THE INSIDE STORY: Resource-focused investors who keep a close eye on the daily announcements from the Australian Securities Exchange (ASX) cannot have ignored how often lately the commodity graphite rates a mention.

Many pundits consider the rise in graphite’s prominence to be merely a distraction to the focus market-watchers usually save for more mainstream commodities, gold or iron ore, whose fortunes have recently suffered.

The reality though, is that graphite’s rise in providence and reputation should come as no surprise.

The European Commission included graphite amongst 14 materials it considers to be high in both economic importance and supply risk, while the British Geological Survey listed graphite as one material most likely be in short supply globally.

A number of analysts are starting to appreciate the potential of graphite, guided by data suggesting future demand is most likely to be driven by new technologies, in particular lithium-ion batteries.

The lithium-ion battery market, for which graphite demand has grown from virtually zero five years ago to almost 100,000 tonnes per annum, now represents 20 per cent of the flake market and continues to grow at 20 per cent annually.

Kibaran Resources (ASX: KNL) is positioning itself to become a major player in the emerging graphite sector.

The company’s key project is its 100 per cent-owned Epanko graphite deposit, located within the broader Mahenge project area in Tanzania.

 

The project has a total JORC Mineral Resources Estimate of 22.7 million tonnes at 9.8 per cent total graphitic carbon (TGC) for 2.22 million tonnes of contained graphite.

Kibaran recently completed a Scoping Study at Epanko based on Indicated Mineral Resources of 12.8 million tonnes at 10 per cent TGC for 1,281,200 tonnes of contained graphite.

The results from the study concluded Epanko to be an economically robust graphite deposit capable of producing premium quality large flake graphite with no industrial limitations boasting an NPV of US$213 million with plenty of upside through both resource and planned production expansion.

A key to the project is the quality of the graphite concentrate – testwork indicates the production of low contaminant, ultra-high purity (99.98 per cent) large flake graphite suitable for all applications, including the production of the value added expanded and spherical forms, which should command a premium price.

To put this into perspective it is worth noting China, India and Canada are currently responsible for most of the world’s graphite mining and processing, with China producing the lion’s share of between 70 to 80 per cent; however China’s production comprises 70 per cent amorphous and lower-value, smaller flake graphite.

Having recently completed a Scoping Study, activities are now concentrated on moving to feasibility and then construction in early 2016.

Kibaran recently appointed GR Engineering Services to undertake a feasibility and project evaluation study.

“Our main focus, at present, is the Epanko deposit at the Mahenge project,” Kibaran Resources executive director Andrew Spinks told The Resources Roadhouse.

“The appointment of GR Engineering is important as it is a highly-reputable and recognised successful engineering firm with a significant track record of building mines in Africa.

“We have signed them up to do the Feasibility Study and, ideally, they will build the plants at Epanko and at Merelani and carry out all expansion works to come.

“Our strategy is to become the largest producer of graphite in Tanzania and be able to increase production when demand increases.

“We are now finalising the schedule for the Feasibility Study.

“It is likely we will have the mining lease for Epanko finalised in March 2015 and that should concur with the Feasibility Study.

“We are anticipating production at Epanko by early 2016, which is only 18 months away.”

Kibaran signed a binding off-take agreement in 2013 with a European graphite trader for Epanko graphite sales.

The deal meant Kibaran became the first ASX-listed company to sign a graphite off-take and the first company globally to sign a binding off-take for the European graphite market.

As things currently stand, the company remains the only one of its peers with such a deal in place.

“The validation of the potential of the Epanko graphite project is confirmed by having a binding offtake agreement in place,” Spinks said.

“Many of our peers proclaim to have Memorandums of Understanding in place for hundreds of thousands of tonnes – we have an actual binding offtake agreement.

“Our test work during the recent Scoping Study has shown – through flake size distribution and high-purity – that there is absolutely no limitation in our application, or concern regarding our product.

“That is supported by the binding offtake agreement.”

The company’s second project, Merelani-Arusha, is located adjacent to the previous producing Merelani graphite mine

Kibaran is currently in negotiation with the owners of the mine, TanzaniteOne Mining Limited, which is a wholly-owned subsidiary of AIM-listed Richland Resources and Tanzania’s State Mining Corporation (STAMICO) via their STAMICO-TML Joint Venture, with a view to combine the relevant companies’ assets by way of a JV and restarting graphite production.

Having one offtake agreement in place at Epanko, with a second likely to be struck at Merelani, places Kibaran in good stead, especially in a sector such as the industrial minerals markets.

“It is a challenging sector and it is not just about tonnes and grades – there is a lot more depth to it than that,” Spinks explained.

“We are looking – in enormous detail – at why we have an offtake agreement and nobody else has and we believe it comes down to a number of factors.

“One significant aspect is our flake size distribution – 50 per cent of our distribution is greater than 180 microns, but we also have very low fine material with 15 per cent being less than 75 microns.

“That makes us commercially viable and designates our product as being very much highly in demand.”

Kibaran is highly-motivated to bring Epanko through to production as soon as possible and it has the Board structure to attain that goal.

Spinks has had a 13 year association with Africa, during which time he co-founded Tanzgraphite Pty Ltd.

Non-executive chairman John Park was founder and executive director of TSX-listed SAMAX Gold, which developed and operated the Merelani graphite mine, which remains the largest historical producer of graphite in East Africa.

The company’s other executive director, Grant Pierce has held a number of management roles in Africa including time with Perseus Mining, Resolute Mining, Africo Resources, and with Barrick Gold in Tanzania.

“We have all the right ingredients in our view in terms of the management of the company,’ Spinks said.

“We recently restructured the Board and we now consider we really have the capacity to deliver the objective to become a major graphite producer with the management box expertly ticked.”

Kibaran Resources recently reached an agreement with the CSIRO through its part-owned subsidiary 3D Graphtech Industries to investigate research opportunities in the application of graphite and graphene inks in 3D printing and fused filament fabrication.

“We’ve just engaged with the CSIRO – and it is absolutely mind-boggling what research is being done in the emerging field of 3D printing,” Spinks said.

“We are focused on becoming a graphite producer, however we can’t overlook the possibility of becoming involved in some of these other aspects of the industry.”

Kibaran Resources Limited (ASX: KNL)
…The Short Story

HEAD OFFICE
388 Hay Street
Subiaco WA 6008

Ph: + 61 8 6380 1003
Fax: +61 8 6380 1026

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

DIRECTORS
John Park, Andrew Spinks, Grant Pierce

MAJOR SHAREHOLDERS
Strategic Resource Management     4.67%
UBS Nominees                4.19%
GP Securities                3.27%

SHARES ON ISSUE
120.3 million

MARKET CAPITALISATION

Approx. $33.7 million (at 25/9/14)

THE INSIDE STORY: A good deal of recent commodity market commentary has held a particular fondness for the future prospects, both short and long-term, in relation to the prices of nickel and zinc.

There are, at present, a healthy number of nickel/zinc exploration plays hitting the radar screens of these well-informed analysts and among these is ASX-listed junior Rox Resources (ASX: RXL).

The company believes it is well placed to take advantage of any price increases in both these commodities, especially nickel.

Rox Resources recently announced a maiden Mineral Resource estimate for the Musket nickel sulphide deposit, which has substantially increased the company’s Fisher East nickel sulphide project mineral resource inventory by over 100 per cent.

The Musket mineral resource estimate comprises 2.1 million tonnes at 1.8 per cent nickel containing 37,500 tonnes of contained nickel.

Of particular note is 64 per cent of the Musket resource estimate is in the Indicated Mineral Resource category, using a one per cent nickel lower cut-off.

At a higher cut-off grade of 2.5 per cent nickel the Mineral Resource contains 10,100 tonnes of nickel with approximately 75 per cent Indicated.

The resource at this higher cut-off grade is 100,000 tonnes at 10.1 per cent nickel.

Total Fisher East project resources (Musket + Camelwood) now stand at 3.6 million tonnes at 2 per cent nickel containing 72,100 tonnes of contained nickel.

Indicated resources account for 52 per cent of the total resource.

 

“This maiden resource estimate for Musket is very important for us as it displays the continued prospectivity of the Fisher East nickel sulphide belt,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.

“It has taken the overall project resources to over 72,000 tonnes of contained nickel at a grade of two per cent nickel.”

An important aspect of the Musket deposit is that it contains a very-high grade core of approximately 100,000 tonnes grading 10.1 per cent nickel.

This lies close to surface and Rox has identified it to be an obvious economic driver for any planned future development.

“Having such a high percentage of the resource in the Indicated category demonstrates how good the continuity of the mineralisation is,” Mulholland said.

“We have previously said that deposits of similar style to Camelwood don’t usually occur in isolation, and we proved that by discovering Musket.”

Rox is confident in its ground position, which it considers to be very strong with the potential to discover a lot more nickel and continue to significantly grow the project resource base.

With a discovery cost so far of around 4.2 cents per pound of nickel, which is one of the lowest in the world, that confidence seems to be very well placed.

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

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

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

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

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

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

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

Rox recently completed a program of aircore drilling at Mt Fisher, which identified three new nickel sulphide target zones.

The aircore drilling consisted 138 holes for 8,083 metres and was carried out in order to explore numerous nickel sulphide targets the company had interpreted from airborne magnetics and electro-magnetics.

“We believe these three new high-priority targets hold great potential to deliver further nickel sulphide mineralisation,” Mulholland said.

The first of the new targets is known as Cutlass and is located is along strike four to six kilometres to the south of the Camelwood and Musket deposits.

 

The other two – known as Jim’s and Fisher South – are located further west on what Rox thinks could be a possibly dislocated portion of the Mt Fisher ultramafic belt.

Results from Cutlass included:

FEAC235:
6m at 0.18 per cent nickel, 181ppm copper, 20 ppb platinum and palladium from 56m;

FEAC240:
12m at 0.30 per cent nickel, 147ppm copper, 20 ppb platinum and palladium from 32m, including 1m at 0.51 per cent nickel, 330ppm copper, 24ppb platinum and palladium;

FEAC262:
4m at 0.31 per cent nickel, 53ppm copper from 91m.

Further drilling was carried out at Red Mulga, which confirmed additional anomalous nickel over a strike length of 600m, with results including:

FEAC219:
17m at 0.35 per cent nickel, 67 ppm copper, 34 ppb platinum and palladium from 24m;

FEAC241:
32m at 0.26 per cent nickel, 36 ppm copper from 24m;

FEAC202:
16m at 0.22 per cent nickel, 51 ppm copper from 16m.

Drilling at the Jim’s prospect comprised 13 holes for 804m.

Best results included:

MFAC074:
10m at 0.26 per cent nickel, 265 ppm copper, 9ppb platinum and palladium from 32m;

MFAC067:
4m at 0.20 per cent nickel, 527 ppm copper, 16 ppb platinum and palladium from 32m; and

MFAC073:
4m at 0.21 per cent nickel, 575 ppm copper, 28 ppb platinum and palladium from 32m.

Drilling at third new prospect, Fisher South entailed 26 holes for 560m, with best results including:

MFAC092:
2m at 0.20 per cent nickel, 139 ppm copper, 3 ppb platinum and palladium from 26m; and

MFAC084:
20m at 0.12 per cent nickel, 504 ppm copper, 18 ppb platinum and palladium from 22m

“Being able to identify these three new targets is very exciting,” Mulholland continued.

“The excitement stems from each anomaly possessing values similar to the aircore values we encountered to define Musket and Camelwood.”

Rox has declared its hand in regards to its intentions with Cutlass, Jim’s and Fisher South with a ground electro-magnetic survey to be undertaken to better define the targets at each prospect prior to RC drilling.

The Cutlass, Red Mulga and Fisher South prospects are located on tenements that are 100 per cent-owned by Rox while the Jim’s prospect lies on an Option to Purchase tenement.

Rox is now in the planning stages for a ground electro-magnetic survey to better define the anomalies before RC drilling.

The company anticipates both will be undertaken as soon as possible.

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

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

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

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

DIRECTORS
Jeff Gresham, Ian Mulholland, Brett Dickson

MAJOR SHAREHOLDERS
Drake Private Investments    3.8%
Rox Directors        3%

SHARES ON ISSUE
Approx. 745 million

MARKET CAPITALISATION
Approx. $39.5 million (at 11/9/14)

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

All holes ended in mineralisation.

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

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

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

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

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

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

Bond Abrasion Index determination;

SAG Mill Comminution Test, including SG determination;

Bond Rod Mill Work Index determination; and

Bond Ball Mill Work Index determination.

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

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

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

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

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

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

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

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

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

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

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

And, of course, then there is Toto…

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

HEAD OFFICE
22 Altona Street
West Perth WA 6005

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

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

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

MAJOR SHAREHOLDERS

Van Eck    6%

SHARES ON ISSUE
Approx. 515.42 million

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

 

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

HEAD OFFICE
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Ph: + 61 8 6424 8440
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Email: info@sheffieldresources.com.au
Website: www.sheffieldresources.com.au

DIRECTORS and MANAGEMENT
Will Burbury, Bruce McQuitty, David Archer

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

SHARES ON ISSUE
approx. 119.6 million

MARKET CAPITALISATION

$117.79 million (at 24/4/14)