Metalicity Conducting Lithium Review

THE DRILL SERGEANT: Metalicity (ASX: MCT) is conducting a geological review of its four lithium projects in Western Australia.

Metalicity has appointed CSA Global to conduct the review charged with the aim of generating new targets and prioritising existing targets for future drilling.

Metalicity has put together a sizeable landholding in Australia’s two key lithium producing districts, the Greenbushes district and the Wodgina-Pilgangoora district.

Previous targeting work conducted by Metalicity has focussed on mapping of pegmatites at its Pilgangoora North project and the Stannum prospect within its Wodgina South project.

This area represents approximately 20 per cent of the company’s lithium-prospective land package and it believes there to be potential to generate new targets for drilling within these two hard rock lithium producing regions.

From recent field work at the Pilgangoora North project, Metalicity confirmed that pegmatites interpreted from satellite imagery, are present; some of which host anomalous lithium values.

An initial four-hole 600m reverse circulation percussion (RCP) drill program was undertaken aimed at testing pegmatites in the southern portion of the project area the company had interpreted to be extensions of the Lynas Find deposit pegmatite system.

Although this was a very limited drill program, pegmatites were intersected in every hole.

No significant levels of lithium were encountered in this program, however Metalicity said it had been encouraged by the continuity and thickness of the pegmatites, which it determined to be comparable to the Pilgangoora deposits to the south.

“The initial four-hole drill program at Pilgangoora North targeted the most accessible pegmatites which represent a small fraction of the mapped or interpreted pegmatites that have been identified at the project, some of which are confirmed from rock chip sampling as lithium bearing,” Metalicity managing director Matt Gauci said in the company’s announcement to the Australian Securities Exchange.

“Given the size of the company’s lithium portfolio and interest from end users in the sector, we believe this is a right time to appoint lithium experts from CSA Global to conduct a targeting review of our entire lithium portfolio and determine the best strategy to progress these assets.”

Website: www.metalicity.com.au

Azure Completes Inital Mexican Drill Program

THE DRILL SERGEANT: Azure Minerals (ASX: AZS) completed the first drilling program on the company’s 100 per cent-owned Sara Alicia gold-cobalt project, located in the northern Mexican state of Sonora.

Azure Minerals said the reconnaissance drilling was designed to test a zone of high-grade gold and cobalt mineralisation, which was historically exploited by small-scale underground mining in the 1930s.

The area was further outlined by Azure’s sampling of surface outcrop and underground exposures which returned high-grades up to maximum values of 39 grams per tonne gold and 7 per cent cobalt.

The company explained the initial drilling program comprised six holes of diamond core designed to test around the old mine workings and beneath the outcropping gold and cobalt mineralisation to determine potential grade, width and orientation of the mineralised zone.

“Core logging identified carbonate rocks intruded by a granodiorite porphyry, causing strong alteration and mineralising reactions in the limestones, forming a skarn horizon enriched with garnets, magnetite and sulphides,” Azure Minerals said in its ASX announcement.

“Each drill hole was sampled in its entirety and dispatched to the Bureau Veritas laboratories in Hermosillo, Mexico, and Vancouver, Canada for precious metal and base metal analyses respectively.

“Due to a very busy northern hemisphere field season, the turnaround time for sample analysis in Vancouver is currently between four and six weeks.

“Assay results for the Sara Alicia holes are expected between late November and early December.”

Website: www.azureminerals.com.au

Peel Mining Persistence Pays Off

Tuesday, October 31, 2017
THE INSIDE STORY: There is no argument that modern exploration techniques assist in the discovery of new deposits, but it also helps to be exploring in the right area.

Persistence also helps, and for coming up to eight years, Peel Mining (ASX: PEX) has been focused on the company’s Cobar Basin projects in New South Wales where it has made systematic discoveries of copper and base metals, most notably at the Mallee Bull and Wirlong deposits.

Peel has always had confidence in both prospects, however it was a recent announcement from the Wagga Tank prospect area that set the market abuzz.

Peel acquired tenements EL6695 and EL7226 last year and quickly designated Wagga Tank as the ‘prospect most likely’.

“When we conducted our initial review of the historic results at Wagga Tank we quickly realised the previous owners probably hadn’t given the area the attention it deserved,” Peel Mining managing director Rob Tyson told The Resources Roadhouse.

“Results from our own drilling this year provided the impetus for us to conduct further drilling, mainly because we thought we were on to something and the best way to confirm such opinions is to drill.”

The Wagga Tank drilling provided the company with plenty to think about, including:

WTRCDD023
11m at 7.15 per cent zinc, 2.31 per cent lead, 58 grams per tonne silver from 396m;

WTRCDD020
6m at 8.52 per cent zinc, 2.97 per cent lead, 12g/t silver from 282m; and

WTRCDD022
6m at 1.5 per cent copper from 92m.

“As part of the program we drilled step-out hole WTRCDD021, in what was then known as Wagga Tank South, basically to test coincident chargeable IP and magnetic geophysical anomalies,” Tyson explained.

“The IP chargeability looked particularly compelling, so we decided to drill and see what was there.”

The 456.6m hole was collared one kilometre south of the Wagga Tank deposit at what is now called the Southern Nights area, intersecting a broad zone of deformation, alteration and sulphide mineralisation, including a zone of variable zinc-lead-silver (sphalerite-pyrite-galena) breccia/stringer sulphide mineralisation between 390m and 410m downhole.

The hole was a combination of RC and diamond drilling, demonstrating highly anomalous zinc, lead, copper, silver and gold present over the greater part of the diamond tail (234.1m to 418m).

Highlights included:

4m at 3.38 per cent zinc, 1 per cent lead, 13g/t silver from 289m;

3m at 3.07 per cent zinc, 1.23 per cent lead, 26g/t silver from 346m; and

20m at 2.40 per cent zinc, 0.8 per cent lead, 44g/t silver from 390m.

Peel quickly followed-up drilling of the WTRCDD021 discovery hole at Southern Nights, and at time of writing had completed four RC drillholes (WTRC031, WTRC033-035).

Assays are pending, but better hand-held XRF results included:

21m at 24.5 per cent zinc, 8.6 per cent lead, 102g/t silver from 194m in WTRC035

70m at 4.8 per cent zinc, 1.0 per cent lead, 18g/t silver from 128m (including 8m at 14.9 per cent zinc, 2.2 per cent lead, 15g/t silver from 188m) in WTRC033

The latest drilling was concentrated near WTRCDD021 with the furthest (WTRC031) just 160m south and 80m to the west.

WTRC031 (depth 185m) was designed to further test the Southern Nights chargeable IP anomaly, and to test along strike and up-dip of WTRCDD021.

The hole intersected a broad zone of strongly anomalous zinc-lead-arsenic-silver-copper from approx. 70m below surface through to end-of-hole at 185m.

WTRC033 (200m) was collared 80m west of WTRCDD021 to test immediately up-dip of WTRCDD021, intersecting a broad zone of strongly anomalous zinc-lead-arsenic-silver-copper from approx. 80m below surface through to end-of-hole (200m), intercepting the broad, strong zone of mineralisation highlighted above.

WTRC034 (199m) was collared 40m west of WTRC033 to test immediately up-dip of WTRC033.

WTRC034 intersected a broad zone of weakly anomalous zinc-lead-arsenic from surface to end-of-hole, which was interpreted to suggest the hole was positioned too far west to intersect mineralisation.

WTRC035 (216m) was collared 40m south of WTRC033 to test along strike of WTRC033.

WTRC035 intersected a broad zone of strongly anomalous zinc-lead-arsenic-silver-copper from approx. 40m below surface through to end-of-hole (216m).

The drillhole intercepted several strong zones of mineralisation including:

19m at 3.2 per cent zinc, 0.7 per cent lead, 21g/t silver from 126m and 21m at 24.5 per cent zinc, 8.6 per cent lead, 102g/t silver from 194m (as highlighted above).

Holes WTRC031, WTRC033 WTRC035 were all terminated prematurely in mineralisation due to high water inflows.

Diamond tail drilling is planned for each in due course.

“The true width of these mineralised intercepts is unknown due to the early stage of investigation, however, of importance, is that the mineralisation present in all drillholes appears to be related to the Vivigani Formation,” Tyson said.

“The Vivigani Formation is host to the mineralisation present at Wagga Tank.”

The Vivigani Formation a stratigraphic unit comprising volcanic sandstones, conglomerate, sedimentary breccia, interlayered low energy turbidites, epiclastics, rare felsic lavas, ignimbrites, and bioclastic limestone debris.

“The exciting aspect of these latest results is that they demonstrate Wagga Tank could be a much larger system than previously thought to be,” Tyson said.

“We have drilling at Southern Nights ongoing with a minimum of 10 additional RC drillholes planned in the near term.

“These drillholes will be designed to primarily test for strike extensions.”

The Southern Nights discovery garnered a good deal of market interest with the company’s share price enjoying an almost 50 per cent rise on announcement.

That doesn’t mean, though, the company has taken its eye of the Mallee Bull deposit, located near Cobar in western NSW.

Peel has also had the drill bit spinning at Mallee Bull, releasing results relating to prefeasibility work into the development of a high-grade, near surface T1 zinc-lead-silver lens.

Peel is undertaking a pre-feasibility study on the high-grade, near-surface zinc-lead-silver-gold T1 lens at Mallee Bull in Joint Venture (50:50) with CBH Resources.

The study is investigating conceptual development of T1 as a ‘dig and truck’ operation, where ore would be milled at CBH’s Endeavor mine approximately 150km away, where surplus milling capacity exists.

The PFS is looking at open pit and underground mining scenarios, followed by the development of an exploration decline to approx. 300m below surface to enable underground drilling of the primary Mallee Bull copper mineralisation.

The JV believes this scenario could allow for a reduction in total capital expenditure and the staged mining development of the Mallee Bull deposit.

Recent drilling under the PFS included 39 RC/diamond drillholes charged with infilling a maximum 20m by 20m drill spacing, and to define the limits of T1 mineralisation.

T1 resource definition drilling returned:

MBRC085
9m at 20.82 per cent zinc, 10.64 per cent lead, 338g/t silver and 1.91g/t gold from 88m;

MBRC089
9m at 10.80 per cent zinc, 6.89 per cent lead, 337g/t silver and 0.45g/t gold from 129m;

MBRC088
3m at 12.74 per cent zinc, 6.93 per cent lead, 263g/t silver and 1.25g/t gold from 119m;

MBRC073
10m at 7.10 per cent lead, 19g/t silver and 0.53g/t gold from 46m; and

MBRC084
3m at 5.98 per cent zinc, 3.33 per cent lead, 54g/t silver from 77m.

“We have received all the results for that drilling, which are currently being included in an updated geological and resource model for T1,” Tyson said.

“Prefeasibility work is continuing.”

Peel Mining Ltd. (ASX: PEX)
… The Short Story

Unit 1
34 Kings Park Road
West Perth WA 6005

Ph: (08) 9382 3955

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

DIRECTORS
Rob Tyson, Simon Hadfield, Graham Hardie

Impact Metals Joins Pilbara Gold Rush

Thursday, October 26, 2017
THE INSIDE STORY: Diversified exploration play, Impact Minerals (ASX: IPT) has made a move into the famous Pilbara iron ore region of Western Australia, but this company has a golden gleam in its gaze.

Ever since Paddy Hannan rode into town with saddle bags bursting with gold nuggets, Kalgoorlie and its immediate surrounds have been the hub of Western Australian gold mining.

The region has provided plenty of gold since to keep gold bugs interested, which has left the bulk of the biggest state in the country open to mining of other commodities.

The Pilbara has long been synonymous with iron ore, however there is an emerging group of companies starting to believe it also hosts a wealth of the yellow stuff.

In August, Impact Minerals joined the latest WA gold rush by applying for nine new 100 per cent-owned Exploration Licences in the Pilbara covering 1,300 square kilometres it considers prospective for Witwatersrand-style conglomerate-hosted gold.

The company’s interest was sparked by a review of the Purdy’s Reward discovery in the West Pilbara at base of the geological Fortescue Group by Artemis Resources (ASX: ARV), leading to its Joint Venture with Novo Resources Corporation.

This was followed by the discovery of nuggets and conglomerates in the Central Pilbara by De Grey Mining (ASX: DEG).

The excitement generated from the Artemis/Novo work stemmed from the indication of the possible presence of Witwatersrand-style gold in the Pilbara

For those unfamiliar with the Witwatersrand Basin in South Africa – the region holds the world’s largest known gold reserves and has produced 1.5 billion ounces.

“Although I have been in the industry for a very long time, it’s a little-known fact that I did my PhD on age equivalent basins on the Witwatersrand in South Africa,” Impact Minerals managing director Dr Mike Jones told The Resources Roadhouse.

“So, I’m very familiar with a lot of the history of the Witwatersrand and how it was formed.”

Impact’s new licences cover various parts of the prospective contact between the older Pilbara granite-greenstone terrain and the overlying Fortescue Group rocks in the East Pilbara region including areas close to, and adjoining, licences held by Novo Resources Corporation

Anybody with an extensive knowledge of the Witwatersrand region such as Jones, was sure to take interest in the increasing recognition hitting the market of extensive conglomerate-hosted gold across the entire Pilbara region at several different horizons within the Fortescue Group.

In fact, the interest just served to confirm his, and the company’s, long-held opinion that the area holds much potential for Witwatersrand-style gold.

Of note is that gold in the age equivalent Witwatersrand Basin of South Africa occurs mostly within the middle part of a six-kilometre-thick sedimentary sequence where it mostly occurs as fine to coarse gold associated with carbon seams.

It also produces the region’s characteristic ‘watermelon seed’ nuggets.

“The breakthrough that Nova made was to demonstrate there are a lot of synergies with the Witwatersrand happening in the Fortescue Group basin as it was forming,” Jones said.

‘So, when the announcements came out earlier this year about the shape of the nuggets – the so-called watermelon seed nuggets – that grabbed everybody’s attention, we subsequently pegged all the available ground, which is located mostly in the East Pilbara region.”

The new Impact licences are located in a part of the East Pilbara where gold-bearing conglomerates were first recognised and mined 130 years ago.

This is in the Beatons Creek area where they form part of the Hardy Formation in the lower to middle parts of the Fortescue Group.

“Most people have been focused on the granite greenstones terrain in the area, which is known for its hard rock deposits,” Jones explained.

“Not many people have looked up into the Fortescue area for gold as the conglomerate unit that hosts it is relatively narrow in places and doesn’t look encouraging for traditional gold prospecting activities.

“But you don’t find gold unless you look for it!”

Jones explained that the De Grey results came from the same stratigraphic horizon as Purdy’s Reward below the basalt

“It is 130 kilometres away from Purdy’s Reward in exactly the same position,” he said.

“If you wanted any more proof that this thing has any regional extent – there it is.

“The question is how thick it is and all the other exploration questions that we need to ask.”

Impact Minerals has taken a great deal of encouragement from what it considers to be an overlooked breakthrough made by Novo’s CEO Dr Quinton Hennigh.

Hennigh determined that many of the nuggets in the Witwatersrand may have been sourced from the reworking of gold deposited by microbial activity and basinal fluids early in the history of the sedimentary basin.

According to Jones, this removes the requirement for a source for the nuggets from the underlying granite-greenstone terrain.

“That was one of the criticisms levelled at the potential for these conglomerates to host significant gold,” Jones explained.

“This was an important breakthrough by Dr Hennigh and, once we understood that we acted quickly to acquire the ground.”

Impact currently has a review of previous exploration at the Pilbara gold project underway, from which it will design a program of initial on-ground activities expected to commence in early November under a Miners Right.

Impact has indicated it will be considering options for funding exploration on this new project.

As exciting as the Pilbara gold project could be, the company’s main focus remains its emerging high-grade gold and silver discovery at Commonwealth-Silica Hill 100 kilometres north of Orange in New South Wales.

Impact has continued to produce encouraging results from the Silica Hill prospect.

Recent drilling identified east-west trending structures as an important control of the high-grade zones and shoots within the overall north east trending zone of mineralisation.

It demonstrated the entire vertical extent of the mineralised system has been preserved from an upper barren silica-pyrite zone that passes progressively down and laterally through low grade silver gold veins.

Higher grade gold and silver veins and a lower zinc-lead-copper zone containing ‘feeder veins’ of massive base metal sulphides also have high-grade gold and silver in places.

The most recent results were achieved at Silica Hill, where drill hole CMIPT071 intersected a 30-metre-thick zone of quartz-pyrite-arsenopyrite veins from 83 metres down hole.

This intersection was encountered some 30 metres down plunge from a gold-rich zone the company had identified in previous holes CMIPT063 and 060.

Results from these holes included:

CMIPT063
returned 98 metres at 0.7 grams per tonne gold and 53g/t silver from 58m down hole, including 31m at 1.3g/t gold and 70g/t silver from 58m down hole, which included 0.6m at 0.8g/t gold and 2,090g/t silver and 0.2 per cent zinc from 85.4m; and

0.3m at 6.2g/t gold, 149g/t silver, 8.4 per cent zinc, 3.9 per cent lead and 0.2 per cent copper; (feeder vein)

CMIPT060
37m at 1g/t gold and 31g/t silver from 51m ending in mineralisation.

“We expect to be back drilling at Commonwealth mid-December,” Jones said.

“We have drilled a lot of holes at Silica Hill already, through which we have learned a lot about the prospect.

“This really is developing into being a major regional system – it’s not just one small lens, it is part of something much bigger.”

 

Impact Minerals (ASX: IPT)
… The Short Story

HEAD OFFICE
26 Richardson Street
West Perth WA 6005

Ph: +61 (8) 6454 6666

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

DIRECTORS
Peter Unsworth, Dr Mike Jones, Paul Ingram, Markus Elsasser, Felicity Gooding

Cassini Resources Set to Ride the Nickel Cycle High

Thursday, October 12, 2017
THE INSIDE STORY: Cassini Resources (ASX: CZI) is well-positioned to take advantage of the expected growing global demand for nickel and copper created by the emerging electric vehicle industry.

There was a time in the not-to-distant past when it was thought that stalwart metals such as nickel and copper were to become the horse-and-cart of modern battery technology as demand grew for a fresher suite of commodities.

That was until technology overlord and Tesla CEO Elon Musk was reported on the Benchmark Mineral Intelligence Blog to have said:

“Our cells should be called nickel-graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide… [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”

It was a moment that made the market stand back and take notice of the position nickel could once again occupy on the global stage.

As analysts and market watchers realised the importance of nickel and its capacity as a critical input for electric vehicle battery manufacturers, Musk’s words and the subsequent response were not lost on mining giant BHP, which flagged its intention to take its share of the electric vehicle inspired nickel pie by building the world’s biggest nickel sulphate plant.

BHP Nickel West will spend $US43.2 million on a downstream processing plant at Kwinana, south of Perth, as part of a broader plan to reposition the business around the lithium-ion battery market.

BHP Nickel considers demand from the battery market could account for about 90 per cent of BHP’s nickel output within five or six years.

The conversation in the nickel market has been driven by this demand, particularly surrounding the industry’s preferred feedstock – high purity nickel sulphate.

It is becoming apparent that an insufficiency of sulphate production capacity exists to meet even the conservative demand growth scenarios being developed.

“There is a demand for good sulphide feed,” Cassini Resources managing director Richard Bevan told The Resources Roadhouse.

“Through our original scoping study and the current Further Scoping Study, we have demonstrated that we can produce a high-quality, clean concentrate that will be very marketable.

“The other thing presently in our favour, is that there are very few projects like ours in the pipeline.

“Now that the Nova operation of Independence Group (ASX: IGO) has come online, we haven’t been able to find another nickel sulphide project to be at the same stage we are – one that is funded, and of the same scale as the West Musgrave Project.”

Cassini Resources’ focus of late has been centred on the company’s West Musgrave Project, which is subject to a farm-in and Joint Venture deal with OZ Minerals (ASX: OZL)

The WMP is a world-class asset with a current Resource boasting over 850,000 tonnes of contained nickel and 1.8 million tonnes of contained copper within the Nebo and Babel deposits.

It also contains the 156 million tonnes at 0.6 per cent copper Succoth deposit

The farm-in and Joint Venture Agreement entitles OZ Minerals to earn up to 70 per cent of the project by spending $36 million towards feasibility studies and exploration.

The first stage of the farm-in is currently underway and involves Further Scoping Study (FSS) activities aimed to follow-up results achieved in an earlier Scoping Study completed by Cassini in 2015.

The latest work includes metallurgy, mining optimisation and alternative power solutions, and is due for completion during Q4 this year.

The testwork carried out by Cassini in the 2015 scoping study was focused on the relatively high head grade ore domains, which would be processed through a 1.5 million tonnes per annum treatment plant.

The FSS testwork program has been looking at whole ore composites and variability samples, representative of the ore domains and average head grades aligned with the increased project size development options.

To date, the JV has been able to increase its understanding and confidence in the metallurgical performances across a complete range of mineralisation types within the Nebo-Babel deposits.

This was achieved through focussing on lower head grade samples across the primary and weathered ore domains, some of which were not previously tested.

A major component of the testwork included optimisation of the process flow sheet, and testing of alternative reagent regimes, all of which were aimed at further improving nickel and copper recoveries and concentrate grades.

The program has produced separate, saleable nickel and copper concentrates from all mineralised domains, from which Cassini expects to receive by-product credits for cobalt, platinum, palladium and gold.

“When we commenced the FSS we were targeting two key technical outcomes to ensure the viability of the project – the identification of a near-by groundwater source, and confirmation that the metallurgy results we had previously achieved could be reproduced at lower nickel and copper grades and throughout the weathered zones,” Bevan said.

“We were extremely pleased to achieve positive outcomes in both endeavours.

“The most important outcomes were that the metallurgical program confirmed there to be no fatal flaws in the mineralogy and that the processing flowsheet will be comparable to other nickel and copper sulphide projects globally

“With the amount of metallurgical work for a scoping level study we have carried out through the course of the FSS, we are extremely confident that we will continue to improve these outcomes as we progress through the next study phases.”

Cassini has no desire to rest on its metallurgy laurels and is preparing further work on the optimisation of concentrate grades and recoveries by completing additional locked cycle tests on multiple master composites, representing run of mine material across different ore domains and nickel and copper grades at various stages through the mine plan.

Cassini also completed a trial magnetic separation test on Nebo massive sulphide mineralisation as an alternative processing method aimed at improving nickel concentrate grade in the final step of the process flow sheet.

This produced encouraging results, including a 11.7 per cent nickel concentrate with greater than 80 per cent recovery.

This proof of concept will be applied to the disseminated styles of mineralisation, and if proven successful could potentially lead to lower capital and operating costs.

An important aspect of the deal with OZ Minerals that should not be overlooked is that as a junior exploration and development company, Cassini is free carried through to a Decision to mine at the WMP.

The farm-in/JV also includes OZ to undertake a minimum of $8 million expenditure on regional exploration in Stages 2 & 3.

All of which, provides the company with a clear and defined development pathway to cashflow.

“The thing that we have always believed with the West Musgrave Project, which we have demonstrated and now confirmed with this latest work, is that we are going to have a project that has a long mine life – that allows us to take advantage of the cyclical nature of commodity prices,” Bevan said.

“A really key decision for us will be whether OZ Minerals wants to proceed or not.

“It’s always been a big project, so for a company like Cassini the question has always been – how do we fund that?

“Should OZ decide to push the button on the next phase that immediately provides more certainty around the funding pathway.”

Cassini Resources Limited (ASX: CZI)
… The Short Story

HEAD OFFICE
10 Richardson Street
West Perth WA 6005

Phone: +61 8 6164 8900

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

DIRECTORS
Mike Young, Richard Bevan, Dr Jon Hronsky, Phil Warren, Greg Miles

Blackham Resources Executes Funding Plan

 

THE INSIDE STORY: Despite the recent efforts of the Western Australian government to hamstring the state’s gold sector, the commodity has been enjoying a buoyant 2017.

Globally, the actions of governments of larger scale and influence have provided a boost to the gold price resulting in it having gained nine per cent in just the past two months, and 17 per cent for the calendar year to date, to be hovering above the $1600 (US$1300) per ounce range.

For any local company currently catalogued in the ‘gold producer’ category this is good news, especially if its project can demonstrate it has room to improve and has the support of strong financial backers.

Blackham Resources (ASX: BLK) recently completed an Expansion Preliminary Feasibility Study (PFS) on the company’s 100 per cent-owned 6.2-million-ounce Matilda and Wiluna gold operation in Western Australia.

The PFS demonstrated robust economics, a large increase in reserves and improved economies of scale supporting the operation’s expansion.

Over the last six years, Blackham has consolidated the Wiluna Goldfield with a tenement package covering over 1,100 square kilometres, into one operation that has historically produced over 4.3 million ounces.

Blackham recommenced production in October 2016, and for the period from commencement until 30 June 2017, has produced 39,402 ounces of gold, with production for the coming September quarter expected to increase due to both higher tonnes processed and a higher-grade profile from mining to commence in the project’s open pits.

Blackham is the latest in a line of owners of the project, however, the company’s renewed approach to the operation has enabled to breathe life into it where previous owners had struggled.

Historically, over the last 20 years, the Matilda operation had relied predominately on underground feed.

Blackham has established 15 million tonnes at 2.3 grams per tonne gold (85 per cent at Reserve classification) in open pit feed, which is included in the current Expansion PFS Mine Plan.

Where the company has been particularly successful to date is having identified consolidating, and defining orebodies all located within 20 kilometres of the existing Wiluna gold plant.

From the large existing Resource base of JORC 2012-compliant 61 million tonnes at 3.1g/t gold for 6.2 million ounces of gold, the Expansion PFS brings Reserves at the Wiluna and Matilda operation to 1.2 million ounces of gold (15Mt at 2.5g/t) – representing an increase of 116 per cent in the space of one year.

The Wiluna and Matilda Expansion PFS outlines an economic plan to process both oxide ore (1.8Mtpa) and sulphide ores (1.5Mtpa) for a combined processing capacity of between 2.3 and 3.3 million tonnes per annum.

Key operating parameters to emerge from the PFS include:

Gold Production of 1.47 million ounces of gold from processing 19.1 million tonnes at 2.8g/t gold at an 86 per cent recovery over nine years;

The first six years of expanded plant gold production to average 207,000 ounces of gold at 3.1g/t gold;

Base load open pit production (including stockpiles) to underpin plant feed, which totals 15.1 million tonnes at 2.3g/t gold with an average stripping ratio of 11.7:1 mined over nine years; and

An initial underground production total of 4 million tonnes at 4.7g/t mined over nine years, which is likely to be extended from the large underground resources currently sitting outside the mine plan of 3 million ounces (20Mt at 4.8g/t gold);

The study determined the is expected to take 15 months from commencement and is assumed to be completed in June 2019.

“The Expansion PFS also provided an initial assessment of alternate processing routes to the base case expansion scenario while also providing an indication as to where the business model can further be improved,” Blackham Resources managing director Bryan Dixon told The Resources Roadhouse.

“As we move into the Expansion Definitive Feasibility Study, we will run some of these other possible cases as parallel investigations to benchmark capital cost and return metrics to verify the best possible case for the Board to consider.

“There are not many operations sitting in premium mining jurisdictions that have the geology on a scale such as what Wiluna and Matilda boasts.

“We have the potential to support a plus-200,000-ounce operation with strong grade profile and long mine life as the expanded Wiluna processing facility will have the ability to process a variety of ore types.”

The work completed by Blackham and the potential it has revealed may have bypassed the attention of local sophisticated investors, but not that of The Australian Special Opportunity Fund, a New York-based institutional investor, managed by The Lind Partners.

Lind Partners has come on board to the tune of $72 million in funds to enable Blackham to continue to advance the Expansion DFS and, more importantly, to manage its balance sheet whilst it implements improving operational cash flows from the operation.

“We have been following Blackham since Lind’s first investment in 2012, shortly after it bought into the Matilda gold project and have seen them evolve from an explorer with a 300,000 ounce resource to a gold producer with a 6.2 million ounce resource and an impressive growth story.” Lind Partners managing director Jeff Easton said when the deal was announced.

“We are excited to return at this crucial point to fund Blackham and back management as they demonstrate the next chapter of their significant growth story.”

Although it has access to the funds, Blackham doesn’t expect it will need to draw down on them anytime soon as it plans to utilise its operating cash flows to fund the Expansion.

Of course, this will require a suitable funding solution, but what the Lind Facility provides is time to choose the optimal funding solution without Blackham needing to head back to the market, tapping its loyal shareholder base in a capital raising.

“Our final funding solution for the Expansion will ideally mean that we can secure a fully-funded solution that minimises dilution to existing Blackham shareholders,” Dixon said.

“The Lind funding basically allows a flexible funding solution that ensures we continue with the exploration and reserve definition work we have been carrying out.

“It also increases our current hedge facilities, allowing us to manage gold price risk.”

The agreement allows Blackham to carry out additional private placements of equity and debt funding facilities without restricting the company’s ability to enter into strategic industry partnerships.

As the Wiluna and Matilda operation’s production profile grows, Blackham has the flexibility to manage its funding requirements monthly, letting it monitor gold price fluctuations and feasibility and resource/reserve drilling requirements.

The Lind Fund facility provides Blackham with certainty of a flexible base level of funding over the next 24 months.

“The Lind Partner funding has given us more than cash, it has provided us with valuable time, with which we can take the robust economics defined by the Expansion PFS to enter into discussions with potential financiers to allow financing to be gained on attractive financing terms,” Dixon said.

“We have appointed a financing advisor who has opened discussions with potential financiers with a view to re-sizing the current debt facility.

“We have received a number of expressions of interests for the financing of the Expansion and we intend to continue discussions with financiers in parallel to the completion of the Expansion DFS.”

Blackham Resources Limited (ASX: BLK)
… The Short Story

HEAD OFFICE
Level 2, 38 Richardson St
West Perth WA 6005

Ph: +61 8 9322 6418

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

DIRECTORS
Milan Jerkovic, Bryan Dixon, Alan Thom, Greg Miles, Peter Rozenauers

 

Investigator Resources Explores Paris Silver Lining

THE INSIDE STORY: Infill drilling conducted at a silver-copper project in the southern Gawler Craton, South Australia, supported Investigator Resource’s (ASX: IVR) belief that its Paris project is Australia’s best undeveloped silver deposit.

“The infill program completed in late 2016 achieved a significant increase of 26 percent to 42 million ounces of contained silver at a grade of 139 grams per tonne, which is way above any of our peer deposits as far as grade goes,” Investigator Resources managing director John Alexander told The Resources Roadhouse.

“It’s a very robust project.

“With the infill drilling we confirmed the geological model for the project and believe there’s potential to add another 20 percent from an area we now recognise we haven’t drilled, but we’re happy with where the resource now stands, especially with the upgrade which converted 55 percent of our contained ounces to indicated.

“We’ve now got ourselves into a position where we can now move into a pre-feasibility study.”

The component of the recently announced resource – classified as Indicated – largely corresponds with the area of infill drilling and shows a 41 percent increase in grade to 163g/t silver over the 2015 Inferred resource of 8.8 million tonnes at 116g/t silver for 35 million ounces of silver.

The revised resource was independently prepared by H & S Consulting Pty Ltd (H&SC) using the Multiple Indicator Kriging (MIK) method of estimation, considered the most suitable estimation method for the complex mineralisation style of the Paris deposit.

The mineral resource estimates were reported using a silver cut-off grade of 50g/t and were constrained to above the 25 metres relative level (mRL).

As well as the high grades for the open pit development scenario the tonnage grade profiles also offered flexibilities by adjusting the cut-off grades for more ounces at times of higher silver prices; e.g. to 30g/t cut-off for 50 million ounces silver or to higher grades at times of lower silver prices; e.g. to 70g/t cut-off for 6.2 million tonnes at 179g/t silver for 36 million ounces.

The retention of the bulk of the ounces at the high cut-off is a reflection of the robust grade profile for the Paris project.

Investigator discovered the Paris silver resource in 2011 and then developed flow-on discovery opportunities for copper-gold porphyry-style deposit at Nankivel, five kilometres southeast of the Paris project all within the company’s 100 percent-held Peterlumbo Tenement.

The Paris silver deposit is the first solid discovery in South Australia of an epithermal deposit style.

The Peterlumbo tenement is 583 square kilometres in size and located in the pastoral country of the northern Eyre Peninsula district approximately 350 kilometres northwest of Adelaide and 60 kilometres northwest of the town of Kimba.

Anderson said that company would now concentrate on the pre-feasibility study and does not need to go back to drilling Paris at this time.

“The extent of the resource has been pretty well defined and we’ve closed the drilling,” he explained.

“However, having said that there’s lots of exploration potential to add resource to Paris in satellite deposits, in fact Paris may be a satellite deposit to something bigger going on with regards to the mineral system.

“It’s quite shallow with the shallowest mineralisation coming to within 5m of the surface and stems down to about 160 metres.

“It’s a breccia so it’s highly variable in grade and distribution of the resource box but we’ve been drilling with a lot more confidence knowing that high-grade parts of the deposit are very much part and parcel of the resource population.

“That’s the main reason we’ve been able to increase the grade and resource to contained ounces basically by infill drilling an area that had previously been drilled.”

On the subject of production, Anderson said that once the pre-feasibility had been completed he expected the company to move quickly onto full feasibility, but he felt it would be several years before the decision to mine was made. 

In the meantime, optimisation studies are being conducted regarding high-grade starter pits, mineralised waste and the type of metallurgical options available to treat the ore.

“The choices we’re looking at came out of our original metallurgical work in 2013 which produced positive results in both leaching and flotation.

Standard leaching is the likely best option but we are also looking at flotation as an alternative to produce a concentrate we could possibly sell to a smelter.”

The soft host rock and shallow depth of the Paris deposit offers the potential for an open pit mining operation and H&SC has modelled and classified the Paris resource in accordance with this assumption.

“We’re a lot smaller than a project like Carrapateena but we’re at the surface and the Paris project is a very good fit for a company of our size, however we are aiming higher,” Anderson said.

“There’s potential for more silver, but more importantly larger copper-gold targets in the immediate Paris area.

“We believe the Nankivel prospect, just five kilometres south of Paris, is the start.

“We’ve located a large intrusive system, which is the centre to the whole mineral system, to which we think Paris is a satellite epithermal deposit and we see potential for other shallow epithermal deposits over the Nankivel area.

“We’re postulating that there’s porphyry copper-gold potential deeper under the epithermal outcrops.

“That’s a real breakthrough for South Australian geology because we believe these rocks are Olympic Dam age and that’s really challenging the dogma that Olympic Dam is a style where you wouldn’t expect porphyry deposits to be associated within the same province.”

Co-funded by the South Australian Plan for Accelerating Exploration (PACE) drilling initiative, results from Investigator’s first hole at Nankivel in August, 2016, strongly implied the hole was on the margin of a copper-gold mineralised porphyry system.

Four diamond drill holes were drilled in early 2017 aimed at Induce Polarisation chargeability anomalies within a large demagnetised zone.

All holes intersected potassic-altered porphyritic monzodiorite over the drilled area variously showing the fracturing, veining and multiple intrusives expected in a mineralised porphyry system.

The potassic alteration has the minerals expected in a mineralised porphyry – potash feldspar, biotite, magnetite and tourmaline.

The assays are pending, but the copper mineralisation is visually estimated to be low to modest in content and is not expected to produce significant grades.

The mineral zoning suggests that any higher-grade copper shell to a modelled late intrusive is at least 500m below the surface beneath current drilling.

Although deep, there is alteration and intrusive evidence for multiple porphyry events at Nankivel that implies shallower (telescoped) porphyry deposits.

The nearest town to the project is Kimba about 60km to the southeast with the Iron Road iron ore project to the west and the major town of Whyalla another 140km to the east.

Anderson said railway and port facilities were not a consideration as the company planned to produce silver dore that could be trucked quite easily.

A likely water source has been identified in a large palaeochannel aquifer 12km east of the Paris project through prior Investigator drilling and collaborative airborne electromagnetic surveying by CSIRO.

Investigator Resources Limited (ASX: IVR)
…The Short Story

HEAD OFFICE
18 King Street
Norwood SA 5067

Ph: +61 8 7325 2222

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

DIRECTORS
David Ransom, John Anderson, Bruce Foy, David Jones

Pioneer Resources poised for Lithium-Caesium-Tantalum success

 

THE INSIDE STORY: Amidst the glut of LCT hopefuls, Pioneer Resources (ASX: PIO) is poised to reward shareholders on multiple fronts.

Pioneer Resources has declared a clear and committed focus on exploring for and developing new-technology minerals.

The commodities in question for Pioneer – lithium and cobalt – are both core components of the next generation battery technologies which are poised to become a mainstream energy and power source in the not too distant future.

“As a company, we formed a view some 18 months ago, that the future growth in the demand minerals is highly likely to come from these ‘technology metals,” Pioneer Resources managing director David Crook told The Resources Roadhouse.

“The new end uses being developed for lithium, cobalt and graphite in the battery and energy storage sectors, and the looming exponential commercial adoption of these technologies on a global scale, make a compelling case for these commodities.”

With this aim in mind and a highly experienced Board with wide reaching industry contacts, Pioneer has accumulated a portfolio of high quality lithium and cobalt assets in Western Australia and Canada, and has moved rapidly to add value to these assets.

The core focus is the Pioneer Dome lithium-caesium-tantalum (LCT) project in the eastern goldfields of Western Australia.

To date, 19 targets have been identified and prioritised along a current strike length of 20km, and drilling at Pioneer Dome has confirmed the company’s view of the project’s strong potential for the discovery of a significant lithium spodumene deposit – the pursuit of which will be a focus for the next phase of drilling.

Highlight drilling intersections to date include:
11 metres at 2.63 per cent lithium dioxide (Li2O) from 44m;
6m at 3.66 per cent Li2O from 47m; and
5m at 2.22 per cent Li2O from 47m.

The Pioneer Dome project covers an area of approximately 341 square kilometres comprising six exploration licences plus a mining lease which has been pegged over the Sinclair caesium Zone, and it is the caesium which is the main current value driver for Pioneer.

The small resources sector is familiar with lithium-caesium-tantalum projects, but it is generally taken as a given that the ‘L’ in ‘LCT’ is what it is all about.

Not so for Pioneer.

The company made a world class caesium discovery at the Sinclair Zone, while drilling at Pioneer Dome in October 2016.

Specifically, it is a pollucite deposit; pollucite is a rare caesium mineral found in extremely differentiated LCT pegmatite systems.

The world’s supply of pollucite is highly constrained and Pioneer is committed to the rapid commercial development of the deposit.

Pollucite is primarily used in the manufacture of caesium formate brine, a high-density fluid used in high temperature-high pressure oil and gas drilling.

It acts as a lubricant and helps deliver higher production rates, and is non-corrosive on drilling equipment and can enhance hydrocarbon recovery, plus it is largely non-detrimental to the environment.

“The company’s priority is to expedite the commercialisation of the Sinclair caesium Zone,” Crook said.

“A Mining Lease application has been submitted and the next step is the development of an exploration decline to facilitate the extraction of a 5,000 tonne bulk sample of direct shipping quality pollucite for metallurgical processing.

“We will then move to select the mining contractor for the bulk sample mining and then go ahead with the extraction of the bulk sample, and our timetable indicates we will complete this work in the second half of the 2017.”

Global specialty chemicals and materials giant Cabot Corporation (NYSE: CBT) is the dominant caesium formate manufacturer, producing around 8,500 barrels per annum, which equates to an annual EBITA of approximately $40 million for Cabot’s Specialty Fluid’s division.

It is not uncommon for caesium formate to be recycled after its initial use and be used again, such is the scarcity of supply and the key role it plays in oil and gas drilling operations.

Pioneer confirmed a maiden pollucite Mineral Resource Estimate at the Sinclair Zone in March this year, of: 10,500 tonnes of pollucite at 17.1 per cent caesium oxide (Cs2O) in the Measured category.

This makes the Sinclair Zone the world’s third largest known pollucite deposit, and with next phase of drilling planned for the current quarter, there is upside potential.

Pioneer’s caesium discovery and the fact it is potentially highly valuable has not gone unnoticed.

The company is currently in ongoing, advanced negotiations with potential off-take partners, and aims to conclude these arrangements by the end of the calendar year.

With the pollucite in production, Pioneer plans to utilise the free cashflows generated to accelerate the exploration and development of its other main projects.

At Pioneer Dome, this will include further drilling of multiple lithium spodumene targets.

Also at Pioneer Dome, the company has a Farm-in Agreement with Lepidico (ASX: LPD) over the PEG009 lepidolite target within the project area. Lepidolite, as distinct from spodumene, carries with it a perception of being difficult to extract.

The Farm-in provides Pioneer with a solution to unlock the potential lepidolite value at Pioneer Dome, and so far results from the work undertaken by Lepidico have identified that the lepidolite mineralisation at Pioneer Dome is suitable for extraction via Lepidico’s L-Max process, which produces lithium carbonate directly from lepidolite.

This work will continue under the Farm-in Agreement.

In Canada, Pioneer has an Option Agreement and Strategic Alliance with International Lithium Corp (TSX.V: ILC) to earn up to an 80 per cent interest in the Mavis Lake and Raleigh lithium projects, in the province of Ontario.

An exploration budget of C$1 million has been allocated to these projects, and Pioneer has completed a highly successful maiden 12 hole drill program at Mavis Lake.

Four holes were drilled at the Fairservice target and all intersected thick spodumene-bearing pegmatites.

Seven holes were drilled at the PEG018 target and all intersected spodumene pegmatites with thicknesses between 1.5m and 9.85m, and the target remains open to the east and west and at depth.

Plans are currently underway for follow up drilling at Mavis Lake, which is planned for the current quarter.

Closer to home, Pioneer recently completed a review of the cobalt potential at the Blair Dome project, 35 km south east of Kalgoorlie.

This resulted in the delineation of six cobalt targets with multiple, broad zones of high-grade cobalt mineralisation, from historic drilling.

Highlight results included:
12m at 0.266 per cent cobalt from 106m; and
10m at 0.257 per cent cobalt from 34m.

These cobalt results represent an extra string to the Pioneer bow, and the company is planning a targeted exploration campaign at Blair Dome, including drilling, to unlock its full cobalt potential.

Pioneer has its foot on the right mix of projects, at the right time.

“Simply put, our strategy is to discover and develop high value mineral resources within our project areas to maximise the value of the assets and deliver strong value to shareholders – and we are of the view that we are now in an excellent position to do so,” Crook said.

Pioneer Resources Ltd. (ASX: PIO)
… The Short Story

HEAD OFFICE
21 Ord Street
West Perth WA 6005

Ph: (08) 9322 6974

Email: pioneer@pioresources.com.au
Web: www.pioneerresources.com.au

DIRECTORS
Craig McGown, David Crook, Wayne Spilsbury, Allan Trench

 

Northern Hemisphere Shines on S2 Resources

THE INSIDE STORY: S2 Resources (ASX: S2R) celebrates its second anniversary this October – just as the Northern Lights, aurora borealis, reappear over Swedish Lapland to rejoice in their own electrically charged skyward festival. By Margie Livingston

In just two short years, S2 Resources has established a strategic land holding in Scandinavia, achieved exploration success across its projects and has remained well positioned to fund further exploration and expansion in its quest to discover the next ‘Nova’.

With a shareholder base and management team established on the back of Sirius Resources’ Nova success, S2 feels the weight of expectation, and believes Scandinavia may well be the region that contains terrific opportunity and the next noteworthy result for investors.

The company’s current priority is its Scandinavian projects where it expects better outcomes per drilling dollar spent.

“We believe, that at the current time, our drilling dollars will be more intelligently spent on the projects in Sweden and Finland, rather than Western Australia, because there are numerous targets with surface or near surface clues” S2 Resources managing director and CEO Dr Mark BennetThe Resources Roadhouse.

S2’s exploration has advanced with positive drilling and geophysical results at the Bjurtraskgruvan and Skaggtraskberget VMS prospects within its 100 per cent-owned Skellefte project in Sweden.

The last prospect drilled at Bjurtraskgruvan during the northern hemisphere winter returned the best intersection yet and an electromagnetic survey suggests it might continue for another 450 metres down plunge.

“A single hole drilled 135 metres down plunge from previous S2 drilling at Bjurtraskgruvan intersected the thickest zone of copper mineralisation seen so far,” Bennett said.

The hole intersected a 24.4m thick zone grading 1.1 per cent copper from 220.7m, comprising remobilised veinlets of chalcopyrite, with several intervals of higher grade copper mineralisation, including:

1.05m at 4.11 per cent copper, 0.65 per cent zinc and 19 grams per tonne silver from 221.5m and

3.6m at 2.44 per cent copper and 11.5g/t silver from 224.3m.

The new intersection is considered close to true width, and demonstrates the Bjurtraskgruvan VMS system extends for at least 450m down plunge from its outcrop, remaining open down plunge.

A downhole electromagnetic survey identified a conductor centred approximately 30m to the east of the hole, suggesting the intercept may be adjacent to more massive sulphides.

In addition, the results of a new fixed loop electromagnetic (FLEM) survey defined a large plunging conductor extending a further 470m down plunge from this hole, for a total plunge extent of 900m – so far.

The VTEM anomaly highlights the up-plunge near surface projection of the VMS system, but FLEM better indicates the potential size, extent and position of it at depth.

S2’s drilling and geophysics confirms the Bjurtraskgruvan prospect comprises an elongated shoot which represents a substantial volume of mineralised material.

“The focus of future drilling at Bjurtraskgruvan will be to define its limits and identify any higher grade sweet spots within the overall system,” Bennett said.

Meanwhile, at Skaggtraskberget, a prospect located 4.5 kilometres west of Bjurtraskgruvan, deeper drilling represents an opportunity where S2 has confirmed the presence of a 350m long mineralised zone containing elevated levels of silver and will continue to assess and explore in this world-class VMS belt.

Drilling will recommence in Sweden once the spring thaw is completed with Skaggtraskberget likely to be the first drilled in the summer drilling campaign.

With ground being exposed by melting snow, various targets and prospects in Sweden and Finland will be explored using surface prospecting.

Two large new exploration licences surrounding granted licences at Nasvattnet and Tjalmtrask have been applied for and surface prospecting will include searching for the source of the clusters of mineralised boulders at these two prospects.

In addition to applying for exploration licences in Sweden, S2 has been increasing its tenure in the Central Lapland Greenstone Belt (CLGB) in Finland following the recent discovery of outcropping high-grade gold mineralisation at the nearby Aurora zone of the Risti gold prospect, owned by TSXV-listed Aurion Resources.

This discovery reaffirms S2’s view of the CLGB being a potentially highly endowed but under-explored gold province.

S2’s summer drilling campaign will also involve first pass field assessment of this extensive land package, approximately 1,030 square metres.

The company believes its focus on the Scandinavian region deserves a strong human resources presence to ensure effective management of exploration programs.

“S2 is fully committed to its Scandinavian projects and as such three Perth based geologists have relocated to northern Sweden,” Bennett explained.

“This is a direct reflection of our commitment to exploration in the region and managing programs meticulously and expeditiously.”

With the northern hemisphere being a focus for S2 it seems the name of its Western Australian asset may have taken inspiration from the north as well.

‘Polar Bear’ is a large unexplored holding in the heart of the WA goldfields, on trend from major gold mines.

The Baloo-Nanook trend is a 10km long prospective corridor with three gold hotspots in wide spaced shallow aircore drilling.

To date, 348,000 ounces of gold resources have been delineated at Baloo and Nanook.
 
However great the potential of Polar Bear it is not, at this stage, a priority.

“While we focus on projects in Finland and Sweden the company could entertain ways of divesting Polar Bear” Bennett said.

“As a junior resource company, we are always looking at ways to grow and add value for shareholders.

“Our focus is on mainstream commodities such as gold and base metals in politically stable jurisdictions such as Australia and Europe.

“We constantly look at opportunities with low sovereign risk and well developed infrastructure, which both regions have.

The Fraser Institute’s 2016 annual survey of mining and exploration companies (published February 2017) determined the top jurisdictions in the world for investment based on the Investment Attractiveness Index, which takes into consideration both mineral and policy perception, are Saskatchewan, Manitoba, WA, Nevada, Finland, Quebec, Arizona, Sweden, the Republic of Ireland and Queensland.

“We like North America as a jurisdiction and Nevada in particular, as it is a prolific gold district,”Bennett enthused.

“There is huge production and resources in the area with 10, 20, 30 million ounce deposits and more big deposits still being found.

“Our shareholders would obviously like S2 to discover another Nova, something big, and as a Board we aim to find an elephant rather than a tiddler.

“To do that, our search for assets to complement and increase our portfolio, which hopefully leads to a large discovery, is an ongoing process and one that is global.”

S2 is well positioned to achieve this objective with a highly successful team of explorers, a breadth of corporate experience, a portfolio of highly prospective and strategic ground and a strong balance sheet.

“Our Scandinavian prospects are exciting and we are fortunate to be in a position of having the cash to be able to seriously consider acquisition or joint venture opportunities,” Bennett said.

“Our objective is to find the next big prospect – it might be next month or it might be a few years, but we are focusing on that.”

As the mysterious phenomena of the Northern Lights dances in the skies over the northern magnetic pole, perhaps it will shine some magic over S2’s current and future prospects, leading to that next phenomenal discovery.

S2 Resources (ASX; S2R)
…The Short Story

HEAD OFFICE
North Wing, Level 2
1 Manning Street
Scarborough WA 6019

Ph: +61 8 6166 0240

Email: admin@s2resources.com.au
Web: www.s2resources.com.au

DIRECTORS
Jeff Dowling, Mark Bennett, Anna Neuling, Grey Egerton Warburton.

Gold Road Resources Readies for Big Exploration Advance

THE INSIDE STORY: Seasoned market watchers would be aware of the 50:50 Gruyere Joint Venture (GJV) deal, Gold Road Resources (ASX: GOR) struck in 2016 with international gold producer Gold Fields Ltd.

They would also know Gruyere as a 3.5 million ounce project forecast for average annualised production of 270,000 ounces of gold for 13 years.

Gold Fields recently gave Gruyere a highly-public endorsement by acquiring, through subsidiaries, approximately 75 million Gold Road shares, consolidating a ten percent holding in the company.

The major company’s interest in the emerging producer is understandable, given it has paid $350 million, plus a royalty, to participate in developing the Gruyere Gold Project, which accounts for 114 square kilometres of Gold Road’s substantial 6,000 square kilometre Yamarna Belt tenement holding in Western Australia.

With such a relatively small segment of its large landholding being financed through to becoming a significant gold production facility, Gold Road has signalled its next objective is to find another big gold deposit, using cash flow from Gruyere to develop its next project.

“Our strategy is to build Gold Road to being a 500,000-ounce producer and to become a gold producer in our own right,” Gold Road managing director Ian Murray told The Resources Roadhouse.

“To do that, two further sizeable discoveries need to be made, and we aim to make the first of those discoveries while Gruyere is under construction.

“By the end of 2018, we aim having another project ready for studies, drill out and expansion, paid for by cash flow from Gruyere.

“While that project gets built, we aim for the third discovery to be made, which will be developed using cash flowing from the first two.

“We don’t need to do Joint Ventures going forward, as our first has funded, and de-risked the company and the project.

“Going forward we want to build any further projects ourselves.”

The size and potential of Gold Road’s Yamarna Belt package is clearly defined in this map.

The company owns the 2,300sqkm area in blue outright – 100 per cent – which encapsulates the Gruyere Joint Venture.

Gold Road will spend $15 million in this area on exploration in 2017 on top of money earmarked for GJV exploration, where it will be spending around $11 million.

The pink area defined in the south is a joint venture with Sumitomo Metal Mining where the exploration spend will be $3 million.

Gold Road believes the prospectivity of this area to be worthy of a much higher exploration spend, however its budget had already been set prior to striking the Gruyere Joint Venture.

“We thought we were going to be raising project finance and were anticipating the banks limiting our exploration spend,” Murray explained.

“This year we will push Sumitomo harder – we think a fair exploration spend in the south is $10 million.”

For those without calculators, that adds up to around $30 million Gold Road, with its joint venture partners, will be spending on, what will be, the largest greenfields exploration budget in Australia – and potentially the largest globally.

“We’ve looked around and we haven’t found anyone else conducting that level of greenfields exploration,” Murray said.

“There is plenty of brownfields exploration by companies seeking to keep hungry processing mills fed, but none carrying out this level of greenfields exploration.”

Greenfield exploration by other companies is most likely restricted by funding issues, a problem Gold Road resolved through the GJV cash injection.

A recent $70 million tax payment made a reasonable dint in the company coffers of $337 million, but not enough to defer its anticipated exploration spend.

The company will also be able to pay its $30 million share of the Gruyere project build in the fourth quarter of this year, after Gold Fields spends $100 million on its behalf.

This will bring the bank balance down to around $220 million by the end of the calendar year, enabling it to fund a $20 million exploration spend and a further $130 million share of the project build costs next year.

After all that, Gold Road will be sitting on around $60 million, which it considers to be a fair working capital balance when embarking on first production.

“Some people have asked about the possibility of us paying a special dividend, however we feel it makes much better sense to reinvest the cash into assets to benefit shareholders,” Murray explained.

“At the end of two years we will have enough of a working capital buffer, and going into production we should be generating around $100 million of EBITDA.

“If we don’t make another discovery that we want to develop, we will be able to start returning some money to shareholders through a dividend, and as we have paid our tax bill, that will be a fully-franked dividend.”

Construction at Gruyere is well underway with the establishment of offices and accommodation consisting of two former rail construction camps acquired from Roy Hill.

The further acquisition of two partially completed cancelled orders, in the shape of an 8.5 million tonnes per annum ball mill from Gold Fields West African project, and matching sag mill from Outotec, will shorten the time-frame determined by the original feasibility study and lower capital expenditure.

“The project team are building a 7.5 million tonne per annum project,” Murray explained.

“The operational team has now been tasked with de-bottlenecking the project, so should the JV partners want to increase throughput once we have started production we can easily ramp up.

“Construction is scheduled for completion at the end of 2018 with first gold coming in the first quarter of 2019.”

Gold Road has the added benefit of a Memorandum of Understanding within the GJV, whereby it is allowed access to the project’s gas pipeline, water and toll treating of all satellite deposits discovered beyond the JV area.

Immediately south of Gruyere, is YAM14, at which Gold Road encountered extraordinary drill intercepts.

Results from YAM14 include:

17DHRC0060
64mat 3.73 g/t gold, including 18m at 9.78 g/t gold, and 8m at 19.16 g/t gold;

17DHRC0061
39m at 1.52 g/t gold, including 13m at 2.24 g/t gold, and 7m at 3.55g/t gold; and

17DHRC0059
22m at 1.81 g/t gold, including 14m at 2.63 g/t gold.

“YAM14 was discovered when Gruyere was discovered, but obviously Gruyere was the big prize,” Murray said.

“These drilling results returned some nice good widths and good grades that are located just eight kilometres from the Gruyere process plant.”

South-west of Gruyere, at the Attila prospect, a 107,000-ounce Resource upgrade was recently announced taking it to 327,000 ounces, while just to the north of Attila sits the Alaric prospect with 50,000 ounces, which is currently being reviewed.

Gold Road intends putting these through a pre-feasibility study with the aim of declaring a maiden Reserve for those two deposits in the second half of 2017.

“These prospects are located within, what we call, the Golden Highway, running from Alaric in the north down to Attila in the south,” Murray said.

“It runs for 14 kilometres, covering an area where we previously had Resources declared, which were not JORC 2012-compliant and were removed.

“These are currently being re-assessed with the aim of establishing Resources that could be economic to be run through the Gruyere processing plant.”

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

HEAD OFFICE
Level 2
26 Colin Street
West Perth WA 6005

Ph: +61 8 9200 1600

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

DIRECTORS
Tim Netscher, Ian Murray, Justin Osborne, Sharon Warburton