THE INSIDE STORY: S2 Resources (ASX: S2R) added a new stamp to its passport by entering into an agreement with TSXV-listed Renaissance Gold to earn in to three of that company’s properties located on some of the major known gold mineralised trends in Nevada, USA

While in North America S2 also made a C$1 million investment in GT Gold, another TSXV-listed company that owns the high-grade Saddle gold discovery in the Golden Triangle of British Columbia, Canada

Under the agreement with Renaissance Gold, S2 Resources can earn a 70 per cent interest in three highly prospective gold exploration properties, Ecru, Pluto, and South Roberts, all of which are situated on major mineralised trends in Nevada

S2 described Renaissance Gold as being a company that specialises in generating prospects then joint venturing these with larger partners at the drilling stage

The company’s personnel have been involved in several major discoveries, including the Long Canyon deposit, which was ultimately bought by Newmont for US$2.3 billion

“After a patient search for high quality exploration opportunities in favoured jurisdictions we are pleased to have reached agreement to earn into these very compelling projects,” S2 Resources managing director Mark Bennett said

“Each property comprises a compact land package with well-defined and thought out drill-ready targets.

“Some of these targets are deep but their potential scale is very significant.

“The drill-ready nature of these opportunities complements the longer term strategic value we believe we can add to our other exploration projects in Sweden and Finland”

The Ecru project is located 40 kilometres southeast of Battle Mountain in Lander County, Nevada.

It is in the heart of the highly endowed Battle Mountain–Eureka trend, adjacent to Barrick’s Pipeline, Cortez Hills and Goldrush deposits, which have a collective gold endowment of approximately 50 million ounces.

The Ecru project is situated in an area covered by a veneer of transported colluvium and is centred on a large gravity high that has been interpreted to represent an upthrown block of the same carbonate rocks that host the nearby world class deposits

The Pluto project is located 50 kilometres north of Austin in Lander County, Nevada, on the north-south ‘Rabbit trend’ of gold deposits.

The target at Pluto comprises a gravity anomaly interpreted to represent an uplifted block -or horst – containing stratigraphy known to be receptive to gold mineralisation

This uplifted block is exposed where overlying tertiary volcanic rocks have been eroded to reveal the Havallah Formation, which is the impermeable caprock located immediately above, and sealing, the target receptive carbonate lithologies of the Antler sequence that is host world class gold deposits in the Battle Mountain district 90km to the north.

The South Roberts project is in Eureka County, Nevada and is located on the Battle Mountain–Eureka trend of world class gold deposits and on the western margin of the northern Nevada rift in a very similar setting to Barrick’s Goldrush deposit to the north.

The project covers the southern extension of an uplifted block containing known gold mineralisation that plunges southwards beneath transported colluvium substantiated by a gravity anomaly and confirmed by a six hole first pass drilling program conducted in 2014.

“Importantly, the deal structure enables us to drill test and either earn-in or move on to new targets,” Bennett explained.

“It is a good fit for both parties because it matches S2’s exploration capability and capacity with RenGold’s proven expertise in defining and discovering significant gold mines in an established mining friendly state.

“We are looking forward to working with Rengold and plan to hit the ground running”

Nevada was ranked fourth best mining jurisdiction in the world in the 2016 Fraser Institute ranking and is the fifth largest gold producing district in the world, with an estimated endowment of over 360 million ounces.

S2’s investment of C$1 million in gold explorer GT Gold was by way of a placement at C32 cents per share in April 2017.

GT Gold announced a high-grade gold discovery at its Saddle property, situated in an area of British Columbia known as the Golden Triangle, in July 2017.

The Golden Triangle hosts several world class gold deposits including Eskay Creek that was formerly mined by Barrick, and the new seven million-ounce Brucejack mine being developed by Pretivm.

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

IN THE LOBBY: The Western Australia Government announced its intention to continue funding the $10 million a year Exploration Incentive Scheme.
 
One of the more successful initiatives of the previous government, the EIS provides refunds to exploration companies to cover up to 50 per cent of the costs entailed for selected drilling projects.

The scheme has been welcome by the junior exploration sector, particularly by companies looking to drill out greenfields areas.
 
The Exploration Incentive Scheme has contributed to at least 25 new discoveries including the Nova nickel project (Fraser Range) and Gruyere gold project (eastern Goldfields).

The decision to continue the scheme received plaudits from the industry.

“The Western Australian Government’s commitment to continue the exploration incentive scheme is good news for mineral exploration,” Association of Mining and Exploration Companies (AMEC) chief executive officer Simon Bennison said.

“The EIS is needed to help mineral exploration companies undertake greenfields mineral exploration, which often takes place in remote parts of WA.”

According to AMEC, independent research into the Western Australian scheme has demonstrated the value of the program with each $1 million invested leading to an estimated long run cumulative increase of exploration expenditure of $19.8million.

A separate evaluation of the trendsetting South Australian PACE initiative (Plan for Accelerating Exploration) between 2004 and 2013 showed that an investment in precompetitive geoscientific data and collaborative drilling programmes provided returns on investment of over 20:1.

The WA government also spruiked the scheme’s benefits saying that for every $1 million invested by the government, towards major new projects, the scheme generates $10.3 million in exploration activities and creates 48 jobs over 18 years.

The Department of Mines, Industry Regulation and Safety said it received a 40 per cent increase in the number of mineral exploration (Program of Work) applications during the March and June quarters of 2017, compared to the last half of 2016.

“I’m thrilled to announce the Exploration Incentive Scheme will continue following an increase in mineral exploration activities; this is encouraging news for the Western Australian mining industry,” Mines and Petroleum Minister Bill Johnston said.

“Western Australia’s mineral industry is in its best shape since 2012 – in the first half of 2017, there were 15 mineral initial public offerings on the ASX, four more than 2016.

“The surge of investor interest in gold and battery metals, lithium, graphite and cobalt, is helping Western Australia to emerge more rapidly from the equity funding doldrums.”

The statistic most worth noting in all this is that around 80 per cent of Australia’s current mineral production is from mines discovered before 1980.

The reality is, of course, that these mines are not an infinite supply and eventually will have to be replaced.

With the average turnaround from initial exploration, discovery, development and mining being around ten years the discovery of new deposits is imperative.

“The vast majority of Australian greenfields mineral exploration is done by small, ASX-listed mineral exploration companies reliant on retail investors,” Bennison continued.

“Increasing the attractiveness of mineral exploration companies to these investors will lead to an increase in Australian greenfields mineral exploration.

“While the co-funded drilling component of the EIS will help companies with their innovative drilling programs there remains an urgent need to rollover the Federal Government’s Exploration Development Incentive program and an extension to a more flexible tax incentive program.

“To discover the mines of tomorrow, the industry needs greater investment.”

THE CONFERENCE CALLER: Before we trundled off to Diggers & Dealers we pondered what results there would be share price-wise for the companies presenting.

Now we don’t pretend to be very scientific here at The Roadhouse, so we were interested in seeing what impact – if any – presenting at the country’s biggest mining forum would have on these companies and their market capitalisation.

As it turns out not much – as you can see from the tables below.

However, looking beyond the share price movement, to the volume of shares traded on particular days, one pattern seems to emerge.

Present early in the day, when the market is still open, and you have a chance of picking up some interest.

Present in the afternoon and punters seem to be distracted – Kalgoorlie has that effect on people – and you will most probably be ignored during the next day’s trade, unless, of course you have a really good tale to tell.

But, when the dust settles and everybody has gone home, it seems they do pay attention and then when back in front of their screens start to recollect what they have seen in the presentations and heard at The Palace during the evenings.

Pilbara Minerals (ASX: PLS) presented on Day One and although its share price didn’t move just over 7.9 million shares changed hands.

Two days later the company share price spiked with 7.6 million shares traded.

Shares closed yesterday at 37.5 cents with volume way down on Diggers figures at 1.8 million

Breaker Resources (ASX: BRB) must have said something that sparked investor interest with its shares doing very well since the conference closing yesterday seven cents to the better from pre-conference levels with no market announcements to create interest.

The day after presenting at Diggers the company’s shares spiked at 78.5 cents with just over 838,000 shares changing hands.

No surprises with gold producers Northern Star Resources (ASX: NST) and Evolution (ASX: EVN) finding positive ground.

Day three was when Northern Star attracted investor attention trading just over 4.4 million shares during the day’s trade, which it followed up on the days following with 3.1 million on Thursday and hitting back over the 4 million mark on Friday taking the price to $4.92.

Evolution was similar, only volumes were twofold with 11.2 million share trade on the Wednesday and 9.2 million and 13 million moving on Thursday and Friday respectively.

Day Two presenters did alright with Saracen Mineral Holdings (ASX: SAR) gaining six cents overall.

Speaking in the early session paid off for Raleigh Finlayson with the company enjoying the initial six cent leap with just over 6 million shares transacted.

There was more joy on Wednesday when Saracen hit a spike of $1.37, trading just over 9 million shares for the day.

Diamond play Lucapa Diamond Company (ASX: LOM) enjoyed a pre-conference run, which hit the skids post presentation.

Whatever CEO Stephen Weatherall said it managed to scare off approximately 665,000 punters who sold out pretty quickly, although 410,000 newbies jumped on board on Friday to take the share price up to 29 cents.

The CEO newly-dubbed ‘the charming man of mining’ Bob Vassie of the company named Digger of the Year, St Barbara Mining (ASX: SBM) took advantage of his pre-lunch time slot to send his company share price in an upward direction.

Although1.8 million shares were traded on the day of his presso, the share price remained static, but took off over Days Two and Three, during which time over 6.6 million shares changed hands and the share price made its way north.

Further interest earlier this week took it to 28.8 cents with things settling back by yesterday.

Day Three is always saved for the big-hitters, but the company that would be named Emerging Company for 2017, Kin Mining (ASX: KIN) became the boutique stock of the conference by adding four cents by the end of Friday trading with an approximate total of just 850,000 shares moving between trading screens.

Winner of the Digger of the Year Gong, Gold Road Resources (ASX: GOR) enjoyed its time in Kalgoorlie.

After presenting in the death slot – after lunch on Day Three – Gold Road attracted plenty of attention on the days following moving some 875,000 shares on Thursday and just under 2 million on Friday when it closed at 69 cents.

CONFERENCE CALLER: The Diggers and Dealers Mining Forum Awards were presented at the closing night gala dinner.

DIGGER OF THE YEAR

This year’s Digger of the Year award went to St Barbara Mines (ASX: SBM).

Diggers and Dealers said the award this year did not recognise the largest producer or the most aggressive corporate developer, however it did recognise the company’s consistent performance over a number of years, exceptional management and a company that has rewarded shareholders with strong equity growth.

St Barbara’s production for the 2017 financial year was more than 380,000 ounces of gold at an all in sustaining cost of less than $900 per ounce.

Since September 2015, the company has fully repaid its debt 0f $360 million and now has a strong balance sheet, with 161 million in cash at the 30th of June.

DEALER OF THE YEAR

The Dealer of the Year award went to Gold Road Resources (ASX: GOR) for its deal to sell 50 per cent of the Gruyere gold project to Gold Fields.

The deal transferred substantial equity to Gold Fields, but most importantly provided a considerable cash injection to Gold Road – sufficient to fully-fund the project development as well as leaving surplus funds for working capital and exploration on other Gold Road targets.

The deal leaves Gold Road with a strong balance sheet and a low-risk profile for investors. It allows the company to work alongside the experienced Gold Fields team, while also using its own expertise to explore the resource potential of other assets.

Gold Road was named as the Best Emerging Company in 2011.

G J STOKES AWARD

The G J Stokes Memorial Award is presented annually to people who have contributed on a sustainable basis through their careers to the advancement of the resources industry and in many cases to the broader society through their leadership.

This year the gong went to Jim Askew.

Over a 35-year period, Jim has been a director of over 30 companies listed on all the major global stock exchanges, covering exploration, construction and operations on all major continents. Interspersed with all this has been involvement with private equity and venture capital.

Today he continues a highly successful career in the mining industry as chairman of OceanaGold, Syrah Resources and as a non-executive director of Evolution Mining and most recently Endeavour Mining Corporation.

EMERGING COMPANY

The Emerging Company Award was presented to Kin Mining (ASX: KIN)

MEDIA AWARD

The Media Award was won by Tess Ingram of The Financial Review.

THE INSIDE STORY: Alloy Resources (ASX: AYR) is confident its 100 per cent-owned Ophara cobalt-gold project in the Broken Hill region of New South Wales is in an emerging hot new area for cobalt in Australia. By Margie Livingston

Alloy Resource believes it has a unique cobalt-gold prospect with excellent potential.

“It’s hard to find a good cobalt project and we are excited by the opportunities cobalt presents and our Ophara cobalt-gold project which is our current focus,” Alloy Resources managing director Andy Viner told The Resources Roadhouse.

The opportunities in cobalt Viner refers to include the cobalt price point, which has raced ahead and risen 130 per cent over the last 15 months, an increase from $32,000 to $72,000 per tonne.

Some 48 per cent of produced cobalt is consumed by battery technologies with 68 per cent of lithium ion batteries requiring cobalt – expanding that market by 35 per cent year upon year.

“The main use for lithium batteries is mobile phone electronics however electric vehicles are now the leading use,” Viner said.

“China is increasingly using electric vehicles, which will be a big driver in the use of cobalt in the coming years.”

With cobalt prices and demand high, any discovery is bound to be a success, making Alloy’s Ophara project even more exciting.

Located 50 kilometres west of Broken Hill on the South Australian border, the 314 square kilometres Ophara cobalt-gold project has identified the Great Goulburn cobalt-gold-copper prospect.

“We’re in a fabulous position, situated between two big cobalt prospects, and all have similar style mineralisation,” Viner said.

Cobalt Blue Holdings’ Thackaringa cobalt project 10km to the northeast contains 50,000 tonnes of cobalt with pyrite, and Havilah Resources’ Mutooroo deposit is 10km southwest of Great Goulburn containing 17,500 tonnes of cobalt with copper and gold.

The Ophara project licence encompasses a large sand covered area with little surface geology.

“Previous explorers did no systematic work, no serious exploration, so with the increase in value of cobalt, we can justify spending money on it,” Viner explained.

Alloy recommenced exploration in December 2016 with follow up detailed ground magnetics, rock and soil sampling.

RC drilling on ground magnetics took place late January – early February completing 12 new holes.

“We’ve confirmed new mineralised zones over about 700 to 800 metres strike, found some new mineralisation and the system is very open,” Viner said.

Results included:

8 metres at 0.14 per cent cobalt and 0.43 grams per tonne gold from within 15m at 0.12 per cent cobalt and 0.3g/t gold

3m at 0.13 per cent cobalt and 0.37g/t gold from within 8m at 0.11 per cent cobalt and 0.27g/t gold, and a further 3m at 0.12 per cent cobalt and 0.36g/t gold.

“We have a strong electromagnetic anomaly dipping back to the north and two smaller EM anomalies in the area,” Viner continued.

“With the ground surface in this area it is very hard to do soil sampling because of a very complex regolith and lots of transported cover.

“We’ve got pathfinder elements from drill sampling of cobalt, copper, gold, molybdenum and it looks like copper is the best element to actually get onto these systems.

“We’ve also got a very direct association with the pyrite and pyrrhotite and seeing some mineralisation in faults and quartz veins with sulphide.

“It’s a steep learning curve but we believe we are getting there.

“The target for finding more of this is going to be co-incident Magnetic and Electromagnetic conductors.”

After searching historical records for the Broken Hill area, Alloy located an aerial electro-magnetic (GEOTEM) survey done by BHP in 1990.

“The survey indicated strong potential underneath the sand cover, and suggests we are just scratching the surface and that there are large new conductors to be defined,” Viner said.

Alloy hit the ground to find any signs of these possible conductors which showed up in the GEOTEM survey.

“We drove for days and found little outcrop, however we did find old prospecting pits and rock chip sampling showed very strong copper results supported by cobalt and gold, which is pretty exciting,” Viner said.

At this stage, Alloy had to make decision – whether to keep drilling at Great Goulburn and placate the market by releasing encouraging results, or to ensure it spent its exploration funds drilling the best targets.

“We decided the best way forward was to fly a modern new VTEM survey to try and define exactly where these conductors are,” Viner said.

“Our independent consultants, Southern Goescience, believe the area being surveyed is highly prospective for conductive bodies and think VTEM will work absolutely beautifully – so we’ve got that happening as soon as landowners give us access later in August or early September.

“We are also looking at possible ground EM surveying over a smaller specific area if contractors are going to be later than thought for the aerial survey.”

Alloy has very clear objectives at its Ophara cobalt-gold project.

The company wants to find the best targets as quickly as it can using VTEM or ground EM, follow up with RAB and air-core drilling of priority targets and then conduct RC drilling under those better drill anomalies.

With such a well-defined plan and highly prospective ground, it is no wonder there is some expectation in the marketplace on its next round of exploration results.

Alloy’s second project of note is its Horse Well gold project Joint Venture with Doray Minerals, over 1,000sqkm in the north-eastern goldfields of WA.

Doray earnt a 60 per cent interest as a JV partner over 2014-15 and Alloy is now funding 40 per cent since early 2016.

The JV is conducting broad first and second pass exploration aiming to discover a one million ounce gold deposit capable of supporting a 100,000 ounce per annum gold operation.

“We are looking for a million ounce deposit, it might be multi-million ounces, and it’s very exciting,” Viner said.

“We’ve got lots of prospects over this 10 kilometres of strike of an extensive greenstone belt.

“Over 80 per cent of the project is covered by transported sand – meaning exploration requires aeromagnetic survey mapping and then drilling of targets.”

Horse Well’s two main known mineralised areas are the northern Dawn prospects area and the southern Horse prospects area which includes 75,000 ounces of Mineral Resources.

Doray achieved new gold discoveries in the Dawn prospects area in 2015/16 with definition of the northern Dusk til Dawn and Django prospects.

“Importantly in the last year we have completed over 50,000 metres of regional air core drilling and 4,500 metres of RC drilling,” Viner indicated.

“Last year we defined two six-kilometre-long air-core anomalies and another of 4 kilometres strike.

“The drilling has been on 800 metre lines and holes 160 metres apart so anything could be in these areas.

“All we need is for Doray to start fieldwork again and I can assure everyone we are being pro-active in trying to make this happen as soon as possible!”

Alloy seems to be in the right space with its cobalt and gold projects.

It has large targets, good strategic locations and is well funded.

Exploration is stepping up at Alloy, and whether it’s gold or cobalt, it looks like results across its projects will be promising.

Alloy Resources Limited (ASX: AYR)
…The Short Story

HEAD OFFICE
Suite 6, 7 The Esplanade
Mount Pleasant WA 6153

Ph: +61 (8) 9316 9100

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

DIRECTORS
Andrew Viner, Kevin Hart, Allan Kelly