Gold Road Resources Readies for Big Exploration Advance

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THE INSIDE STORY: Seasoned market watchers would be aware of the 50:50 Gruyere Joint Venture (GJV) deal, Gold Road Resources (ASX: GOR) struck in 2016 with international gold producer Gold Fields Ltd.

They would also know Gruyere as a 3.5 million ounce project forecast for average annualised production of 270,000 ounces of gold for 13 years.

Gold Fields recently gave Gruyere a highly-public endorsement by acquiring, through subsidiaries, approximately 75 million Gold Road shares, consolidating a ten percent holding in the company.

The major company’s interest in the emerging producer is understandable, given it has paid $350 million, plus a royalty, to participate in developing the Gruyere Gold Project, which accounts for 114 square kilometres of Gold Road’s substantial 6,000 square kilometre Yamarna Belt tenement holding in Western Australia.

With such a relatively small segment of its large landholding being financed through to becoming a significant gold production facility, Gold Road has signalled its next objective is to find another big gold deposit, using cash flow from Gruyere to develop its next project.

“Our strategy is to build Gold Road to being a 500,000-ounce producer and to become a gold producer in our own right,” Gold Road managing director Ian Murray told The Resources Roadhouse.

“To do that, two further sizeable discoveries need to be made, and we aim to make the first of those discoveries while Gruyere is under construction.

“By the end of 2018, we aim having another project ready for studies, drill out and expansion, paid for by cash flow from Gruyere.

“While that project gets built, we aim for the third discovery to be made, which will be developed using cash flowing from the first two.

“We don’t need to do Joint Ventures going forward, as our first has funded, and de-risked the company and the project.

“Going forward we want to build any further projects ourselves.”

The size and potential of Gold Road’s Yamarna Belt package is clearly defined in this map.

The company owns the 2,300sqkm area in blue outright – 100 per cent – which encapsulates the Gruyere Joint Venture.

Gold Road will spend $15 million in this area on exploration in 2017 on top of money earmarked for GJV exploration, where it will be spending around $11 million.

The pink area defined in the south is a joint venture with Sumitomo Metal Mining where the exploration spend will be $3 million.

Gold Road believes the prospectivity of this area to be worthy of a much higher exploration spend, however its budget had already been set prior to striking the Gruyere Joint Venture.

“We thought we were going to be raising project finance and were anticipating the banks limiting our exploration spend,” Murray explained.

“This year we will push Sumitomo harder – we think a fair exploration spend in the south is $10 million.”

For those without calculators, that adds up to around $30 million Gold Road, with its joint venture partners, will be spending on, what will be, the largest greenfields exploration budget in Australia – and potentially the largest globally.

“We’ve looked around and we haven’t found anyone else conducting that level of greenfields exploration,” Murray said.

“There is plenty of brownfields exploration by companies seeking to keep hungry processing mills fed, but none carrying out this level of greenfields exploration.”

Greenfield exploration by other companies is most likely restricted by funding issues, a problem Gold Road resolved through the GJV cash injection.

A recent $70 million tax payment made a reasonable dint in the company coffers of $337 million, but not enough to defer its anticipated exploration spend.

The company will also be able to pay its $30 million share of the Gruyere project build in the fourth quarter of this year, after Gold Fields spends $100 million on its behalf.

This will bring the bank balance down to around $220 million by the end of the calendar year, enabling it to fund a $20 million exploration spend and a further $130 million share of the project build costs next year.

After all that, Gold Road will be sitting on around $60 million, which it considers to be a fair working capital balance when embarking on first production.

“Some people have asked about the possibility of us paying a special dividend, however we feel it makes much better sense to reinvest the cash into assets to benefit shareholders,” Murray explained.

“At the end of two years we will have enough of a working capital buffer, and going into production we should be generating around $100 million of EBITDA.

“If we don’t make another discovery that we want to develop, we will be able to start returning some money to shareholders through a dividend, and as we have paid our tax bill, that will be a fully-franked dividend.”

Construction at Gruyere is well underway with the establishment of offices and accommodation consisting of two former rail construction camps acquired from Roy Hill.

The further acquisition of two partially completed cancelled orders, in the shape of an 8.5 million tonnes per annum ball mill from Gold Fields West African project, and matching sag mill from Outotec, will shorten the time-frame determined by the original feasibility study and lower capital expenditure.

“The project team are building a 7.5 million tonne per annum project,” Murray explained.

“The operational team has now been tasked with de-bottlenecking the project, so should the JV partners want to increase throughput once we have started production we can easily ramp up.

“Construction is scheduled for completion at the end of 2018 with first gold coming in the first quarter of 2019.”

Gold Road has the added benefit of a Memorandum of Understanding within the GJV, whereby it is allowed access to the project’s gas pipeline, water and toll treating of all satellite deposits discovered beyond the JV area.

Immediately south of Gruyere, is YAM14, at which Gold Road encountered extraordinary drill intercepts.

Results from YAM14 include:

17DHRC0060
64mat 3.73 g/t gold, including 18m at 9.78 g/t gold, and 8m at 19.16 g/t gold;

17DHRC0061
39m at 1.52 g/t gold, including 13m at 2.24 g/t gold, and 7m at 3.55g/t gold; and

17DHRC0059
22m at 1.81 g/t gold, including 14m at 2.63 g/t gold.

“YAM14 was discovered when Gruyere was discovered, but obviously Gruyere was the big prize,” Murray said.

“These drilling results returned some nice good widths and good grades that are located just eight kilometres from the Gruyere process plant.”

South-west of Gruyere, at the Attila prospect, a 107,000-ounce Resource upgrade was recently announced taking it to 327,000 ounces, while just to the north of Attila sits the Alaric prospect with 50,000 ounces, which is currently being reviewed.

Gold Road intends putting these through a pre-feasibility study with the aim of declaring a maiden Reserve for those two deposits in the second half of 2017.

“These prospects are located within, what we call, the Golden Highway, running from Alaric in the north down to Attila in the south,” Murray said.

“It runs for 14 kilometres, covering an area where we previously had Resources declared, which were not JORC 2012-compliant and were removed.

“These are currently being re-assessed with the aim of establishing Resources that could be economic to be run through the Gruyere processing plant.”

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

HEAD OFFICE
Level 2
26 Colin Street
West Perth WA 6005

Ph: +61 8 9200 1600

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

DIRECTORS
Tim Netscher, Ian Murray, Justin Osborne, Sharon Warburton

Middle Island Resources Establishing Neighbourhood Ties

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THE BOURSE WHISPERER: Middle Island Resources (ASX: MDI) took heart from dispatches by neighbouring gold-hopeful Alto Metals (ASX: AME).

Middle Island Resources drew the market’s attention to recent public statements by Alto Metals and a research report commissioned by that company referring to the potential opportunity for Alto to regionally process some of its hard rock gold inventory through gold processing plants within a 200-kilometre radius to service such a requirement.

Middle Island noted its Sandstone tenements are close to Alto’s acreage and include an existing 600,000 tonnes per annum gold processing plant.

“The company plans to refurbish that plant to service both MDI’s own future gold treatment requirements, and offer toll treatment or production sharing options to gold miners in the wider Sandstone district,” Middle Island Resources said in its ASX announcement.

“Strategically, MDI’s Sandstone mill is within 25 kilometres of Alto’s deposits, offering the potential for distinct competitive cartage and revenue upside compared to the nearest operating mills, which are at least a further 150 kilometres distant.

“Critically, not only has the Sandstone mill historically treated softer oxide ores, but between 1994 and 2010 under previous ownerships, processed a proportion of harder primary and lateritic gold ores.”

Middle Island reiterated results from its Pre-Feasibility Study (PFS) completed earlier this year into refurbishing and recommissioning its Sandstone mill, which included a focus on being able to process hard rock ore.

Key PFS outcomes included:

A suitably designed contract crushing circuit was incorporated into the PFS, producing an approximate 12mm SAG mill feed size, to achieve target mill throughput using a blend of hard and soft ore;

GR Engineering Services and MDI completed a detailed mill refurbishment plan and cost estimate as part of the PFS;

There is significant supporting infrastructure and services at or near the Sandstone mill; and

Due to the significant cost, and hence impact on Ore Reserves, of long distance road ore haulage, the MDI mill will be a competitive option for third party deposits.

Email: info@middleisland.com.au

Website: www.middleisland.com.au

Woodlark Gold Project Moving Towards Production

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THE INSIDE STORY: Geopacific Resources (ASX: GPR) is implementing an aggressive development program at the company’s Woodlark gold project having negotiated a project development extension of 2.5 years with the Papua New Guinea Government. By Ron Berryman

Woodlark Island is located approximately 600 kilometres east of Port Moresby and is about 75 kilometres in length and 25 kilometres in width.

Historically the project has had US$150 million spent on exploration and studies, including 275,000 metres of drilling.

Previous owner, Kula Gold completed a scoping study as well as pre-feasibility and definitive feasibility studies with an expectation to commence production in late 2013 subject to completing necessary regulatory approvals and the availability of financing.

In July, 2016, Geopacific Resources entered into a three-tranche earn-in Joint Venture agreement with Kula Gold, which would give it up to an 80 percent interest in the Woodlark gold project.

Geopacific holds five per cent of the project, having completed the first tranche of the earn-in and is progressing in the second.

In July 2017 Geopacific made an off-market takeover bid offer for all ordinary shares of Kula Gold with a pre-bid acceptance of the offer from Franklin Advisers, a 17 percent shareholder in Kula Gold.

On 26 July 2017 Kula Gold Limited (Kula) released a letter from their
major shareholder, Pacific Road (collectively including the holdings of
Pacific Road Capital Management GP Limited, Pacific Road Holdings
SARL, Pacific Road Capital A Limited, Pacific Road Capital B Limited),
stating that they will accept an unconditional, increased offer. Read the announcement here

“It’s important to remember that we already have the Joint Venture over the Woodlark project,” Geopacific managing director Ron Heeks told The Resources Roadhouse.

“This means Geopacific has the right to earn up to 80 per cent of Kula’s only project, which puts us in a comfortable position.

“We see this as a low-risk takeover underpinned by the existing Joint Venture.

“The key rationale for pursuing the takeover is to simplify the ownership structure of the Woodlark gold project.

“The single ownership structure will provide greater clarity for both Geopacific and Kula shareholders and is expected to be more attractive to investors.

“Kula has already recognised the strength of Geopacific’s offering, by selecting us as their Joint Venture partner.

“Geopacific has a strong management team with significant experience in developing mineral projects and we are in the enviable position of enjoying strong financial support from major industry players.

“We believe our offer is compelling – providing shareholders of both Kula and Geopacific the opportunity to realise the benefits that a merged entity and clarity of ownership will provide.

“The regulation on this kind of corporate activity limits what we can say, as you’d expect there is a bit going on behind the scenes.”

Geopacific is focused on bringing the project into production and is currently operating under the JV undertaking all work necessary to present the project as a robust and attractive proposition to development financiers.

The company has received encouraging results from its development drilling program, validating its strategy to add mineralisation to the reserve inventory from areas surrounding 2012 pit designs and todevelop Woodlark into a robust project.

Geopacific is conducting an extensive drilling program with three drill rigs in operation.

Results have identified broad, high-grade mineralisation surrounding 2012 pit designs at the Kulumadau and Busai deposits

In July Geopacific announced that focussed drilling confirmed depth extensions with broad zones of gold mineralisation below the pit designs of both deposits.

Recent intersections include:

Kulumada
8 metres at 10.29 grams per tonne gold from 231m;
22m at 2.78g/t gold from 53m;
3m at 63.44g/t gold from 212m at; and

Busai 
40m at 2.04g/t gold from 121m; and
18m at 5.55g/t gold from 178m.

Other drilling focussed on improving confidence of the resource classification and a discovery intersection north of Kulumadau East where positive results from surface continue in line with the Kulumadau East deposit and within 80 to 100 metres of the 2012 pit design.

“Our focus has been development-orientated to make the project more real, more robust and to move it forward,” Geopacific executive director corporate Philippa Leggat explained.

“We want something that is bankable and attractive to investors.

“As part of our assessment process we have undertaken a like-for-like comparison on the original processing plant design, which was completed in 2012 at the height of the boom.

“The intention behind the study was to validate that it’s possible to build a plant more cost effectively now than was possible in 2012.

“The quantum of the cost saving being around 27 per cent is something that people in the industry seem comfortable with.

“We are working through all aspects of the feasibility, applying rigor to the process to make sure we are doing everything necessary to present a robust DFS.

“In the process, we’ve identified several opportunities for optimisation which have the potential for capital and operational savings.

“Optimising both is important to ensure that we have a robust project and that remains our focus.

“Remember that US$150 million has been spent on the project.

“The fact that so much work was done in the past is what allows us to run optimisation work concurrent with a drilling program.

“It is something of a luxury to have the time to work through aspects like the metallurgy, engineering, capital and operating costs.

“We are focussed on getting this project right and we are using the time to deliver a robust outcome.”

Kula Gold’s original mining licence for the project had a condition to complete construction and commissioning of the project by July 4, 2017.

Geopacific realised this was clearly not possible so, after taking over management of the project in late 2016, it approached the PNG Government.

“We were confident the PNG authorities would form a favourable view of the plan for our experienced and financially supported team to move Woodlark forward, and that our strategy stood the best chance of delivering an economic outcome for PNG Authorities and local communities,” Leggat said.

“We are pleased that we have built a good relationship with the PNG authorities during this process.”

The extension approval grants an additional 2.5 years to develop the project within a 20-year mining lease, including a 12-month period to vary the technical aspects resulting from Geopacific’s definitive feasibility study.

The PNG Government’s extension to the mining lease is a critical element in the company’s plan to deliver Woodlark into production.

Geopacific recently released positive drill results confirming the increasing value of the Woodlark gold project.

The current drilling campaign at Woodlark identified broad zones of high-grade mineralisation at both the Kulumandau West and Busai deposits, while the area north of Kulumadau East also produced positive results from surface, in line with the Kulumadau deposit.

Focused drilling assessing depth extensions at Kulumadau and Busai confirmed broad gold mineralisation below 2012 pit designs, including

Kulumadau:
18m at 10.29g/t gold from 231m;
22m at 2.78g/t gold from 53m; and
3m at 63.44g/t gold from 212m.

Busai:
40m at 2.04g/t gold from 121m; and
18m at 5.55g/t gold from 178m.

“Depth extensions at the Kulumandau West and Busai deposits have been identified, demonstrating positive potential for Woodlark,” Heeks remarked.

“The trend continues across all three areas with broad intersections of mineralisation identified at Kulumandu West, Busai and Kulumandau East.”

These drilling results followed on from previous positive results, achieved during the ongoing drilling campaign.

The company will continue to upgrade its JORC resources with the view to releasing updated resource and reserve statements in the next few months.

Geopacific Resources LTD (ASX: GPR)
…The Short Story

HEAD OFFICE
Level 1
278 Stirling Highway
Claremont, WA 6010,

Phone: +61 8 6143 1820

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

DIRECTORS
Milan Jerkovic, Ron Heeks, Phillipa Leggat, Mark Bojanjac, Ian Clyne

High-Grade Hits Add to Kin Mining Leonora Gold Story

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THE INSIDE STORY: Most junior mining companies – not to mention shareholders – would be very pleased to be able to consider commissioning a new mine in a little over five years after listing on the Australian Securities Exchange. By Ron Berryman

Kin Mining (ASX: KIN) chairman Trevor Dixon is confident his company’s aggressive drilling campaign has delivered the right resources from the company’s Leonora Gold Project to take it from explorer to producer within that timeframe.

Dixon explained that when the company listed in 2013 the Initial Public Offering (IPO) included the Desdemona, Iron King, Randwick, Mt Flora, Murrin Murrin and Redcastle projects but the real excitement came when Kin was able to acquire the Leonora gold project.

“It slotted perfectly into the middle,” Dixon told The Resources Roadhouse.

“It was a beautiful fit for our business and this has been demonstrated by the outstanding results we have achieved through a vigorous drilling campaign.

“We’re extremely pleased with the land holding we have and we’re continuing to build on it.

“We see that as our real strength – we have a project we can develop and we have additional regional holdings that contain a robust pipeline of exploration and development projects.”

The Leonora gold project is located about 30 kilometres northeast of Leonora.

The Kin Mining project has three main areas:

Mertondale with current Indicated and Inferred resources of 5.59 million tonnes at 2.2 grams per tonne gold for 395,000 ounces of gold;

Cardinia – 4.68 million tonnes at 1.3g/t gold for 192,000 ounces of gold; and

Raeside – 1.57 million tonnes at 2.6g/t gold for 134,000 ounces of gold.

The project has a combined total of Indicated and Inferred Mineral Resources of 11.8 million tonnes at 1.9g/t gold for 720,000 ounces of gold.

Kin mining has agreed to purchase an 800,000 tonnes per annum gold plant and expects to finish its Definitive Feasibility Study (DFS) by the end of August with plans to commission the mine by the end of 2018.

Dixon explained that when the company had listed in 2013 it immediately instituted a five-year plan.

“That’s how we like to run our business,” he said.

“We wanted to establish a clear, definable model.

“Our first five-year plan was to define enough resources to take into mining.

“We have achieved that and we are now embarking on a second five-year plan which is to achieve a highly profitable 50,000 to 100,000 ounces per annum mining operation.

“We have a development strategy and we have just completed an extensive program of Resource drilling.

“The results have been exceptional and for that reason we’ve extended the DFS to allow those figures to come in to build a more robust proposal for our project finance.

“It’s the conversion of the 720,000 ounce Resource base into Ore Reserve that’s most important to us now – that’s the key driver.

“It’s not the number of global ounces that we have as a business, it’s the amount of ounces we can take into an operation that can be demonstrated to be profitable ounces.

“We’re aiming to bring some 250,000 to 300,000 ounces into an operation that can be classified as profitable ounces.”

Recent drill results at Cardinia revealed this area to host multiple large gold systems that are underdeveloped.

High-grade primary mineralisation discovered beneath an extensive three kilometre long supergene blanket at the Lewis deposit delivered outstanding high-grade primary intersections from a Reverse Circulation (RC) drilling program, including:

16 metres at 37.6g/t gold from 47m, including 5m at 117g/t gold;

13m at 14.3g/t gold from 49m, including 3m at 50.7g/t gold;

17m at 6g/t gold from 20m, including 2m at 44.7g/t gold;

15m at 3.4g/t gold from 58m, including 2m at 21.3g/t gold; and

4m at15.3g/t gold from 33m, including 1m at 55.5g/t gold.

The recent RC drilling program at the Lewis deposit combined with historic drilling defined a mineralised structure that is estimated to have a strike length of at least 500m.

Lewis had previously been regarded as being highly prospective for shallow, free-digging supergene gold mineralisation, however recent primary intersections suggest that the supergene resources could represent the top of a large mineralised shear system with potentially significant higher grade mineralisation at depth.

Drilling at the Fiona prospect also revealed additional primary zone targets with hits of up to 283g/t gold.

Highlights included:

8m at 51.4g/t gold from 10m, including 4m at 101g/t gold, including 1m at 283g/t gold;

9m at 6.1g/t gold from 21m, including 3m at 12g/t gold;

4m at 7.4g/t gold from 10m, including 3m at 9.5g/t gold;

10m at 3.6g/t gold from 25m; and

4m at 4.1 g/t gold from 24m, including 2m at 6g/t gold.

More recent follow-up drilling confirmed the high-grade nature of a southerly plunging shoot with indications of a potential further deeper shoot.

Highlights included:

30m at 2.4g/t gold from 20m, including 3m at 5.8g/t gold and 4m at 6.2g/t gold;

17m at 3.2g/t gold from 31m, including 4m at 5.1g/t gold;

9m at 3.5g/t gold from 31m, including 1m at 23.3g/t gold; and

1m at37.6g/t gold from 20m.

“So far, we have effectively tested the mineralised shoot at Fiona to a maximum depth of just 50 metres below surface, and there is excellent potential for this to continue at depth,” Dixon said.

“We are now incorporating Fiona into the Helens Mineral Resource, which is currently being updated.”

Kin has completed more than 30,000 metres of resource drilling on the project within the past 12 months focussed primarily on open pit resources.

What has emerged is a pattern demonstrating the resources are constrained to the amount of drilling that has taken place.

“What we are finding is the more you drill the more you find,” Dixon said.

The company recently raised $10.2 million through a share purchase plan and placement to fund further extensive RC drilling campaigns and complete the project Feasibility Study.

Kin Mining has exercised an option to purchase the Lawlers Carbon in Leach (CIL) gold plant for $2.5 million, which offers a lower capex and faster build than a new plant.

The DFS will also review the option to upgrade the plant to increase its capacity to 1.2 million tonnes per annum.

“We’ve just finished up an extensive drilling campaign and couldn’t be happier with the results, and we may see a bump in grade in our key resource areas,” Dixon said.

“Furthermore, the Feasibility Study is nearing completion which will deliver the platform needed to demonstrate the true value of the LGP.

“We have also just finalised the purchase of the Lawers plant so we now have all the components to pour gold bars.”

Kin Mining NL (ASX: KIN)
…The Short Story

HEAD OFFICE
342 Scarborough Beach Road
Osborne Park
Western Australia 6017

Ph: +61 3 9242 2227

Email: info@kinmining.com.au
Web: www.kinmining.com.au
 
DIRECTORS
Trevor Dixon, Donovan Harper, David Sproule, Joe Graziano

St George upbeat about Mt Alexander Dragon

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“We’re very lucky.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HEAD OFFICE
Level 1
115 Cambridge Street
West Leederville WA 6901

Ph: + 61 8 9322 6600

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

DIRECTORS
John Prineas, Tim Hronsky, Sarah Shipway

Major drill campaign for Impact Minerals’ Commonwealth project

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THE INSIDE STORY: Impact Minerals’ (ASX: IPT) is confident it could grow Resources at the company’s 100 percent-owned Commonwealth project to at least one million ounces in the next 12 months. By Ron Berryman

The Commonwealth project sits just six kilometres from Wellington in New South Wales, where the Macquarie and Bell Rivers intersect, an active region for an alluvial gold mining industry in the 1850’s.

Impact’s Commonwealth gold-silver-base metal project has a strong historic background.

Opened in 1905, it was one of several gold mines operating near Wellington, where in 1854 Dr Samuel Curtis and Magistrate B Sheridan faced off in the last known duel to be conducted in Australia near the country’s second oldest hotel The Lion of Waterloo.

While the duel offered little to Impact’s decision to move into the Wellington area, railway access to the Port of Newcastle on the NSW east coast and Port Pirie in South Australia, the location of the town on the Mitchell Highway with a community supportive of mining certainly added to the project’s appeal.

The excellent transport infrastructure was a bonus when Impact Minerals managing director Dr Mike Jones and his team were looking at the old Commonwealth mine, located 100km north Orange on the richly mineralised Lachlan Fold Belt.

The Belt hosts numerous gold and copper mines, including one of Australia’s biggest gold mines, Newcrest’s Cadia-Ridgeway, which has produced over nine million ounces of gold since 1999.

The Lachlan Fold Belt is a zone of folded and faulted rocks of similar age dominating NSW and extending into Victoria, including the major gold mining regions of Bendigo and Ballarat.

Commonwealth’s appeal grew after high-grade rock chip samples taken by Impact, and previous explorers, returned assays of up to 24g/t gold, 1,100g/t silver, 2.6 per cent copper and 5.7 per cent zinc, doubling the known mineralised zone strike length to at least 600m.

“To be able to set foot on such significant ground in the Lachlan Fold Belt is an excellent development for Impact,” Dr Jones told The Resources Roadhouse.

“We acquired the Commonwealth project for just $250,000 at the beginning of the resources downturn, a deal that is now looking to be an excellent investment.”

Early exploratory work influenced Impact to increase its holding to 1,000 square kilometres.

Further drill results from the Silica Hill prospect indicated the acquisition could be a game-changer for Impact with the discovery of high-grade gold and very high-grade silver including:

41.3m at 2g/t gold and 176g/t silver from 61m, including 16.3m at 3.7g/t gold and 246g/t silver.

The Commonwealth project has an established Resource of 720,000 tonnes at 2.8 grams per tonne gold, 48 g/t silver and 0.6 percent lead.

“We believe that with further drilling the Commonwealth and Silica Hill mineralisation will link up at depth,” Jones continued.

“Over the next six months we’re planning a campaign of 3,000 metres of RC diamond drilling to test targets along trend and at depth from the current resource to demonstrate the potential for at least a million ounces to warrant a major development.”

Impact’s follow-up drill program received all statutory approvals and the company has started clearing access tracks and drill pads.

“We also announced two five kilometre long trends that are very prospective for further discoveries of gold-silver-base metal mineralisation similar to Commonwealth-Silica Hill,” Jones said.

“New drill assay data, and results we discovered in the New South Wales Government databases, identified extensive barium as an important pathfinder and indicator element along these trends.

“Barium is a significant accessory element and can be used as a vector and direct indicator of ore in gold-rich Volcanogenic Massive Sulphide (VMS) deposits like Eskay Creek in Canada.

“A strong correlation exists between high-grade gold and high-grade barium to the deposits at Eskay Creek, which has produced four million ounces of gold and 150 million ounces of silver.”

Assays from Commonwealth of up to 1m at 17.7 per cent barium were returned within a thicker intercept of 7m at 9 per cent barium.

Sporadic assays from drilling by previous explorers also indicated high-grade barium in places and throughout the massive sulphide mineralisation.

“It is also a minor component in the surrounding disseminated mineralisation and within the high-grade gold-silver mineralisation at Silica Hill,” Jones said.

“Significant gold and silver mineralisation has been intersected in six drill holes at Silica Hill covering an area of 200 metres by 100 metres to a depth of 120 metres below surface with an average true thickness of at least between 50 and 70 metres.

“This mineralisation is open in all directions.

“Four of the six drill holes also returned gram-times-metre intercepts greater than 100 gram-metres, demonstrating potential for bulk mining.”

Impact’s 2016 drill program also intersected high-grade extensions 30m down plunge of the Commonwealth Resource with highlight results in massive sulphide at Main Shaft, including: 

7m at 6.3g/t gold, 496g/t silver, 7.2 per cent zinc, 2.9 per cent lead and 0.2 per cent copper from 91m, including 3m at 10.6g/t gold, 571g/t silver, 7.8 per cent zinc, 2.1 per cent lead and 0.2 per cent copper from 92m; and

1m at 2.5 per cent gold, 979g/t silver, 8.3 per cent zinc, 4.4 per cent lead and 0.1 per cent copper from 95m.

Further high-grade intersections at Commonwealth South of 15m up dip and 40m down plunge and along trend included:

2.6m at 10.6g/t gold, 55.7g/t silver, 2.5 per cent zinc and 0.9 per cent lead from 88.1m, including 0.9cm at 23.2g/t gold, 94.6g/t silver, 3.6 percent zinc and 1.6 percent lead.

One aim of the drilling was to confirm the four areas drilled are part of one large mineralised system covering many square kilometres.

Initial work by Impact has demonstrated this is likely to be correct.

Jones stated the company’s policy of, “doing the proper work properly” was a key factor in the development of the project.

“It’s difficult to do without time and money and that’s something junior companies often don’t have,” he said.

“We’re hopeful our next 12 months will set us on the path to a major company-making discovery.

“The work at Commonwealth over the past three years has shown rocks on both the eastern and western side of the Molong Belt, which hosts the Cadia-Ridgeway mine and which were perceived to be relatively unprospective, do in fact have tremendous potential for the discovery of deposits similar to Commonwealth and our emerging gold-silver discovery at Silica Hill.

“We have shown good detective work, using good old fashioned geological thinking and field work, can lead to exploration breakthroughs

“New ground we recently pegged throughout this part of the Lachlan Fold Belt contains abundant mineralised locations, most of which have not been drilled and are poorly understood.

“They are exciting projects to be working on.

“Development of the mine may include a small open pit initially, but to keep the footprint contained, a small underground mine would be preferred.”

The company received a welcome boost and a vote of confidence from shareholders when a Share Purchase Plan in May raised $1,073,970. 
“We are very pleased with the outcome of the SPP given the difficult market conditions of the past few months,” Jones said.

“We can now move on with the drill program at the Commonwealth project.”

Impact Minerals (ASX: IPT)
…The short story

HEAD OFFICE
26 Richardson Street
West Perth WA 6005

Ph: +61 (8) 6454 6666

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

DIRECTORS
Peter Unsworth, Dr Mike Jones, Paul Ingram, Markus Elsasser, Felicity Gooding

Aruma Resources Rebuilds on Slate Dam Potential

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

GWD013
19 metres at 1.09 grams per tonne gold.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HEAD OFFICE
Level
6 Thelma St 
West Perth WA 6005

Ph: +61 3 9321 0177

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

DIRECTORS
Paul Boyatzis, Peter Schwann, Ki Keong Chong

Alliance Resources Fervently Exploring Zealous

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ph: +61 3 9697 9090

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

DIRECTORS
Ian Gandel, Tony Lethlean, Steve Johnston

Musgrave Minerals Lines-up New Cue Resource

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

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

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

The updated JORC 2012-compliant Mineral Resources include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HEAD OFFICE
28 Richardson Street
West Perth WA 6005

Ph: +61 8 9324 1061

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

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

Australian Potash Making Rapid Advancement at Lake Wells

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HEAD OFFICE
31 Ord Street
West perth WA 6005

Ph: +61 8 9322 1003

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

DIRECTORS
Matt Shackelton, Rhett Brans, Brett Lambert