THE BOURSE WHISPERER: The Roadhouse’s inbox was inundated with quarterly reports this season so we thought we’d take a random selection and see what the companies had to say.

Ventnor Resources

During the quarter base metals exploration play Ventnor Resources commenced a fourth phase of drilling at the company’s Thaduna and Green Dragon copper project.

During the quarter there were 18 RC drill holes for 3,118 metres and 13 NQ2 diamond tails for 1,197m drilled at Thaduna and 11 RC holes for 1,352m and 2 HQ diamond holes for 390m at Green Dragon.

 

Deeper diamond tails are proposed to intersect the
mineralisation at depths from 280 metres to 300 metres below surface and
drilling is underway. Source: Company report

The quarter’s drilling has brought the total undertaken at the Thaduna and Green Dragon project to 145 RC drill holes for 18,700m and 15 diamond tails for 1,517m drilled at Thaduna and 89 RC holes for 11,643m and 2 HQ diamond holes for 390m at Green Dragon drilled to the end of the quarter.

The company has a deep drilling program underway to test the projected mineralisation at 280m to 320m below ground level.

The fourth phase program is designed to achieve two goals:

–    To complete the resource drill out above 200m vertical; and

–    To investigate the potential for economic mineralisation below 200m vertical along a strike length of 1,000m.

The company’s third phase of drilling at the Thaduna and Green Dragon copper prospects was completed in December 2011 and some results were received in the March 2012 quarter that included:

37m at 2.61 per cent copper from 111m, including 10m at 7.53 per cent copper from 134m downhole;

62m at 2.19 per cent from 125m, including 32m at 3.10 per cent copper from 127m downhole ending in mineralisation –  3.70 per cent copper at EOH, to be extended by diamond drilling

19m at 1.85 per cent copper from 246m including 6.57m at 3.93 per cent copper and 19.2 grams per tonne silver from 258m downhole;

13m at 2.87 per cent copper from 130m, including 8m at 4.48 per cent copper and 15.6g/t silver from 131m downhole; and

9m at 2.68 per cent copper from 180m downhole.

Laconia Resources

Perth based exploration company Laconia Resources’ activities for the March quarter included progress on its acquisition of the Rasuhuilca gold-silver project in Peru and results from preliminary metallurgical testwork at the company’s Lennons base metals project in Western Australia.

Laconia completed Due Diligence on the proposed acquisition of the Rasuhuilca gold-silver project during the March quarter.

 

Rasuhuilca project location map. Source: Company report

The company said the acquisition will establish it as an emerging precious metals producer and complement its existing portfolio of precious and base metals projects in WA.

The project is a high-grade gold and silver asset with near-term development potential and major exploration upside.

Other March Quarter highlights included:

At the Lennons Find Base Metals project in WA, preliminary test work was completed on composite samples from the oxide component of the Resource.

Results included:

–    Sulphuric acid leach extracted 75 per cent of the copper and 87 per cent of the zinc; and

–    Subsequent cyanide leach tests extracted 87 per cent of the gold and 94 per cent of the zinc.

Geological and litho-geochemical study was completed at Lennons Find in preparation for detailed field mapping and interpretation of the mineralising system.

The total Mineral Resource at Lennons Find is currently at 1.80 million tonnes at 82g/t silver, 0.26g/t gold, 0.2 per cent copper, 1.4 per cent lead and 5.1 per cent zinc.

Laconia is in a solid financial position with $2 million in cash at bank at the end of the quarter.

Exploration planned by Laconia for June 2012 Quarter includes Reverse Circulation (RC) drilling targeting additional oxide resources at Lennons Find and metallurgical test work on bulk samples from Lennons Find oxide resources.

The company will also RC drill test co-incident XTEM and geochemical targets at its Barramine project in addition to complete Phase 2 infill and regional auger drilling at the 701 Mile project.

Brazilian Metals Group

During the March Quarter Brazil-focused iron ore exploration and development company Brazilian Metals Group forged an agreement to acquire the advanced stage Carrapato iron project in the Northern Minas Gerais state, in Brazil.  

BMG announced an agreement to acquire 100 per cent of the Carrapato iron project, which it stated was a significant step in the company’s strategy to complement its existing large scale iron projects with smaller, high grade projects with near term production potential.

The Carrapato project is an extension of the Sarzedo mine, which has a 1.3 billion tonnes resource and was recently sold to Chinese state-backed East China Mineral Exploration and Development Bureau (ECE), for $1.2 billion.

 

Location of Carrapato tenement, Itaminas Sarzedo Mine to the
east; Vale’s Corrego do Feijao mine to the south. The tenement is about
1000 metres wide east-west. Source: Company report

Carrapato is also immediately adjacent to the Corrego do Feijao Mine of global big boy Vale, which produced direct ship iron ore at a grade of 66.6 per cent iron.

The project has proximity to domestic steel mills and rail infrastructure, to provide future domestic or export options for early development of a low cost iron ore operation.

The company has two larger projects, also located in the Northern Minas Gerais state the Gema Verde and Rio Pardo iron projects where further metalurgical testwork and pre-feasibility work was conducted during the quarter.

Alligator Energy

Uranium explorer Alligator Energy lit up its March Quarter performance with a maiden JORC Code-compliant Resource statement at its flagship Tin Camp Creek uranium project in the Northern Territory.

Alligator Energy confirmed a maiden Resource at the Caramel prospect within the Tin Camp Creek project of 944,000 tonnes at 0.31 per cent uranium for 6.5 million pounds of uranium.

 

Caramel Resource. Source: Company report

 

The company also carried out a comprehensive revision of the geology of the Caramel prospect, which identified a number of extension targets.

Company has a sound cash position with $8.1 million in in the bank.

Further activities for 2012 will involve drilling a seven kilometre zone from Caramel to South Horn within the Tin Camp Creek project area.

Alligator plans to drill 5,000m of Diamond Drilling in 2012 and drilling is due to commence late May.

Corazon Mining

Canada-focused exploration company Corazon Mining identified further strong nickel-copper-cobalt sulphide mineralisation at the company’s Lynn Lake nickel-copper sulphide project in Canada.

Drilling beneath the EL Mine at Lynn Lake Project continued to identify strong nickel-copper-cobalt sulphide mineralisation, including:

–    73.46m at 0.81 per cent nickel, 0.50 per cent copper and 0.022 per cent cobalt from 727.54m, including 32.46m at 1.26 per cent nickel, 0.72 per cent copper an 0.032 per cent cobalt from 727.54m.

Corazon conducted down-hole EM surveys taht defined several conductors it will use to direct exploration drilling of extensions to the EL Deposit between 700m to 1,200m below surface.

 

EL Deposit – Drill hole cross-section. Source: Company report

Drilling of priority target areas identified a new zone of nickel-copper sulphide mineralisation.

One hole  intersected approximately 51m of disseminated to massive sulphide mineralisation approximately  50m east of previously discovered sulphide breccia.

Drilling of these targets is continuing.

Corazon has kicked off mining studies for the Lynn Lake project and early results indicated copper and cobalt may provide a valuable credit (greater than CAD$2.00 per pound of nickel benefit).

Canadian underground mining costs have come in showing an approximate 30 per cent reduction in comparison to Australian costs.
 
Corazon is holding approximately $2.18 million at end of the quarter.

Talga Gold

During the March Quarter Talga Gold conducted exploration on the company’s 100 per cent-owned projects in Sweden (graphite, iron ore, copper-gold) and the Pilbara and Yilgarn regions (gold and iron ore) of Western Australia.

Fieldwork completed on Talga’s WA projects included Reverse Circulation (RC) drill testing of gold and iron targets and geochemical surveying over first pass targets.

In Sweden, the company acquired seven advanced graphite projects in its own right before entering an option agreement to acquire a further eleven graphite, iron and copper/gold prospective projects from TCL Sweden, a subsidiary of Teck Resources.

 

Sweden project location and transport infrastructure map
showing graphite deposits and Talga/TCL Sweden tenure. Source: Company
report

Work completed by Talga in Sweden included ground geophysical surveys, project reconnaissance, data compilation, logging and sampling of historic drill cores and the estimation of maiden JORC Code-compliant Inferred mineral resources at three projects.

Talga claims one of these project areas to include the highest grade graphite deposit published by any public company in the world. (Ref. Technology Metals Research – Advanced Graphite Projects Index).

Talga has $2.71 million cash at bank and enjoyed a strong increase in market capitalisation during the period.

OUT AND ABOUT: The Fly In Fly Out scheme of work has many detractors and just as many supporters.

Companies can’t be taken to task for using a system that works to keep their financial bottom line operating in their favour.

Workers can’t be answerable for opting to work within a system that allows them to earn big – working away from home – dollars, while not having to leave their urban-based residential address.

Towns that are in close proximity to mining operations also can’t be blamed for expressing concerns about the effect such a transient week-by-week population shift has on its services and livelihoods.

 

Of course, any mining industry associated debate wouldn’t be worth its salt unless some form of parliamentary inquiry was held to look into its machinations.

When the recent inquiry made its way to Perth junior sector lobby group the Association of Mining and Exploration Companies (AMEC) outlined what it felt about the argument.

“FIFO has provided a viable solution in attracting and retaining the right skill sets to work on mining and minerals exploration related projects in remote and regional communities throughout Australia,” AMEC national policy manager Graham Short said.

“AMEC and our members support FIFO as a legitimate workforce strategy which provides an adaptive management capacity to meet industry demand and the differing needs of the workforce”.

“Minerals exploration, mining companies, suppliers and contractors choose workforce strategies that suit their individual business circumstances, needs and financial requirements.

“A FIFO workforce for many companies may be the only viable option open to them, particularly with the current constrained workforce conditions.

“There are a number of factors which influence workforce strategies, such as the cyclical nature of the industry, mine location, mine life cycle, the skills required and the transient nature of the workforce.

“FIFO has not only been successful in meeting the immediate needs of employers for construction and production purposes but it also provides workers with a choice.”

Although the government appears to have reached the verdict that FIFO is the root of all evil falling upon regional centres it would be surprised to hear the people living in with the reality of the FIFO conundrum do understand why the industry operates that way.

“The consideration of Fly In Fly Out is something that we all have to grapple with within regional Western Australia,” Mayor of Port Hedland Kelly Howlett told The Roadhouse.

“Certainly in my time, particularly here in my time on Council, our thoughts and our views on Fly In Fly Out has certainly matured and I guess that’s something that has happened, even from 2008, when we did our last position statement and we are currently reviewing our position statement now.

“There is an appreciation and understanding of the real competitive nature of competing for high-expertise skilled trade, and the real competition, whether it be from Gladstone to Darwin to Western Australia.

“All the different resource projects that are happening at the moment means there is a really high competition to get the necessary skills and expertise to make that happen.”

As a big FIFO town due to the number of mining operations, including those of BHP Billiton, Fortescue Metals Group, Atlas Iron, and BC Iron that utilise its port facilities to ship their iron ore, Port Hedland is a fine example of just how competitive that employment market can be.

“All the roles that we are filling are for companies that are based in Port Hedland,” Pia Thornett safety manager of local recruitment agency Category 5 Labour Management told The Roadhouse.

“We have a lot more people looking for Fly In Fly Out work but as we don’t fill those type of positions, we can’t help those people.”

I may surprise some people but Port Hedland is something of a magnet for workers seeking better paid employment opportunities than what they may be able find at home.

However, as more people arrive in town and start work they soon realise the potential earnings they can be making are soon eaten up by the high rent market.

Being close to the action also enables them easier access to the mining companies.

The desired ‘industry experience’ or better still that acquaintance who works on a mine site who tells his boss, ‘I know a bloke looking for some work’, is much closer than when you are living and working thousands of kilometres away from the action.

It is for reasons such as this that many local businesses associated with the mining industry tend to see themselves as being no more than a revolving door as far as staff levels go.

Employees that do end up staying in town become a valuable commodity and can shop themselves around, which makes it more and more difficult for the smaller, local businesses to retain staff.

 “Occasionally they lose them to a Fly In Fly Out position, other times they may lose them to another company that is able to pay the employee a bit more money,” Thornett explained.

“Once people get their foot in the door – they do come here fully intending to become a Port Hedland local but they soon realise – after they have developed their skills and have gained the necessary experience – all of a sudden they want to start working on  a Fly In Fly Out basis.

“Local employers are constantly going through staff, who are always on the lookout for that bigger, better job.

“They become a training ground for some of the bigger businesses around, and that’s sad because they are forking out all this money to train new staff only to lose them.”

The question raised by FIFO is how to reach equilibrium between how a regional centre such as Port Hedland can successfully operate and evolve when placed in direct competition for a work force with the very industry that helped put it on the map when the first iron ore boom exploded in the early 1960s.

Kelly Howlett said she considers it to come down to the State of Western Australia and that it has an over-arching obligation to make sure there aren’t any gaps, that it needs to make sure there is the flow-on in terms of the health professionals, police, emergency services, and telecommunications.

“Even the state of Western Australia is now starting to catch up,” She said.

“Hopefully, now with the revision and the changes under the State Agreement Act, there will be a much greater collaborative effort between the state government, the actual mining proponents when they do projects and the involvement of the community and local government to make sure we are looking at the cumulative impact and filling any of those gaps.”

ONE OFF THE WOOD: Cassini Resources managing director Richard Bevan casually sat at the bar of The Roadhouse this week and told us how this new kid on the ASX block has managed to pick up some exciting new projects in Nevada.

 

Cassini listed in January this year on the back of an interesting tenement package located in Western Australia. Could you give us a bit of detail about what and where they are?

We listed on the back of four early-stage projects in Western Australia located in the West Musgrave, out near Warburton; Forrestania; Peak Charles; and the Eucla Basin.

We worked pretty hard to get, what we considered to be a reasonable asset package. They’re all early-stage projects, but we believe they all have a great deal of potential.

Particularly the Musgrave, which we think is pretty exciting due to the fact there is plenty of exploration activity in the region being carried out by some of the bigger companies.

We’ve had some independent reports done on the ground we hold out there and it really is looking quite prospective.

What was in in particular that attracted you to assemble the package of projects you did?

For us they just displayed some prospectivity, mainly for nickel, copper and gold.

The Musgrave is mainly nickel and copper, with some platinum group elements while Forrestania is mainly nickel and gold.

The Forrestania tenement is only about ten kilometres from the Flying Fox nickel mine and about 25 kilometres south of the Bounty gold mine.

The reason the tenement had originally been identified by the guys we bought it off was that some new survey results showed an extension of the Greenstone Belt running into it, which is undercover and therefore had not previously been identified.

So that tenement is in close proximity to producing gold and nickel mines with an opportunity to discover an extension to that Greenstone Belt.

Which of the four projects has been Cassini’s major focus since listing?

We conducted a drilling program on Forrestania in late March, really just to test that there was indeed an extension to that Greenstone Belt.

That came back with some positive results indicating that is the case.

So the next stage at Forrestania is that we are going to need to obtain some environmental approvals to allow us some further access to enable us to conduct a more comprehensive drilling program.

The WA projects are ticking along fairly well considering your recent-listed status, but you have just acquired a new group of projects in the state of Nevada in the USA. How did that happen?

It came about through an Australian unlisted company called Search Resources, which had been looking at a number of projects in Nevada.

They were originally intending to IPO on those assets but we were able to structure a different transaction with them.

We just liked the assets. It’s interesting that Nevada is not that well known and is off the radar of a lot of Australians.

Real estate wise, it is the Peppermint Grove of gold districts. The US is the third largest gold producing region in the world. Nevada, by itself, comes in at number six.

That has a lot to do with the Carlin Trend that is a Gold Belt running through Nevada and one of our new deposits, the Leonid project is located in this trend.

So for us the acquisition ticked a few of the right boxes; it was a transaction of the size we could do despite having only been a listed entity for three months; and they are really good projects.

It has really brought forward our timeline for finding a potential discovery by having some more advanced project than what we already had.

 

How much more advanced are the Nevada projects compared to the WA ones?

We can pretty much commence drilling there straight away and over the next six months we should have a very good idea of what we have there.

All the Nevada projects have been subjected to some work. A lot haven’t been drilled, although the Goldstar project has returned rock chip samples of 20 grams per tonne gold, so there is gold there.

You have negotiated a Joint Venture for the Nevada projects with a local company in Renaissance Gold?

They are a highly-regarded company with a number of projects in the region. Their model is to generate these sorts of projects and to then Joint Venture them.

The way our Joint Venture has been structured reduces a lot of our risk. We can spend money on these projects as long as the exploration results support it.

It wasn’t an expensive acquisition; it was mainly scrip so that means we have been able to maintain our good capital structure while binging in some, what we believe to be, excellent projects.

I suppose one advantage of being in Nevada is that you can dig up all that gold, take it straight to Vegas and double it?

I once read a quote that said, ‘if you want to double your money in Vegas, fold your bills in half and put them in your pocket’.

As far as being in Nevada goes, our chairman Mike Young pointed out that in terms of sovereign risk, the last time there was any trouble there was in 1861 during the American Civil War.

It is a very good mining environment with a lot of expertise and infrastructure.

All the big guys are there and there is still a lot of exploration activity going on. A lot of people think Nevada has been mined to death for gold but there have actually been more significant multi-million ounce discoveries there, in the last ten years, than what there has been in Australia.

You mentioned your chairman Mike Young. How much of an advantage is it for Cassini having somebody with his background involved?

Mike completed his geology studies in Toronto so for him Nevada is like what Kalgoorlie or Ballarat is to an Australian-trained geologist.

When he first saw the projects he understood how good the gold district is they are located in.

Also, a lot of his contemporaries are now working in that area running gold companies, which affords us another level of access and provides already established relationships in the region.

Another key for us is a fellow called David Johnston, who is an Australian-trained geoscientist based in Utah.

He’s worked for such companies such as Western Mining, Rio Tinto, LionOre and Independence Group.

He is very experienced and well-regarded within the industry and he will be running those projects for us.

So while we have been able to leverage of those relationships to pick up some very good projects we also have an already established network in terms of logistics and access to good exploration people.

As exciting as Nevada is, will it deflect your attention from the WA projects?

Our intention is to operate the two in tandem. We have the capital to run both and because the Australian projects are at such an early stage there are things we can do to add value to those and progress them.

We do need to be mindful about where we spend our money, but the good thing is that with the Nevada assets, especially with some of the early drilling programs, we should know sooner rather than later if we do have something there.

We can then sit back and assess where we would be best placed to allocate our capital in terms of adding value.

OUT AND ABOUT: Perth-based gold explorer Blackham Resources has told the Paydirt 2012 Australian Gold Conference making up for an historic lack of detailed drilling is the key to unlocking its future gold opportunity in one of Western Australia’s oldest goldfields.

Presenting on the second day of the Perth conference Blackham Resources managing director Bryan Dixon, said the Wiluna goldfield province remained a large, highly prospective tenement holding but had suffered from being formerly unloved and forgotten – despite significant previous operating mines, infrastructure and residual gold resources.

Blackham took ownership of the Matilda gold project in November last year through its acquisition of Kimba Resources.

It has since announced a strategy to grow the existing gold resource of 12.5 million tonnes at 1.9 grams per tonne for 757,000 Inferred ounces to above one million ounces in the medium term through delineating 4 million tonnes of plus 2 grams per tonne oxide reserves.

“Our objective is to grow the existing resources to over one million ounces in the short term and convert a large portion of our existing oxide resources to reserve status,” Dixon said.

“What has been ignored is that Blackham now commands a very major position within the Wiluna greenstone belt – a structure that has already supported more than four million ounces of gold production.

“Yet there has been little systematic regional exploration of Matilda in more than a decade.”

Dixon explained that the Wiluna greenstone belt is a structure, which has historically been subjected to more than 39,000 drill holes sunk.

He said Blackham’s approach will be a “data mining” one to revalidate and assess this massive bank of knowledge to enable the company to identify any new opportunities for oxide resources and to identify the primary gold resource in the area.

”Limited drill testing has proven that depth extensions at Matilda continue for at least 300 metres but only the project’s oxide material has been mined from local source pits and generally to less than 50 metres depth,” Dixon said.

“Most of these pits also remain open along strike and we have identified primary down-plunge targets that have yet to be fully tested – so in our view, the upside for Matilda is considerable and benefits from the fact the broader area has been mined on and off for more than 100 years.”

Dixon said Blackham’s analysis of the various existing pits along the Matilda project suggested previous mining had only scratched the surface of what is a very large mineralised gold system with mineralisation found to extend beneath and along strike of those current pits.

“Our conclusion is that Matilda, including its high grade shoots, offers the sort of geometries for multiple ore bodies, possibly on a bulk mining approach to either open pit or underground,” he said.

Blackham has commenced a re-evaluation of the mining economics of the Matilda pits and resources based on the current gold price.

OUT AND ABOUT: Opening his address to the Paydirt 2012 Australian Gold Conference, Barry Dawes managing director of Sydney-based Martin Place Securities held a quick poll via a show of hands to ascertain the audience’s bull or bear sentiments towards gold.

 

The bulls took the result, which is probably not so surprising given the way the gold price is almost spoken of in reverential tones on any news service around the country each day.

For some people their day hasn’t started, or is yet to be completed, unless they hear how the price for the most precious of metals has fared in the last 24 hour period.

Many don’t really understand why they need to do this but they do understand it has something to do with the strength of the Australian dollar and whether or not they will need to be diligent with their money on their next overseas trip or will be able to spend like a sailor on shore leave.

In recent times gold has captured the imagination of the investment community.

They can’t be blamed really given its run over the last couple of years. Gold greeted 2009 at US$875 per ounce mark on its way to breaking through to enter the magical realm of US$1000 per ounce-land.

Lately it has been hovering between the low to high US$1600 mark.

Source: www.goldalert.com

Gold has been the only sure-fire go-to investment strategy since the Global Financial Crisis put the brakes on the 20 cent resources sector IPO market, when companies would list on an almost daily basis at premium prices.

Back at the Paydirt Gold Conference Dawes tipped a gold price of US$5,000 an ounce by 2016, suggesting he expected a price of at least US$2,000 this year with that high to be reached “quite rapidly”.

“We are bullish on gold and if you examine the historic price trends for gold – and we have to look long-term –a parabolic curve emerges that comfortably pushes the price to $5,000 in four years’ time,” Dawes said.

“I’m also confident that Australia will lift its annual gold output to 400 tonnes by that time from around 280 tonnes currently, if not by 2015.”

Dawes pointed to the success enjoyed by Australian gold explorers, in particular what has been achieved in Western Australia where resources had increased through activity in new areas as well as through brownfields upgrades.

He highlighted the influence new deeper drilling in old mining areas where previous penetration had been beyond 100 metres had also had on this success saying this deeper drilling was now delivering sound gold grades and intersections.

Dawes predicted solid earnings being reported and for gold equities to pay put some very attractive dividends.

“The most recent correction in the Australian gold index from the post GFC-highs in April had been an irrational 31 per cent whilst many smaller gold stocks had been hurt in the trashing of their share prices in recent years by over 50 per cent,” he said.

“Australian gold shares should now follow the recent major breakout in the United States of gold equities in 2010, which ended a period of 30 years of consolidation in the sector.

“The recent pullback there just corrected the strong run up from the GFC lows in 2008.

“We have got a long way to go before gold peaks out.”

Dawes rattled out the regular gold-bull line of gold now being a global commodity being traded against all main currencies, with strong physical demand.

He said this reflected a general lack of confidence in governments that was underlined by strong net buying by central banks, strong demand from jewellery consumers and the hoarding of gold in the form of coins or ingots under any number of mattresses around the world.

“Gold’s standing in Australia will always be a question of price but we forecast a surprising growth in earnings and dividends in gold equities and that will change things quite positively for these stocks,” Dawes said.