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

St George upbeat about Mt Alexander Dragon

THE INSIDE STORY: There are three items that exploration companies like to tick off when they announce a new resource-grade discovery, infrastructure and sound economics. By Ron Berryman.

These three factors have provided the impetus for St George Mining (ASX: SGQ) following the acquisition of two key tenements from BHP Nickel West in 2016.

The Mt Alexander project stands out as it is showing all the signs of being a major nickel–copper discovery with the three prospects – Cathedrals, Strickland and Investigators -within the landholding showing exciting potential.

Early drilling suggests they could be looking at an excellent investment – a project with plenty of upside that could develop into a low-cost operation able to deliver separate high quality nickel and copper concentrates.

Mt Alexander is located 120 kilometres south southwest of the Agnew-Wiluna greenstone belt in the Yilgarn Craton of Western Australia, which hosts two of the world’s largest komatiite-hosted nickel sulphide deposits, the Mt Keith and Perseverance deposits.

Strategically placed 120km south of Leinster and 100km west of Leonora it is in close proximity to existing infrastructure.

St George executive chairman John Prineas told The Resources Roadhouse that initial exploration had confirmed recurrent nickel-copper sulphides in the Cathedrals Belt over a strike of 3.5 kilometres.

Historic drilling at the Cathedrals prospect intercepted 4 metres at 4.9 percent nickel, 1.7 percent copper and 3.9g/t Platinum Group Elements (PGE’s) from 91.4m and 3m at 3.8 percent nickel, 1.6 percent copper and 2.7 percent PGE’s from 56.3m.

“In our current drill program, there was 19 planned drill holes but we have expanded it to 25 and further extended the zones of mineralisation,” Prineas said.

“Preliminary metallurgical testwork of the massive sulphides at Mt Alexander produced concentrate with 18 per cent nickel and 32 per cent copper as well as high values for cobalt and PGE’s, cobalt is very popular at the moment.”

Downhole Electromagnetic (DHEM) surveys are being carried out in all completed drill holes to detect conductors associated with massive sulphide mineralisation and to assist in planning follow-up drilling. A major Moving Loop Electromagnetic (MLEM) survey is also in progress over the structural corridor one kilometre south of the Cathedrals prospect, which was revealed by a high resolution airborne magnetic survey completed in late 2016.

“It’s a very exciting project and we have been looking forward to the results of our current drill and DHEM program and once we’ve analysed the information we’ll plan the next round of drilling, which will be the drill-out phase,” Prineas said.

As the diamond drilling has progressed the company has been able to announce significant intersections from the Investigators prospect including a 20.6 metre thick mineralised ultramafic which included 4.88m of massive and matrix sulphides from 157.8m downhole.

Two intervals of massive sulphides were intersected, which were 3m and 0.3m thick, with average values of 6.3 percent nickel and 4.3 percent copper.

At the Cathedrals prospect a 3.25m thick intersection of nickel sulphide mineralisation returned average values for the 1.35m thick massive sulphide of 9 percent nickel and 2 percent copper.

Commenting on the Investigators intersection Prineas said it was the thickest mineralisation encountered at the prospect to that point and represented an important milestone in the ongoing drilling campaign.

“The drill results at Cathedrals continue to extend the shallow high-grade mineralisation with further massive sulphides intersected only 60m below the surface,” he continued.

“These results are amongst our best ever intersections at Mt Alexander and illustrate the potential at this under-explored project.

“The nickel and copper values we are seeing continue to be impressive and give confidence that the high-grade mineralisation will support robust economics for a potential mining operation.

“The beauty of this project is that it is not just high-grade nickel, we’ve also got high-grade copper, cobalt and PGE’s and a choice of processing at nearby plants, which will save something like $100 million if we don’t build our own concentrator.”

The economics of the Mt Alexander project is an important factor in its future as an operating mine and John Prineas has the background to provide a clinical evaluation of the venture and its potential to deliver a successful mine in the most efficient and cost-effective manner.

He has more than 25 years’ experience in the banking and legal sectors, including responsibility for project and acquisition finance for resources and infrastructure projects with a major international bank.

“The shallow mineralisation is a major economic benefit,” Prineas added.

“These kinds of grades are usually obtained by drilling down to 500 or 800 metres, we’ve only been down to about 160 metres and we haven’t really tested it beyond that.

“We have high-grades of nickel and copper with strong credits for cobalt and PGE’s; excellent metallurgy; high quality smelter-friendly concentrate; proximity to existing processing plants; and we’re located near existing infrastructure with access to roads and power.

“We’re very lucky.”

The number of established nickel concentrators in the region is a valuable bonus for the project.

The Sinclair project is 75km northeast, the Cosmos concentrator 135km north and BHP’s nickel headquarters at Leinster 110km northeast.

Prineas said the company would be looking at a pre-feasibility study within six to 12 months.

“Because of the shallow mineralisation at this stage we’re considering an open cut or box cut, but whatever we do it’ll be a low cost operation which will be a big advantage,” he explained.

St George also acquired another project from BHP Nickel West which is 60 kilometres north of Mt Alexander along the Ida Fault, a significant craton-scale structure.

Reconnaissance aircore drilling conducted by BHP at the Hawaii project revealed more than five kilometres of moderate to high magnesium oxide (MgO) ultramafics.

The drill holes confirmed the discovery of a new greenstone sequence in an area previously considered to be barren granitoids.

These greenstone sequences have never been explored for nickel sulphide or gold mineralisation, and indicate that the Hawaii project provides an attractive exploration opportunity for St George.

A first pass RC drilling program has been initiated at the company’s third project at East Laverton over several new gold targets.

In addition, diamond drilling is underway to test a powerful electromagnetic conductor (EM) at the Windsor prospect at East Laverton.

With conductivity of 210,000 Seimens, this is the most powerful conductor identified by St George to date and is highly prospective for massive sulphide mineralisation.

As The Resources Roadhouse was going to the printers, St George Mining received assay results from drilling at the Cathedrals prospect, which include the best intersections of nickel-copper-cobalt-PGE mineralisation to date at the Mt Alexander project.

Seven diamond drill holes were completed and all intersected mineralised ultramafic with laboratory assays confirming multiple, good-sized intersections of high-grade nickel-copper-cobalt-PGE mineralisation, including results from one hole of:

11.36m of mineralised ultramafic, including 4.2m at 0.39 percent nickel, 0.18 percent copper, 0.02 percent cobalt and 0.52g/t total PGEs from 53.6m; and

7.5m at 3.9 percent nickel, 1.74 percent copper, 0.12 percent cobalt and 3.32g/.

St George Mining Ltd. (ASX: SGQ)
… The Short Story

HEAD OFFICE
Level 1
115 Cambridge Street
West Leederville WA 6901

Ph: + 61 8 9322 6600

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

DIRECTORS
John Prineas, Tim Hronsky, Sarah Shipway

Aruma Resources Rebuilds on Slate Dam Potential

THE INSIDE STORY: The Invincible gold deposit, being mined by Goldfields at its St Ives operation, set a new discovery benchmark for gold explorers in the Western Australia goldfields.

The possible discovery of such a deposit has reinvigorated industry stalwart Peter Schwann, managing director of Western Australia-focused gold explorer Aruma Resources (ASX: AAJ).

The Invincible deposit is considered by market watchers as one of the most important gold discoveries in recent decades for many reasons.

One being that it highlighted potential for new substantial gold systems within an existing gold district, hosted by an alternate geological setting.

Invincible readjusted the way geologists regard lithological units within the region, which were previously thought to never contain gold.

Now, with fresh eyes and open minds, these lithological units are considered to possibly host gold systems with economic grades.

The Invincible ore body was almost overlooked due to its unconventional geological setting and exploration hindered by surficial cover.

Invincible broke all the rules by being a hydrothermal gold deposit formed near the geological contact between the Black Flag Group and Merougil Sediments. 

With a lode thickness varying from one metre to over 20m, the ore body was defined over a strike length of two kilometres with both open cut and underground operations set to produce over two million ounces.

“We recognised that the major gold deposits around the world, and in Western Australia, are in sediments,” Schwann told The Resources Roadhouse.

“One thing about them is that they usually have large endowments and good grades.”

Schwann revisited Aruma’s land package paying close attention to the potential of sediment-hosted gold deposits.

“I had looked at Goldfield’s Invincible deposit at Kambalda and at the stratigraphy there,” Schwann continued.

“I realised we are also looking at gold in the Black Flag Group sediments and that they have been sitting right under our nose all along. Other companies to look at this included Sirius and S2.

“I have been a long-time believer in the Majestic Imperial area, but the Invincible discovery became very important and I recognised parallels with the Invincible discovery at both Norseman and up in the Paddington-Bardoc region.”

Schwann’s recalibrated view led to Aruma Resources carrying out a re-evaluation of the company’s Glandore project, located within the Kalgoorlie District.

From this, Aruma has identified that the geological sequence at Glandore bears similarities to that of the geology surrounding the two-million-ounce Invincible deposit. 

Aruma’s major project is Slate Dam, located 40 kilometres from Kalgoorlie where it recently extended its reach with the acquisition of the Juglah leases (EL25/534 and ELA25/558, 22 graticular blocks) over the southern extension of the project.

The tenements cover prospective gold ground within the geology that hosts the Majestic and Imperial gold deposits.

“The most recent land acquisition took our landholding in the region to over 260 square kilometres, located in a desirable address east of Kalgoorlie that is highly prospective for gold,” Schwann said.

Evaluation carried out by Aruma of the geology surrounding the Glandore project, identified the Slate Dam prospect as a potential site for an invincible-style gold deposit.

“Our activity in the area is progressing well as we prepare to drill covering the large high-tenor gold anomaly at Slate Dam,” Schwann said.

Slate Dam had previously been mapped as a felsic volcanic package and consequently explored for its potential to host a large intrusive porphyry-style gold system.

At first, the initial exploration looked extremely promising – identifying a large (7sqkm) bottom of hole gold anomaly (>200ppb gold).

Follow-up deep diamond drilling tested the porphyry intrusive model, returning thick low-grade intersections of mineralisation, including:

GWD013
19 metres at 1.09 grams per tonne gold.

Although the drilling results were encouraging, no gold-bearing intrusive porphyry units were intersected, resulting in little to no further groundwork being carried out on the prospect since 2002.

Fast-forward to 2012 and the discovery of the Invincible deposit opened the area for further potential discoveries for this style of mineralisation.

Aruma is confident the similarity of the sedimentary sequence of Slate Dam to that of the Invincible stratigraphic sequence, consisting of interbedded volcanic sediments, could results in the prospect being one of those discoveries.

The company has been busy conducting further investigation into Slate Dam geophysics, which has identified a large ring-structure, the company believes likely to represent a granite intrusive, a necessary potential driver for the mobilisation of gold bearing fluids.

The major geological structures of Slate Dam are covered by shallow lake sediments which could potentially be masking a Tier 1 gold deposit.

Aruma Resources aims to test its Invincible gold model theory at the Slate Dam project over coming months, and with initial ground reconnaissance and mapping confirming the similarities to the Invincible-style gold system, spirits are high.

Aruma’s decision to move on Mulga Dam followed a presentation by the company to Melbourne-based PAC Partners who suggested the ring structure in the magnetics.

“It was then that I realised we needed the other lease so I pegged Mulga Dam, which was also available,” Schwann explained.

The company was encouraged by results from a data search that identified an anomaly around 3.5 kilometres by two kilometres, which is bigger than the Golden Mile-Super Pit footprint.

“The anomaly was not a low-level anomaly and was basically greater than 0.25 grams and stood out as something too big for us to walk away from,” Schwann continued.

“The other thing is that it had large intersections – they weren’t high-tenor – but they were big and at 19 metres at 1.09 grams per tonne – they were deep, but they were thick.

Drilling to be undertaken at Slate Dam over the coming months will be targeting results greater than five metres and greater than two grams per tonne gold.

“It doesn’t sound very much, but it is a model we have called the Black Flag model,” Schwann said.

“Remember that Invincible was eight metres at six gram per tonne gold!”

“The targets are based on Kalgoorlie ore bodies that includes the likes of Golden Mile, Paddington, Bardoc and Invincible.

“It is the Invincible model we are working off for our upcoming drilling programs.

“I believe Invincible is probably one of the most important discoveries in, at least, the last 50 years in Australia.

“It was discovered with around one million ounces at four grams per tonne.”

Once statutory requirements for the approved program of work and Heritage Surveys are arranged and existing exploration databases and geology have been validated, Aruma will be on the ground at Slate Dam fervently drilling.

Aruma has scheduled 5,000m of first pass Reverse Circulation drilling over the high-tenor, drill defined gold anomaly at Slate Dam.

This will be done by drilling 200m spaced lines of 100m deep angled drill holes at 50m intervals into the steeply dipping stratigraphy.

Schwann can hardly contain his excitement when speaking about the Slate Dam project and the possibilities it holds for Aruma Resources.

“It has given me, and the company, a pulse,” he declared.

“We are sitting up, out of the recovery position and we are getting a renewed interest in the company from people who believe in the story we now have to tell.”

“I’m prepared to say that this is the best gold project I have had in my entire career.”

Aruma Resources Limited (ASX: AAJ)
…The Short Story

HEAD OFFICE
Level
6 Thelma St 
West Perth WA 6005

Ph: +61 3 9321 0177

Email: info@arumaresources.com
Web: www.arumaresources.com

DIRECTORS
Paul Boyatzis, Peter Schwann, Ki Keong Chong

Alliance Resources Fervently Exploring Zealous

THE INSIDE STORY: Alliance Resources (ASX: AGS) is manager of the Wilcherry project Joint Venture, located in the mineral rich Gawler Craton of South Australia with Tyranna Resources (ASX: TYX).

Alliance (51%) and Tyranna (49%) struck the Wilcherry JV in 2016, when the latter wanted to concentrate on its Jumbuck project, but did not want to divest totally from the quality 1,200 square kilometres of tenements, which are considered prospective for gold and base metals.

The Wilcherry project Joint Venture comprises three priority areas, including the Zealous tin-base metals, Telephone Dam zinc-lead-sliver, and Weednanna gold prospects.

Alliance as operator of the Joint Venture recently commenced a program of reverse circulation (RC) drilling at the Zealous tin-base metals prospect, which it identified as a first-order conductive target via a helicopter-borne electromagnetic (HEM) survey during December 2016.

This was confirmed by a follow-up high-powered moving loop electromagnetic (MLEM) survey completed in March 2017.

“When we first came into the Joint Venture we recognised the project was under a significant amount, covering about 80 per cent of the tenement, of mostly shallow transported cover,” Alliance Resources managing director Steve Johnston told The Resources Roadhouse.

“From that we saw an opportunity to use airborne electromagnetics to search for buried massive sulphide deposits.

“There were two really good data bases of magnetics and gravity, but the next step was to fly a regional airborne EM survey. 

“We did that and identified many late-time conductors, including the two big ones – the first at Zealous and the second at Telephone Dam.”

Alliance completed a moving-loop survey on both Zealous and Telephone Dam in March that confirmed the prospects to be conductor systems, being that there is more than one conductor at each prospect.

A program consisting five RC holes, totalling 1,500 metres, is being drilled to initially test the two conductors that comprise the Zealous target.

Three holes are planned to test the Zealous Main Conductor and two holes at the Zealous northwest conductor.

“The moving-loop survey conducted at Zealous confirmed a large southern conductor of 1500 metres by 1250 metres, dipping to the southwest at a depth around 100 to 200 metres and a northern conductor – more flat lying – 1500m by 750m and the interpreted depth to the top of that one was around 50 metres maximum,” Johnston said.

“There has been no previous drilling carried out into either of these conductors, however, there is some historic drilling 300m to the southeast of the southern conductor by Ironclad in 2012 as part of its search for iron ore deposits.”

The previous drilling at Zealous between 2012 and 2014 intersected sizeable tin grades, including:

12ZLRC007
20 metres at 1.29 per cent tin from 42m;

13ZLDH001
12.3m at 1.1 per cent tin from 119m; and

13ZLRC001
10m at 1.23 per cent tin from 128m.

“Because the initial analyses were for iron ore and base metals were not the focus, the lab reported missing mass in the iron suite XRF analyses,” Johnston explained.

“Introducing another analytical method showed up the presence of base metals, including an elevated level of tin.

“That resulted in Ironclad going back and looking at the project as a new tin target and they drilled around 25 holes that intersected shallow, but significant, tin intercepts.

“A couple of further holes in 2016 intersected lower grades whilst targeting a magnetic anomaly.

“However, our recent moving-loop survey showed the presence of the conductor system to the north and below the historic drilling.

“The Joint Venture has commenced drilling on the Zealous target and we are really looking forward to receiving the results of those holes.”

The MLEM survey data from Telephone Dam clearly confirmed the presence of weak bedrock conductors consistent with the HEM anomalism.

Two bedrock conductors have been defined with the northern conductor being strongest.

“Again, at Telephone Dam, there are two main bedrock conductors – a northern conductor that is around 1000 metres by 1000 metres in size interpreted to be around 150 metres to the top, and a slightly larger southern conductor 1500 metres by 1000 metres and a depth to the top of around 25 to 50 metres.”

Alliance has interpreted the conductors to potentially have some width/thickness to them and more complex geometry than simply a thin plate model approximation with constant dip.

Should this be the case, then Alliance expects the conductive unit could be intersected above the current modelled position.

“At Telephone Dam, there has been a lot of historic drilling carried out by a raft of owners since the 1980s for silver-lead-zinc,” Johnston said.

The historic drilling at Telephone Dam produced some impressive results, such as: 92m at 2.28 per cent combined lead and zinc with some silver credits, associated with the northeast corner of the Southern Conductor.

Upon completion of the drilling at Zealous, Alliance will commence a small program consisting three RC holes for 850m to test the MLEM conductors at the Telephone Dam zinc-lead-silver prospect.

The third target of the Alliance trinity is the Weendnanna gold prospect, which was another pre-existing project to evolve from the Ironclad legacy.

Ironclad viewed Weednanna as a magnetite prospect, and Trafford was keen on the gold potential of the prospect.

However, Ironclad was the operator and its view prevailed until 2015 when the two companies merged, resulting in Tyranna Resources.

“Whilst we were planning and flying the geophysics over the regional targets, we were keen to commence work at an advanced prospect and Weednanna fitted the bill,” Johnston explained.

“We couldn’t ignore that it had produced great gold results over a strike length of around 1.3 kilometres. 

“We identified three target areas we considered to have potential to have high-grade, but which required further drilling.”

Alliance drilled those targets in March and produced outstanding gold intersections including:

17WDRC003
49m at 6.3g/t gold from 45m, including 21m at 10.7g/t gold from 48m;

17WDRC012
2m at 61.1g/t gold from 167m;

17WDRC011
10m at 6.8g/t gold from 79m, including 3m at 15.5g/t gold from 81m; and

17WDRC013
7m at 11g/t gold from 82m, including 4m at 17.6g/t gold from 84m.

Weednanna is the most advanced gold prospect in the Wilcherry project area, having originally been identified in 1997 as a strong gold-in-calcrete anomaly coincident with a prominent north-north-west-trending magnetic anomaly.

Successive drilling campaigns identified gold mineralisation associated with skarn alteration and brecciation in the contact aureole of the adjacent granite, however, these failed to fully unravel the structural and lithological controls on the distribution of gold.

Alliance is now systematically re-logging all available RC chips and diamond core from Weednanna with the objectives of identifying structural and lithological controls on the distribution of gold, constructing a 3D geological model of the prospect, and planning further exploration with a view towards defining a mineral resource.

A further program of RC drilling is planned to test for extensions to, and infill, high-grade gold intersections at Weednanna Targets 1, 2 and 3 returned from the recent RC drilling program.

This drilling will follow the drilling to test electromagnetic conductors at the Zealous and Telephone Dam prospects.

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

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

Ph: +61 3 9697 9090

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

DIRECTORS
Ian Gandel, Tony Lethlean, Steve Johnston

Musgrave Minerals Lines-up New Cue Resource

THE INSIDE STORY: Methodology may not be recognised as a science, however, Musgrave Minerals (ASX: MGV) is putting it to effective use at the Cue project, located in the Murchison Province of Western Australia.

Musgrave Minerals is working towards an 80 per cent interest in the Cue project, from its current sixty per cent, as part of a Farm-In and Joint Venture Agreement with Silver Lake Resources (ASX: SLR).

The company’s major focus at the Cue project is on the Moyagee area, where it recently announced a sizeable upgrade to the total Mineral Resources at the Break of Day and Lena gold deposits.

The updated JORC 2012-compliant Mineral Resources include:

Break of Day (Indicated and Inferred) 868,000 tonnes at 7.15 grams per tonne gold for 199,000 ounces of gold; and

Lena (Indicated and Inferred) 2.682 million tonnes at 1.77g/t gold for 153,000 ounces of gold.

The numbers take the total Break of Day and Lena (Indicated and Inferred) Resource to 3.55 million tonnes at 3.09g/t gold for 352,000 ounces of gold.

“This is a significant milestone that will enable Musgrave to assess multiple processing options going forward to maximise shareholder value,” Musgrave Minerals managing director Robert Waugh told The Resources Roadhouse.

“We have now drilled more than 22,000 metres on the project.

“The Mineral Resource estimate strengthens the open-cut potential of Lena and the underground potential of Break of Day and together with the proximity to existing road and processing infrastructure, significantly increases the future development potential of the project.

“Break of Day is still open in all directions and we are yet to define the limits to the high-grade gold mineralisation.

“Further drilling planned for early August will aim to continue to grow the resource base.”

Drilling results from Break of Day confirmed the high-grade mineralisation with intersections including:

21 metres at 21.5 grams per tonne gold from 157m;

15m at 16.6g/t gold from 170m;

14m at 14.4 g/t gold from 111m;

11m at 6.8g/t gold from 23m;

6m at 46.5g/t gold from 99m; and

5m at 53.5g/t gold from 138m.

Break of Day consists of two parallel gold lodes with a combined strike extent of over 500m, an average lode width of approximately 1.7m and an average grade of approximately 16g/t gold.

“The drilling campaign we have completed at Break of Day so far this year has been extremely positive,” Waugh said.

“Not only does it leave the mineralisation on both lodes at Break of Day open to the south, we are consistently seeing higher-grade gold mineralisation at Break of Day below the 80 to 100 metres depth level where it is wide open with no current drilling in this area.

“This creates a significant opportunity for the company to grow the Resource further with further drilling.”

The Break of Day drilling campaign received great support from the Lena deposit, in the form of excellent gold drilling results supporting the potential for an open cut operation, including:

13m at 9.7g/t gold from 61m;

8m at 6.4g/t gold from 13m;

4m at 8g/t gold from 35m;

3m at 48.6g/t gold from 80m;

5m at 7.8g/t gold from 118m; and

2m at 12.4g/t gold from 3m;

The drilling confirmed the mineralisation at Lena to occur in vertical to steeply dipping, semi-parallel quartz lodes hosting gold within a mafic-ultramafic stratigraphic sequence and remains open along strike and down plunge.

The Lena mineralisation is currently defined along a 1.6 kilometre strike length and hosts a generous portion of the overall Moyagee total Mineral Resource.

“The results from the RC gold drilling program were always encouraging and enabled us to complete a significant upgrade to the Resources,” Waugh explained.

“The continued strong near surface gold results from Lena provide a good case for the establishment of an open cut mine.”

Musgrave is confident the Resource upgrade will enable the company to progress to a Scoping Study in the second half of 2017.

The Cue project is in what Real Estate Agents would describe as, ‘a desired location’.

The project is proximal to many established gold operations, meaning there is good infrastructure and multiple operating processing plants in the district (Ramelius 40km south, Westgold 130km North).

This potentially provides the company the ability to consider numerous development options.

“Although we have updated the Resource we still consider there to be potential to extend that mineralisation significantly, as it is still open,” Waugh explained.

“The amount of existing infrastructure within the Cue Region will definitely be a benefit for us to be able to get either a standalone or toll treatment operation into production.”

The potential of Break of Day has been highlighted by the completion of an initial metallurgical test work program that returned exceptional gold recoveries.

Positive results came from test work carried out on three composite fresh rock samples that were collected from nine representative drill holes across the strike of the gold lodes at Break of Day.

The samples were representative of the various gold lodes, ore types and feed grades for potential future mining and processing activities utilising conventional gravity and cyanide techniques.

The test work demonstrated very rapid leaching kinetics for all three samples and overall recovery of between 95.7 per cent and 96.3 per cent (average 96%), producing a maximum leaching of gold after the first eight hours.

Exceptionally high gravity recoveries of between 80.8 per cent and 86.1 per cent (average 84.2%) were also achieved from a single pass through a Knelson concentrator.

“The gravity recoveries are very high in comparison to typical Yilgarn gold ores,” Waugh said.

“The metallurgy results will enable us to assess multiple processing options going forward, while the high gravity recovery will enable flexible processing and potentially reduce capital and operating costs.”

Gold is not the only commodity on Musgrave’s Cue project hitlist.

An EM survey completed over the northern portion of the project area to identify basement conductors that may reflect copper-gold massive sulphide mineralisation delivered 13 separate targets for drill testing.

The targets all returned strong ground electromagnetic responses within the Hollandaire volcanic massive sulphide (VMS) field.

Musgrave believes a combination of strong geological, soil geochemical or rock chip sampling will provide the necessary support for the potential discovery of massive base metal sulphides.

That potential was supported with the company receiving WA government EIS co-funded support for the base metal drilling.

Drill testing of these high priority base metal targets has now been completed with assays awaited.

“We like the base metal potential of the Hollandaire project area,” Waugh said.

“Silver Lake demonstrated in 2011 with the Hollandaire discovery that there is potential for VMS deposits in the area.

“We hope to be able to emulate that and make significant discoveries on the base metals side to complement our gold discoveries.

“Our focus on the Cue project is a continuous process – we’ll be spending a significant drilling budget throughout the second half of 2017, focussed on extending and growing the gold Resource while we are carrying out the Scoping Study.”

Musgrave Minerals Ltd (ASX: MGV)
…The Short Story

HEAD OFFICE
28 Richardson Street
West Perth WA 6005

Ph: +61 8 9324 1061

Email: info@musgraveminerals.com.au
Website: www.mugraveminerals.com.au

DIRECTORS
Graham Ascough, Rob Waugh, Kelly Ross, John Percival

Australian Potash Making Rapid Advancement at Lake Wells

THE INSIDE STORY: Australian Potash (ASX: APC) completed a Scoping Study on the company’s Lake Wells potash project, located approximately 500 kilometres northeast of Kalgoorlie, in Western Australia’s Eastern Goldfields earlier this year.

The Lake Wells potash project consists of a 2000 square kilometre tenement package made up of 100 per cent-owned granted exploration licences, and licenses over which Australian Potash holds rights to all potash minerals.

The Lake Wells potash project tenement package covers palaeovalley and salt lake terrain in the northeast part of the Yilgarn Craton, which Geoscience Australia has recognised as a high-potential potash salt lake system with interpreted palaeovalley trends.

Australian Potash has verified this prospectivity through extensive drill hole brine sampling.

The recent Scoping Study confirmed both technical and economic aspects of the Lake Wells project to be strong and viable.

The Study determined the project has potential to take Australian Potash from its current explorer moniker through to being a long-life, low capital and high margin sulphate of potash (SOP) producer.

In conjunction with the Scoping Study, APC upgraded the Lake Wells JORC 2012-compliant Mineral Resource Estimate to 14.7 million tonnes of SOP, including 12.7 million tonnes sitting in the Indicated category.

Australian Potash believes potential exists for substantial upside in the resource model, encouraged by the Scoping Study mine plan based on the extraction of just 34 per cent of the project’s Indicated Resource in the Western High Grade Zone and 33 per cent of the Inferred Resource in the Southern Zone.

The Study also outlined life of mine extension opportunities with inclusion of the Eastern Zone (4.6 million tonnes SOP Indicated).

After completing the Scoping Study, APC received WA State Government approvals to proceed with developing pilot evaporation ponds for the project.

An on-site, pilot evaporation pond program has commenced to produce the first sample of SOP from the project.

Construction of the evaporation pond was finished in June 2017 with the program to operate for a minimum of six months.

The test-work from the bulk samples of potash salts from the pilot evaporation pond program will be used to further optimise process design.

“The Scoping Study provided areas we can improve and de-risk the project,” Australian Potash process engineer Shaun Triner told The Resources Roadhouse.

“We are finalising those while we carry out some optimisation work.

“Resource-wise, we identified the palaeovalley, which is effectively an old river system that has filled up with sediments over time.

“The hyper-saline environment of the Goldfields has effectively formed – what could be described as – a tank full of brine containing potassium.

“That palaeo-valley under our deposit goes to around 175 metres deep with substantial upper and basal sand layers, from where we will be able to extract brine.”

The optimisation work underway includes recently-conducted laboratory based test-work that confirmed the validity of the conversion process of Muriate of Potash (MOP) to SOP that APC proposes to implement at Lake Wells.

Unlike the Mannheim process, this natural, low-energy process can increase output from the project by up to 50 per cent.

The test-work also confirmed the Lake wells project can increase SOP output by 50,000 tonnes per annum to 150,000 tonnes per annum in stage 1, and by 100,000 tonnes per annum to 300,000 tonnes per annum in stage 2 by converting MOP to SOP.

To achieve this APC will use a non-Mannheim conversion process, similar to that used at the Compass Minerals brine SOP operation in the United States, the largest brine SOP operation outside of China.

The main differences between the conversion process APC intends using compared to the Mannheim process are it happens at low temperature and will not create additional reagent expense associated with purchasing sulphuric acid, as sulphate is already present.

The company considers the economic case for developing this conversion facility to be compelling considering the low marginal operating costs associated with producing an additional 50,000 to 100,000 tonnes of SOP from essentially the same plant.

APC is working to de-risk the three essential components of a brine SOP operation, being brine extraction, brine evaporation and salt processing and is about to commence a Stage 2 test-pumping program that will add to the plus-20 million litres of test-pumping already conducted.

This test-pumping program will feed into the brine flow model for brine extraction, building on decades of understanding and operation of brine bore fields in WA.

“We are now aiming to kick into a Feasibility Study, for financing purposes, during the second half of this year that should be ready for reporting in the first half of next year,” Triner said.

“As we move into a Feasibility Study – obviously there is the technical side of the project to consider, but we also need to have a market for our material, which is where the recent MoUs regarding offtakes come into play.”

A valuable lesson junior Resource companies learnt in recent times is that financiers can be reluctant to fund an operation that doesn’t have customers for its product.

To that end, APC placed a healthy chunk of its corporate puzzle in place by demonstrating to the right people the company does have potential customers interested in its product.

Australian Potash signed of a non-binding Memorandum of Understanding (MoU) for the supply of SOP to one of China’s largest fertiliser companies after striking a deal with Sino-Agri Holding Company Limited, a subsidiary of CNAMPGC Holding Limited Corporation.

The MoU portends potential high-level commercial terms for sales volumes of up to 30 per cent of estimated production – up to 100,000 tonnes per annum of SOP – from Stage 2 of the Lake Wells project.

“In the Scoping Study, we talked about a two-stage project, the first stage being 150,000 tonnes per annum and the second stage being another 150,000 tonnes per annum,” Triner said.

“That was based on getting funding for the first half, and then funding the second half through cash flow.

“Although it is still non-binding at this stage, the signing of a 100,000 tonnes per annum offtake MoU is an extremely important component of the project’s first 150,000 tonnes of production.

“We have been developing our relationships within the Chinese potash and fertiliser industries for some time and it is encouraging that we are now seeing the results in the form of a formal pathway to securing customers in the world’s largest fertiliser market.”

Australian Potash has a great deal of activity planned for Lake wells, including the commissioning of pilot evaporation ponds, completion of the Stage 2 test-pumping program, installation of Stage 2 test-production bores, continuing Resource upgrade and expansion program, and commencement of the Feasibility Study.

“We have made some rapid advancements with the release of the Scoping Study and we are now very confident the project is viable and should go ahead, which we have demonstrated to the market with the imminent commencement of our Feasibility Study,” Triner said.

“Although we haven’t quite kicked-off the FS at this stage, we are very busy finalising that work-optimisation phase on the back of the Scoping Study.

“The Scoping Study presented a few options we need to look at and we are just assessing those to finalise the fixed-scope of the Feasibility Study, which we anticipate will be underway by Q3 this year.”

Australian potash Limited (ASX: APC)
…The Short Story

HEAD OFFICE
31 Ord Street
West perth WA 6005

Ph: +61 8 9322 1003

Email: m.shackleton@australianpotash.com.au
Web: www.australianpotash.com.au

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Matt Shackelton, Rhett Brans, Brett Lambert