THE INSIDE STORY: Quick: name an Australian junior mining company that has cash in the bank, delivered a maiden dividend, and an advanced portfolio of near-term development and mining opportunities.

As gold explorer and producer, Southern Gold (ASX: SAU) is one junior that stands apart from the crowd.

The company has built-up a bank balance of around $6 million and produced a clean balance sheet.

Remarkably it achieved this solid financial standing without rattling the tin at market whilst maintaining a tight share register of only 47 million ordinary shares.

In July, it announced a special unfranked dividend of three cents per share cash, or equivalent in shares.

The company locates development projects with potential to generate cash and is now in the enviable position where it can organically fund current, and future, exploration by monetising its expanding portfolio.

“We are working on opportunities with the intention of generating cash flow,” Southern Gold managing director Simon Mitchell told The Resources Roadhouse.

The backbone to Southern Gold’s success has been production of gold from the Cannon open pit mine, located east of Kalgoorlie in Western Australia.

The mine is managed by Westgold Resources (ASX: WGX) with ore treated at Westgold’s South Kalgoorlie Operations (SKO) Jubilee plant, in a profit share arrangement, with both parties entitled to 50 per cent of the profits.

Open pit mining from Cannon is now complete, however steadily increasing gold grades, which were confirmed at the base of the pit, led Southern Gold to consider developing an underground extension.

The company has completed a 2,170 metres Reverse Circulation (RC) drill program with a view to a new resource estimate below the open pit.

“We are eagerly awaiting the results from the RC drilling program,” Mitchell said.

“While open-pit mining operations have ceased, mined ore is still being processed, so the underground upside offers an opportunity to move forward relatively quickly with a new phase of mining at Cannon.

“We think there is, at the minimum, a small underground gold mine there.”

Elsewhere in WA, Southern Gold is farming into the Glandore project of Aruma Resources to earn up to 90 per cent by spending $1.2 million.

Southern Gold spent $300,000 during the first year to earn 50 per cent and is currently in the second expenditure period where another $400,000 increases project ownership to 75 per cent.

Drilling at the Doughnut Jimmy and Lavaeolus prospects confirmed previous gold intersections.

“We are confident additional high-grade mineralisation exists at Glandore,” Mitchell said.

“We don’t expect that to be a multi-million-ounce type of deposit, but we certainly feel there is opportunity there to establish 5,000 to 10,000 ounces of gold at relatively high-grade that could potentially make us a lot of money once they are processed through one of the many mills in the Kalgoorlie area.”

Overseas, Southern Gold’s South Korean portfolio is progressing at a satisfactory rate with approval given by the country’s mining regulators for the re-opening of, and access to, the historic Gubong underground gold mine.

Southern Gold’s development partner, London Stock Exchange-listed Bluebird Merchant Ventures Ltd can now access the mine and begin project assessment under the Farm-In and Joint Venture Agreement that was struck in March this year.

“Bluebird has been in the game a long time and are the right people for the task of re-commissioning old gold mines,” Mitchell said.

“Activating small, but high-grade, production in Korea will happen a lot quicker than most people will expect.

“South Korea used to have a robust gold mining industry, it is just that everybody has now forgotten about it

“There is a substantial amount of underground development already in place at Gubong.”

The Gubong mine was South Korea’s second largest gold mine and was mined over a 60-year period. 

There is more than 50 kilometres of level development (and possibly up to 100km) accessed by two vertical shafts and six inclined shafts in what was a substantial mining operation in its day.

Bluebird will re-open the mine, conduct preliminary assessment works and an evaluation of re-starting operations.

This is expected to take six to nine months and cover modern era resource estimation, mining methodology, metallurgical studies, capital and operating cost estimates and financial analysis.

Southern Gold Ltd (ASX: SAU)
…The Short Story

HEAD OFFICE
Level 1
8 Beula Road
Norwood SA 5067

Ph: +61 8 8368 8888

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

DIRECTORS
Greg Boulton, Simon Mitchell, David Turvey, Mick Billing

THE INSIDE STORY: Lithium Australia (ASX: LIT) aims to become the contrary John West of the lithium chemical production industry by processing the materials rejected by others with a low exposure to mining costs.

Lithium Australia believes it is ideally positioned to deliver on the company’s business strategy, which is to apply the best available processing technology to unconventional plant feed to produce lithium chemicals.

This feed may include low-grade, of contaminated spodumene concentrates, lithium micas, lithium feldspathoids, lithium amphiboles, and a host of other lithium minerals, not usually processed in lithium chemical production.

LIT’s most advanced extraction method is the company’s 100 per cent-owned trademarked SiLeach technology that eliminates the expensive roasting step in conventional lithium processing.

The technology can treat lithium bearing minerals currently being disposed of as waste from mining operations around the world, due to a lack of suitable mineral extraction technology.

Recently-conducted engineering design studies and financial modelling showed a proposed large-scale SiLeach-based pilot plant (LSPP) can be cash positive based on the production of lithium carbonate, before by-product credits, and that mica material can be a competitive source of commercial lithium products.

The studies also identified multiple avenues for further substantial capital and operating cost reductions.

“The LSPP study outcomes are encouraging,” Lithium Australia managing director Adrian Griffin said.

“They show that a SiLeach large scale pilot plant can be potentally profitable – and this without considering by-product credits or further optimisation.

“This was not the primary aim of the study – we would have been happy with break-even at this scale and stage of the commercialisation program – but we now have additional confidence in pursuing a LSPP as the study outcomes are based on successful pilot-scale test work at one of Australia’s premier mineral research institutions.

“We will use the remainder of 2017 to optimse the outcomes with a view of committing to construction of such a plant.”

The LSPP’s design studies used a base annual lithium carbonate production of 2,500 tonnes (approx. 1/10th scale of a full-scale production plant), concluded:

Recovery of high purity lithium carbonate produced by the ANSTO operated pilot plant that meets offtake specification, can be achieved;

Hydrometallurgical plant operating costs of around US$5,600 – US$6,400 per tonne of lithium carbonate produced, without consideration of any potential by-product credits;

By-product credits have potential to reduce operating costs; and

Potential to make further significant improvements to both capital and operating costs by:
o improved water management; o optimisation of reagent mix and usage;
o improved control on neutralisation to minimise lithium losses;
o optimising the trade-off of residence time versus recovery; and o economies of scale transitioning from pilot plant testing to commercial operations.

LIT’s preferred supply model is to source lithium mica from waste streams from already operating mines, however the company is also pursuing exploration activity to secure alternative supply, if required and is evaluating the processing of spodumene, and suitable spodumene supplies.

LIT recently completed stage 1 drilling, to test the Horseshoe pegmatite, at the company’s 100 per cent-owned Ravensthorpe lithium project in Western Australia.

The drilling program was designed to define the structural and geological setting of the Horseshoe pegmatite and to test for economic lithium mineralisation.

The drilling demonstrated the Horseshoe pegmatite to be a relatively flat, sheet-like body with a true thickness ranging from 15 metres to 25 metres with continuation of the pegmatite to the west of the surface expression open, while lithium minerals spodumene and lepidolite have been identified in drill chips.

“The large footprint, substantial thickness and shallow dip of the Horseshoe Pegmatite, provides an excellent target,” Griffin said.

“The identification of lithium minerals within the Pegmatite clearly demonstrates the very strong similarity to the pegmatite being mined nearby at Mt Cattlin, by Galaxy Resources.

“The Ravensthorpe area is showing a lot of promise and we look forward to improved weather conditions later in the year to enable the resumption of drilling which will focus on Deep Purple.”

The sourcing of the feed material is one of LIT’s high priorities as this remains a critical requirement for committing to the construction of the LSPP.

Optimisation studies will be undertaken, to improve both capital and operating costs, with a view to committing to construction of a LSPP by year end.

Lithium Australia NL (ASX: LIT)
… the short story

HEAD OFFICE
Level 1,
675 Murray Street,
West Perth WA 6005

Ph: +61 8 6145 0288

Email: info@lithium-au.com
Web: www.lithium-au.com

DIRECTORS
Adrian Griffin, Bryan Dixon, George Bauk

THE INSIDE STORY: Rox Resources (ASX: RXL) is looking forward to spending its $13.9 million war chest to deliver further success across its diverse portfolio of exploration projects.

Rox Resources has been busy of late, completing several drilling programs across the company’s portfolio and has further programs planned soon.

Rox is keen to continue to explore its nickel projects, but is doing so with a prudent approach given the current nickel market and outlook.

The company has also initiated a search for project opportunities in other commodities, including copper, zinc, gold and silver.

An RC drilling program was carried out at the Fisher East gold-nickel project in Western Australia.

The Fisher East drilling produced encouraging results, including the generation of the first ever intersection of massive and disseminated nickel sulphides at the Mt Tate prospect.

Drilling highlights from Mt Tate included:

MFEC127
1m at 0.88 per cent nickel from 121m, within semi-massive sulphides;

MFEC128
2m at 1.45 per cent nickel from 94m, transitional disseminated nickel sulphide;

MFEC135
4m at 0.57 per cent nickel from 141m, disseminated sulphides;

MFEC136
2m at 1.42 per cent nickel from 146m, disseminated sulphides;

MFEC137
1m at 0.81 per cent nickel from 196m, disseminated sulphides; and

MFEC140
1m at 0.85 per cent nickel from 125m, within massive sulphide.

Other results from drilling at the Cutlass prospect, included:

MFEC132
4m at 0.43 per cent nickel from 108m, and 4m at 0.35 per cent nickel from 134m, two zones of low grade disseminated nickel sulphides.

While at Sabre North:

MFEC133
5m at 0.67 per cent nickel from 115m, disseminated sulphides.

The earlier discovery of, and drilling at the Camelwood, Cannonball and Musket nickel prospects within Mt Fisher has defined a JORC 2012 Mineral Resource of 4.2 million tonnes at 1.9 per cent nickel (Indicated Mineral Resource: 3.7 million tonnes at 1.9 per cent nickel, Inferred Mineral Resource: 0.5 million tonnes at 1.5 per cent nickel) comprising massive and disseminated nickel sulphide mineralisation, and containing 78,000 tonnes of nickel.

Diamond drilling was recently undertaken to test for further massive nickel sulphide potential at Sabre, extend the Camelwood massive sulphides at depth, and to test a downhole EM conductor along strike at Musket.

Drilling at Camelwood demonstrated high-grade nickel sulphide mineralisation continues at least 100m deeper than the previous drilling had indicated with DHEM results indicating the possibility of mineralisation extending down dip to the south.

Assay results were:

MFED076
7.7m at 1.4 per cent nickel from 693.3m, within semi-massive and disseminated sulphides, including 1.4m at 2.9 per cent nickel from 693.3m.

Drilling at Musket intersected a brecciated and faulted zone where an intrusive porphyry may have disrupted the mineralised zone with a strong off hole DHEM conductor showing a new mineralised zone that warrants drill testing.

Assay results were:

MFED079
0.13m at 2.3 per cent nickel from 519m, within a nickel sulphide stringer;

0.5m at 4.7 per cent nickel from 522.5m, within matrix sulphides;

0.1m at 2.6 per cent nickel from 606.1m, within a nickel sulphide stringer; and

0.2m at 2.6 per cent nickel from 607.1m, within a nickel sulphide stringer.

Drilling at Sabre was designed to test the deeper portions of a conductive EM plate defined from ground surveys about 100m below previous RC drill intercepts.

The drill holes interested a mineralised zone of variable thickness, containing semi-massive and disseminated nickel sulphides.

Assay Results were:

MFED075
2m at 1.0 per cent nickel from 315.5m, within semi-massive and disseminated sulphides.

MFED077
4.8m at 1.2 per cent nickel from 330m, within semi-massive and disseminated sulphides.

MFED078
2.3m at 2.4 per cent nickel from 337.3m, within semi-massive and disseminated sulphides, including 0.7m at 3.7 per cent nickel from 338.2m.

Rox has completed its acquisition of 100 per cent ownership of the Collurabbie project, which the company considers to be a strategic opportunity that fits within its current portfolio.

The Collurabbie area has not had any exploration of substance since 2011 and Rox plans to apply the exploration techniques that have proven successful at Fisher East.

The first stage will be a 6,000m aircore drilling program to be undertaken during the third quarter of 2017.

Historic core will also be re-logged while a mineral resource estimate for the Olympia deposit is due for completion during the quarter.

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

HEAD OFFICE
Level 1, 34 Colin Street
West Perth WA 6005

Ph: +61 8 9226 0044

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

DIRECTORS
Stephen Dennis, Ian Mulholland, Brett Dickson

THE INSIDE STORY: Pioneer Resources has a clear and committed focus on exploring for and developing new-technology minerals – mainly lithium and cobalt.

Pioneer has accumulated a portfolio of high quality lithium and cobalt assets in Western Australia and Canada, which it has been rapidly advancing.

The company’s main 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 20 kilometres, and drilling has confirmed the project holds potential for the discovery of a lithium spodumene deposit.

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 small resources sector is familiar with lithium-caesium-tantalum projects, with most focusing on the lithium aspect.

This changed for Pioneer with the world class caesium discovery at the Sinclair Zone at Pioneer Dome in October 2016.

Sinclair 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 is primarily used to manufacture caesium formate brine, a high-density fluid used in oil and gas drilling.

“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.”

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.

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.

Once pollucite is 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 where the company has a Farm-in Agreement with Lepidico (ASX: LPD) over the PEG009 lepidolite target within the project area.

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 the lepidolite mineralisation at Pioneer Dome is suitable for extraction via Lepidico’s L-Max process, which produces lithium carbonate directly from lepidolite.

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 that identified 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 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

THE INSIDE STORY: Musgrave Minerals (ASX: MGV) recently announced its intention to assume 100 per cent ownership of the Cue project in the Murchison Province of Western Australia.

Musgrave Minerals was in a Farm-In and Joint Venture Agreement with Silver Lake Resources (ASX: SLR), which had signalled it would be selling its 40 per cent interest to Westgold Resources (ASX: WGX).

Musgrave elected to exercise its pre-emptive right and acquire SLR’s interest in the project, saying at the time that it believes potential exists to extend existing mineralisation and to also discover new high-grade mineralisation within the project area, which has been demonstrated by the recent success at Break of Day and Lena deposits.

Much of the recent exploration activity has focused on drilling at the Break of Day and Lena gold prospects on the Moyagee area at the Cue project.

The Moyagee area hosts a combined JORC (2012) and JORC (2004) compliant Mineral Resource of 3.87 million tonnes at 3.07 grams per tonne gold for 382,000 ounces contained gold within four separate deposits: Break of Day, Lena, Leviticus and Numbers.

The Break of Day Mineral Resource estimate currently stands at 868,000 tonnes at 7.15g/t gold for 199,000 ounces contained gold (Indicated and Inferred) with 55 per cent of the resource in the higher confidence Indicated category.

Break of Day mineralisation is open in all directions and RC drilling has continued to intersect high-grade gold with drill results incorporated in the Mineral Resource estimate.

The Lena Mineral Resource estimate of 2.68 million tonnes at 1.77g/t gold for 153,000 ounces contained gold (Indicated and Inferred) boasts 46 per cent of the resource in the Indicated category.

Lena has produced metallurgical gold recoveries greater than 95 per cent from oxide and transitional material.

RC drilling has intersected near surface gold with the drill results incorporated in the Mineral Resource estimate

After the announcement, Musgrave reported the identification of new high-priority gold targets for drill testing on the Cue Project in the Murchison region of Western Australia.

The new targets included the Louise prospect, an extensive gold soil anomaly located approximately 600 metres south of the high-grade Break of Day gold deposit.

The Louise prospect gold target currently measures over 500m long and 250m wide and covers the southern extensions of both the Break of Day and Lena shear zones.

The anomaly returned a peak gold value of 1,382ppb gold in soils (1.3g/t gold) and has never been effectively drill tested.

The soil anomaly follows a series of old workings analogous to Break of Day. Drilling is planned to test this high priority target during the next phase of RC drilling, which has commenced.

Musgrave continued its run of positive drilling announcements by providing further assay results from a RC drill program at.

The base metals and gold focused drilling program was completed in late May comprising 16 drill holes for a total of 2,720m.

Drill hole assay results were received for all drill holes with results from 17EPRC001 through 17EPRC005 having been previously reported.

Drilling at three targets returned encouraging gold anomalism, CV19 (17EPRC009), CV20 (Lady Stardust – 17EPRC010) and CV22 (17EPRC011).

Strong shearing, alteration, the presence of semi massive sulphide (pyrrhotite and pyrite) and highly anomalous gold was identified.

Musgrave is eager to commence follow up geochemical surveys, and further drilling it has planned on these targets, which are all located within 10km of the Tuckabianna mill that was recently purchased by Westgold.

Highly anomalous copper and zinc was also identified in a number of drill holes, leading to down hole electromagnetic surveys, which are scheduled to be undertaken on selected drill holes later in th eyear.

Drill hole 17EPRC010 intersected elevated gold including:

18 metres at 0.1 grams per tonne gold from 102 to 120m and terminated in a second zone which assayed 1m at 1.24g/t gold at the end of hole at 159m.

“These results support the company’s, very positive view on the gold prospectivity of the Cue project,” Musgrave Minerals managing director Rob Waugh said.

“We continue to identify high-priority targets and have a strong belief in the upside potential of the project.

“The Louise target south of Break of Day has the potential to be another high-grade gold discovery opportunity.”

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