration program.

“We raised $15 million, in a very tough market, for nickel exploration,” Harold said.

Subsequent to the discovery, KUD1525 intersected a second zone of mineralisation of: 8.7m at 1.23% nickel, 0.87% copper and 0.09% cobalt from 882.5m, which was interpreted to be mineralisation caught up within the 900 Fault zone, lying below the Savannah North discovery.

“We are definitely onto something and down-hole EM surveying of KUD1525 identified targets to follow-up, which has provided much confidence as well as the impetus to get in there and do some serious drilling,” Harold said.

“We have one underground rig and two surface rigs drilling focusing on the area where that EM target was identified and where we encountered mineralisation previously, to test the entire structure in order to determine just how big it may be.

“The sooner we convert all that drilling into Resources and Reserves the sooner we can start thinking about mine life extension.”

With everything happening at Savannah, it would be easy to presume Panoramic was concentrating all of its efforts there.

However, there is still a lot of action at the Lanfranchi project where a number of prospective targets have been identified.
 
“From the $15 million we raised last year we determined to spend as much as possible on nickel exploration at both sites,” Harold said.

“We budgeted an equal amount of money at Lanfranchi with the intention of extending existing ore bodies, potentially identifying a new mineralised channels.

“There’s been no major discoveries yet, but we are confident, as we know the Kambalda Field has a track record of producing a lot of ore.”

 

Panoramic’s diversity extends beyond the two nickel mines it operates to incorporate other commodities.

The Gidgee gold project near Wiluna in WA, includes the high-grade Wilsons project, while the company also holds a 70% interest in the Mt Henry gold project near Norseman.

“We are in the process of finishing off Feasibility Studies on both these project, both of which we anticipate being completed by around June this year,” Harold said.

“We are keen to get those finished to get a good idea of how those projects look in 2014 dollars from a capital and operating cost perspective.

“We expect one of those projects to look better than the other one in terms of risk and ecomonics i.e. free cash, NPV, and internal rate of return.

“The better project will get front running on development, then the rest is up to the gold price.

“Ultimately we will make decisions on our gold projects that provides the best return for our shareholders.”

Panoramic has also expanded into Platinum Group Metals (PGMs) having purchased the Panton PGM project near the Savannah project and the Thunder Bay North PGM project in Northern Ontario, Canada.

The company has a bullish outlook for platinum and palladium prices in the medium term and is keeping a close eye on South Africa as far as production is concerned given there was a ten% drop in production there of platinum and palladium last year and rumours of Russia’s stockpile of palladium coming to an end.

“PGM demand is growing strongly mostly for catalytic converters in cars and with the car market growing rapidly in Southeast Asia, and recovering American market and Europe this bodes well for PGM demand,” Harold said.

“There seems to be a potential supply and demand imbalance developing with many analysts forecasting higher platinum and palladium prices.

“Our view is that we have a reasonably cheap option on platinum and palladium with our two assets, and like our gold assets, we’re happy to wait and take advantage of improved prices in the future.

Panoramic Resources Limited (ASX: PAN)
…The Short Story

HEAD OFFICE
Level 9
553 Hay Street
Perth   WA   6000

Ph: +61 8 6266 8600
Fax:   +61 8 9421 1008

Email: info@panres.com
Website: www.panoramicresources.com

DIRECTORS and MANAGEMENT
Brian Phillips, Peter Harold, Christopher Langdon, John Rowe

MAJOR SHAREHOLDERS
M&G Investment Ltd 10.7%
HSBC Nominees 12.9%
JPM Nominees 12.6%
Zeta Resources 10.7%

SHARES ON OFFER
322.27 million

MARKET CAPITALISATION
$143.4 million (at 3/4/14)

New Mining Leases permit swift development

THE INSIDE STORY: Brazil-focused gold exploration play Orinoco Gold (ASX: OGX) is poised to become a developer much quicker than it, or the market, anticipated.

Taking the company into the development stage is a recent deal struck with Troy Resources (ASX: TRY) to acquire Mining Leases encompassing the Sertão gold mine in central Brazil.

 

“The Sertão gold mine is an important piece of the development puzzle for us, which really only works because of what we have already got,” Orinoco Gold managing director Mark Papendieck told The Resources Roadhouse.

Orinoco already has its 194 square kilometre Faina goldfields project in the Faina Greenstone belt, located in the central Brazilian state of Goiás, centred on the large, high-grade Cascavel system.

The Faina Greenstone belt is located approximately 100 kilometres southwest of AngloGold’s Serra Grande mine and Yamana Gold’s Pilar mine.

Troy Resources successfully operated the Sertão mine, producing over 250,000 ounces of gold at 25 grams per tonne.

Since acquiring Cascavel in September 2012, Orinoco has completed a swathe of exploration work including high-grade drilling, channel sampling and bulk sampling.

This work quickly identified a gold-bearing structure at Cascavel, covering an area of 1,600 metres by 700 metres which remains open along strike and down dip with three mineralised zones ranging in width from 2m to 25m.

Drilling also resulted in the discovery of the Tinteiro polymetallic target with the discovery hole returning:

17.56m at 1,292.4 grams per tonne silver, 11m at 0.25 per cent copper, 16.41m at 1,400g/t tungsten from 101m.
 
A subsequent follow-up drill program encountered:

4.38m at 760.27g/t silver, including 1.05m at 2,510g/t silver from 156.95m.

The company is concentrating on a two-pronged strategy as it progresses towards establishing a mining camp in the region.

The first part of this strategy is focused on achieving short-term production from the high-grade Cascavel and Sertão projects.

Orinoco anticipates utilising the cash flow it generates to continue growing these mines and further exploration at its large Tinteiro project.

“Short term production from our high-grade assets is first on the agenda,” Papendieck said.

“We can then use the cash flow they generate, instead of having to tap the market, to grow our assets because we believe mines are built, not discovered.

“We believe, the style of deposits we have, including the Sertão project we have acquired from Troy Resources, are perfect for growth in this manner.

“We think we can get them off the ground for a very low amount of capex and then continue expanding the mine from there.”

The second part of the Orinoco strategy involves exploring large-scale, long-life mine assets, which is where its Tinteiro project comes into play.

Tinteiro is situated very close to Cascavel, but is different in that it is a very big IOCG target where Orinoco has already defined around seven kilometres of strike, along which it encountered the high-grade silver hits mentioned above.

“Our strategy is reasonably simple,” Papendieck said.

“One: generate cash flow from high-grade assets in the short term.

“Two: use that cash flow to grow the production profile of those assets at Faina and to explore for large-scale, long-life assets, like Tinteiro.”

 

Obviously the purchase of the Sertão project slips in as a perfect fit for the first part of Orinoco’s strategy, especially as it brings with it two important elements.

The first of these is that it delivers the company a fully-permitted mining lease on a site that has had operations on it before.

It comes with grid power connected to site and the usual site infrastructure completed, so all the work that usually entails spending both a lot of money and time has already been spent bringing the project to its current advanced stage.

“To get a full-scale mining lease can take up to two years sometimes, which also entails environmental licencing,” Papendieck explained.

“With the Sertão project we walk into a full environmental and mining permit so it saves us so much time and money.

“We already have Cascavel permitted to extract ore, not to process it on site, however we are currently in the phase of applying to advance that to a full-scale mining lease.

“At the moment our only option for processing ore is by means of a toll treating agreement with Cleveland Mining (ASX: CDG).

“That’s a very good agreement and one we intend on utilising, however the addition of the Sertão project means we now have the option of spending a small amount of money on constructing our own gold circuit on site.

“It basically provides us with an instant gold mining lease, from where we will be able to process ore we mine from Cascavel.”

The second aspect the Sertão project brings to the game is a bank of historic drilling data from previous campaigns conducted by Troy and Western Mining before them, beneath the existing open pit, which highlighted Cascavel-style strike and dip extensions to the mineralised zone which remain largely untested.

Results include:

0.7m at 48.2g/t gold approx. 100m down dip from Sertão open pit; and

0.33m at 119.6g/t gold approx. 750m down dip from Sertão open pit.

Orinoco believes this drilling clearly demonstrates extensions to the ore body mined by Troy with the deepest hole intersecting mineralisation at depth from the bottom of the pit.

The mineralisation at the Sertão project is only 18km along from Cascavel and Orinoco is confident it is part of the same geological event as at both sites it is very similar in style and structural controls.

Comparing the knowledge Troy gleaned from its time at Sertão and the work it has completed at Cascavel to date has allowed Orinoco combine years of geological thinking.

“We feel Sertão has the ability to add resource ounces in the short to medium term, enabling us to keep adding to our resource base and maybe even a second front of production,” Papendieck said.

“We have just over 200 square kilometres of ground in the greenstone belt now and there are plenty of opportunities for us to keep making new discoveries within our portfolio.”

Orinoco Gold considers its acquisition of the Sertão project has bought time and will also save it valuable capex dollars and provide the ideal start to the company’s ambitions of being recognised as developer rather than a junior exploration play in the region.

“This is a pivotal moment for Orinoco Gold,” Papendieck said.

“We have just completed a placement, which positions us to conduct a quick campaign involving an exploration decline, generating high-grade stockpiles, and carrying out infill drilling which will give us our maiden Resource over an area covering just 10 per cent of Cascavel.

“Once we have that Resource we will complete a Scoping Study, which will look at toll treating with Cleveland and also at how little it may cost to put a gravity treatment plant at Sertão.

“We believe we can quickly add resources at Sertão as well as from other areas of Cascavel.

“When we finalise our recently announced rights issue we now have a very clear path to Resource growth and to low cost production and we are fully-permitted to do all that, we have all the right pieces we need falling into place to get us underway.

“We are now developing a gold mine.”

Orinoco Gold Limited (ASX: OGX)
…The Short Story

HEAD OFFICE
Ground Floor
16 Ord Street
West Perth WA 6005

Ph: +61 8 9463 3241
Fax: +61 8 9226 2027

Email: info@orinocogold.com
Web: www.orinocogold.com
 
DIRECTORS
John Hannaford, Mark Papendieck, Dr Klaus Petersen, Brian Thomas, Ian Finch

MAJOR SHAREHOLDERS
Trafford Resources 15%
John Hannaford 6%

Exploration upside trumps boardroom power struggle

THE INSIDE STORY: South Australian uranium and South American copper form the basis of Alliance Resources’ current focus.

The flagship project of Alliance Resources (ASX: AGS) is its 25 per cent interest in the Four Mile uranium project located 550 kilometres north of Adelaide in South Australia. Quasar Resources has a 75 per cent interest in the project.

 

Under the terms of the JV, Alliance is free carried through exploration.

Quasar is an affiliate of Heathgate Resources, owner and operator of the adjacent Beverley uranium mine – Australia’s third uranium mine and the only in situ leach mine.

The Four Mile project boasts an impressive set of numbers, including a 2012 JORC Code-compatible Indicated and Inferred Mineral Resource estimate of 9.8 million tonnes at 0.33 per cent uranium oxide (U3O8) containing 32,000 tonnes (71 million pounds) of contained U3O8.

With these figures it’s understandable the Four Mile uranium deposit is considered by most pundits to be one of the larger uranium deposits going around, not only in Australia but on the global stage.

However, not all is as happy as it could be between the JV partners at present as they disagree over how to develop the project.

“During the year, Alliance announced that a decision to recommence development of the Four Mile uranium project was made with Quasar Resources Pty Ltd (Quasar) voting its 75 per cent interest in favour and Alliance’s wholly owned subsidiary, Alliance Craton Explorer Pty Ltd (ACE) voting its interest against Quasar’s Start-Up Plan and Proposed Program and Budget,” Alliance stated in its Annual Report last year.

“Quasar has advised that an updated schedule of activities and cash flow projections will be provided once all government approvals have been received, taking into account later commencement and completion dates from those set out in its Start-Up Plan and Proposed Program and Budget.

“Notwithstanding this decision to recommence development, ACE still considers the construction of an appropriately sized stand-alone plant at Four Mile would produce a better outcome for ACE and Alliance in general.”

The potential of the Four Mile deposit was highlighted recently with the announcement of drilling results, which encountered further uranium intercepts at the discovery area Alliance announced in December 2013, located 1.2 kilometres to the northeast of the Four Mile East uranium deposit.

Results included:

FMD0017: 3.7 metres at 0.39 per cent uranium; and

FMD0018: 3.2m at 0.45 per cent uranium, 1.7m at 0.3 per cent uranium, 2.6m at 0.39 per cent uranium.

Alliance also recently reported the intersection of high-grade uranium mineralisation over a strike length of approximately 1100m and a maximum width of 800m, which is an increase of 300m of what had previously been reported.

While all this has been happening Alliance has added a further project to its fleet, this time casting an exploratory eye over the South American country of Chile.

Alliance’s Chilean properties are located in the Cabeza de Vaca district of Atacama Region III, placing them in northern Chile’s iron-oxide copper-gold belt, close to the mining centre of Copiapo and 27km southeast of the 479 million tonnes at 0.95 per cent copper, 0.22 grams per tonne gold, 3.1g/t silver La Candelaria mine owned by Freeport-McMoran Copper & Gold Inc.

The company’s Chilean subsidiary company, Alliance Chile has secured several options to acquire copper-gold properties and has submitted applications to acquire three exploration licences covering the greater part of the Cabeza de Vaca district.

 

“It’s in the northern regions that the bulk of the country’s major copper deposits exist,” Alliance Resources managing director Steve Johnston told The Resources Roadhouse.

“We believe there is much potential for large porphyry deposits in the region, however we are trying to target and focus on high-grade, near-surface deposits, which are related to the porphyry style deposits at depth.

“Our exploration manager and are contract geologist are on the ground in Chile at the moment and reviewing and sampling specific third party opportunities.

“We’ll get those samples back, analyse them and then make the decision as to which of these prospects we may follow up.”

Johnston said the company was excited to be exploring in Chile saying it is a great place to be as a junior exploration play with many deposits outcropping at surface as well as some of the world’s biggest copper mines already operating there.

“We are looking for a porphyry-style deposit but we haven’t ruled out the smaller high-grade deposits,” he said.

“We feel that if we can find an area that hosts enough of these smaller deposits we then have a chance of locating a feeder zone of a buried porphyry that hasn’t been unroofed.

“That’s really our focus at the moment, identifying second tier targets first with the hope of finding a first tier target.

“Financially, developing a tier one target is tough for a company the size of Alliance, so if it did intersect one, then we would be seeking Joint Venture interest from a major to come in and help to develop it.

“Alternatively, should we hit a smaller deposit of high-grade copper at one to two per cent, then we are more than capable of doing that by ourselves.”

In recent times Chile has developed a reputation as a country with low sovereign risk that encourages exploration, even though it does have a slightly complex tenement structure to navigate.

Basically a lot of Chilean people own one or more mining tenements or concessions.

These get handed down through the family who typically option these tenements out to companies to earn a modest fee each year with a much larger fee if the option is exercised.

The system allows exploration concessions over the top of the mining concessions, allowing exploration over the tenements, enabling companies to conduct drilling, airborne geophysics and geochemistry, however companies ultimately require the permission of the underlying mining concession holder when it comes to exploitation.

“It has taken us just on two years, but we now have established a pretty firm footing in Chile,” Johnston explained.

“It’s been a new region and new regime for us and the learning curve has been quite steep, but we know how things operate over there now.

“From an exploration point of view it is actually a good system, even if you might find yourself dealing with ten different concession holders.

“One major difference from the way we do things in Australia is that here you may start with a tenement holding of 1,000 square kilometres and gradually narrow that down to around 100 square kilometres pinpointing particular targets or point of interest.

“In Chile you may lay out a large Exploration Licence area but the actual mining concessions are reasonably small and as many targets outcrop, this means the footprint of your target area is quite small allowing you to focus in and do the appropriate deals.”

In its September 2013 Quarterly the company reported it was well placed financially with around $24 million in the bank.

Having not dipped into the account in any great way since then it is well-funded to conduct drilling at Cabeza de Vaca, which it anticipates kicking off in the first half of this year.

Alliance Resources Limited (ASX: AGS)
…The Short Story

HEAD OFFICE
Suite 3, 51 – 55 City Road
Southbank, VIC, 3006

Ph: +61 3 9697 9090
Fax: +61 3 9697 9091

Email: info@allianceresources.com.au
Web: www.allianceresources.com.au
 
DIRECTORS
John Dunlop, Ian Gandel, Anthony Lethlean, Steve Johnston

MAJOR SHAREHOLDERS
Abbotsleigh Pty Ltd            25.76%
NEFCO Nominees Pty Ltd            2.27%
John S Dunlop Nominees Pty Ltd    1.78%
J P Morgan Nominees            1.75%

SHARES ON OFFER
341 million

MARKET CAPITALISATION

$56.3 million (at 24/1/14)

 

 

Octagonal Resources shoots to Producer status

THE INSIDE STORY: Sometimes putting the cart before the horse can be a smart way of operating, especially when your cart is the only suitable operating gold processing facility in the area.

Octagonal Resources (ASX: ORS) has achieved a rare feat by attaining the status of gold producer before commencing mining activities at any of its numerous projects.

Octagonal has been producing gold from its 100 per cent-owned 150,000 tonne per annum carbon-in-leach gold processing plant located near Maldon.

 

Maldon sits on a rich goldfield, historically producing over 1.7 million ounces of reef-hosted gold at an average grade of 28 grams per tonne, in Central Victoria.

The area rates third behind Victoria’s more famous gold rush regions, Bendigo and Ballarat.

The Maldon processing plant was recently refurbished and is fully permitted and operation ready to process competent underground ore and lower grade open pit ore.

“This means we can process lower grade and oxidised gold other operations are unable to efficiently recover,” Octagonal Resources managing director Anthony Gray told The Resources Roadhouse.

“This gives us exposure to third party ore by toll treating arrangements.”

In the past 12 months Octagonal has established two ore processing arrangements providing a revenue stream to enable it to develop its own ore sources.

In February 2012, Octagonal struck an agreement with A1 Consolidated Gold to treat up to 150,000 tonnes of ore over a three year period from its A1 gold mine at Woods Point.

In August it agreed to reprocess tailings from the Kangaroo Flat gold mine of Unity Mining near Bendigo.

“In consideration for the removal of tailings, transport, processing and refining, and paying 50 per cent of the costs- we receive 50 per cent of the gold,” Gray explained.

“We commenced regular gold production from these tailings in November.

“During the December quarter we processed 6,430 tonnes of tailings to recover almost 1,400 ounces of gold at an average recovery grade of 6.5 grams per tonne gold.

“We are producing gold on a weekly basis at grades beyond our expectations and expect to be producing gold from this material until the middle of this year.

“For processing the A1 ore, we receive a processing fee and 10 per cent of the gold produced.” 

Being a regular gold producer, Octagonal can now self-fund its exploration, mining and future growth, without diluting existing shareholders’ interests.

Octagonal’s primary focus is its Victorian operations where it is targeting 30,000 ounces per annum of low-cost gold production.

“In this area we own 17 exploration and mining licences overlying 900 square kilometres and seven historic goldfields,” Gray said.

“Our Victorian mining strategy is to develop a sustainable, low-risk gold operation by focussing on grade and profit, not tonnes and ounces.”

This is a reasonable objective; besides its gold processing plant, Octagonal also boasts 245,000 ounces of underground and open pit ore sources, an established decline towards said underground resources, and advanced exploration plays it is confident can sustain operations.

 

The 1.9 kilometre-long Union Hill decline accesses the Alliance South gold deposit and the southern half of the Maldon goldfield and is within 100m of the Alliance South shoot, which has an inferred Resource of 182,000 ounces of gold.

Octagonal is currently extending the Union Hill decline 180m to the south and developing two levels to determine the grades of the ore shoot, assess ground conditions, and determine the most appropriate mining technique for an ongoing operation.

Development of the Alliance South shoot will be the first step towards establishing an ongoing underground mining operation at Maldon.

The Alliance South shoot is hosted by the Eaglehawk Reef: one of five reefs in the central Maldon shear zone to have produced almost 1.5 million ounces of gold.

The others are the Nuggetty Reef to the north, and the Beehive, German and Derby Reefs to the south.

“We have five priority exploration targets on these reefs, which we intend to drill test once the Union Hill decline is developed sufficiently to the south,” Gray said.

“Each target has potential to host between 50,000 and 100,000 ounces of high-grade gold mineralisation and could contribute to ongoing underground mining operations.”

To supplement its underground mining at Maldon, Octagonal is currently developing three open pits.

The first to come into production will be the Black Reef on the Wehla goldfield, 60km from Maldon.

Octagonal intends operating a trial open pit at Black Reef to 30m depth in an area where a costean returned 14m at 4.5g/t gold and drilling intersected 5m at 15, and 5m at 35g/t gold.

“Our expectation is that by improving our understanding on the distribution of gold at Black Reef this will help us to interpret drilling results and help justify a larger open pit mining operation at Wehla,” Gray said.

A second, and significantly larger, open pit will be at the Pearl Croydon deposit, which is located 40km from Maldon and hosts an inferred resource totalling 53,000 ounces of gold.

The Pearl Croydon deposit consists of a 1.6km long reef system and is located on a granted mining licence.

A recent open pit optimisation study indicated Pearl Croydon has potential to produce between 15,000 and 32,000 ounces of gold.

Octagonal is developing a mine plan for this deposit, which once finalised will allow it to seek regulatory approval to commence mining.

The company’s third open pit mine will be the Specimen Reef located 30km from Maldon near Donnelly, which consists of a greater than 1km long line of reef.

Octagonal discovered this deposit in July last year and has since drilled 47 RC holes to define an initial inferred resource containing 10,000 ounces of gold.

“This mineralisation extends over 440 metres strike length and is not constrained by drilling to the north, south, or down dip,” Gray said.

“In June last year we applied for a mining licence to exploit this deposit and we will recommence drilling this deposit later in the year to upgrade the resource and start to define its size.”

In conjunction to its Victorian operations Octagonal intends to grow its Western Australian assets, where it holds a significant landholding located 70km southeast of Kalgoorlie, surrounded by the 12 million ounce St Ives goldfield, 800,000 ounce Daisy Milano mine and 400,000 ounce Salt Creek mine.

The main focus here is the Burns prospect, where 272 aircore holes were drilled in 2011 to define a one square kilometre area of gold anomalism.

Subsequent drilling in 2012 discovered potentially economic gold, copper, and silver, which led the company to have all samples from the 2011 aircore programs re-analysed for copper.

Octagonal has now identified thick zones of copper anomalism, where the latest drilling has defined a 2km long anomaly between 80m and 350m wide, not constrained by drilling, along its southeast margin.

A second anomaly was also identified over 700m not constrained by drilling to the northwest.

“We are excited by the potential of the Burns prospect to develop into a significant multi-commodity deposit,” Gray said.

“In December 2012 the Western Australia government awarded us a $150,000 co-funded drilling grant as part of its exploration incentive scheme for our first four hole diamond drilling program at the deposit, which we expect to complete later in the year.”

Octagonal Resources Limited (ASX: ORS)
…The Short Story

HEAD OFFICE
Suite 3
51 – 55 City Road
Southbank VIC 3006

Telephone: +61 3 9697 9088
Facsimile: +61 3 9697 9089

Email: info@octagonalresources.com.au
Website: www.octagonalresources.com.au

DIRECTORS and MANAGEMENT
Ian Gandel, Anthony Gray, Robert Tolliday, Jason Mills

MAJOR SHAREHOLDERS
Alliance Resources    20.8%
Ian Gandel        18.7%
JP Morgan Nominees    8.9%

SHARES ON ISSUE
106.05 million

MARKET CAPITALISATION

$12.2 million (at 13/3/13)