THE INSIDE STORY: Much of the optimism that has pervaded the boards of the Australian Securities Exchange in 2016, could pretty much be attributed to two commodities; gold and lithium.

Before lithium had burst its way into the commodity psyche, Pioneer Resources (ASX: PIO) had already established itself as a well-credentialed gold exploration play with a number of projects in the traditional gold heartland of Western Australia.

The company’s 100 per cent-owned (all commodities excluding nickel) Acra gold project covers an area of 370 square kilometres just 60km north east of Kalgoorlie.

Pioneer Resources recently announced it had struck a Joint Venture (JV) with one of the gold sector’s current big players in Northern Star Resources (ASX: NST), which it declared would fast track exploration at the Acra project.

Northern Star is set to pay Pioneer $500,000 cash to acquire an initial 20 per cent interest in the project plus the right to earn a further 55 per cent interest (total 75% interest) by sole funding $3 million of exploration expenditure within three years.

“You would have had to have been living under a rock in recent times to not now about the success Northern Star has enjoyed, thanks in no small part to the company’s very good discovery record in the Kalgoorlie District,” Pioneer Resources managing director David Crook told The Resources Roadhouse.

“Striking a JV with a company with such a recent track record, which will bring its organisational technical expertise and financial capacity to rapidly advance the Acra gold project without further financial impost to Pioneer until a Mining Proposal is approved, is a boon for the company and our shareholders.”

Under the terms of the JV, Pioneer will continue to be free carried up until the JV secures a Departmental approval for a future Mining Proposal, at which time Pioneer may either contribute pro-rata to future JV expenditure or sell its 25 per cent interest at fair market value to Northern Star for cash or NST shares at Pioneer’s election.

The agreement also removes the funding responsibilities for future exploration programs at Acra from Pioneer, as they will be funded and advanced by NST.

It also opens strategic possibilities for future mining operations, such as an established ore treatment route, with the Acra gold project located just 40km east of NST’s Kanowna Belle gold mill.

When the lithium bug bit the market in 2015, Pioneer Resources was one company to quickly recognize the commodity was more than a fashion statement and had potential to re-energise the exploration sector.

Pioneer soon established a portfolio of quality lithium projects in Western Australia, which includes:

The Phillips River lithium project, located approximately 100km east of the Mt Cattlin lithium mine near Ravensthorpe in the Great Southern region of WA.

Phillips River consists two exploration licences pegged over an area of around 292 square kilometres considered prospective for lithium.

Pioneer has an Option Agreement to acquire a 90 per cent interest in the Donnelly lithium project located in the world class Greenbushes Minerals District in WA, sitting 12km to 60km from the world class Greenbushes lithium mine.

The Greenbushes Mineral Field hosts the world’s largest pegmatite hosted lithium resource.

Lithium mineralisation was identified at the Pioneer Dome lithium project Eastern Goldfields, where Pioneer Resources holds an area of around 300sqkm covering 13 outcropping pegmatite clusters over a 20km strike length, in rock chip samples, confirming the presence of LCT pegmatites.

Recent drilling undertaken at the 100 per cent-owned Pioneer Dome project encountered encouraging lithium intersections.

On receiving the results, Pioneer declared them to be of some importance and will be subjected to additional drilling as they also encountered an intersection of high-grade pollucite, an ore mineral of caesium.

Drilling results included:

PDRC020
3 metres at 1.11 per cent lithium dioxide (Li2O) from 44m

PDRC021
12m at 1.37 per cent Li2O from 54m and 10m at 408ppm tantalum pentoxide (Ta2O5) from 54m;

PDRC056
6m at 1.79 per cent Li2O from 48m;

PDRC057
12m at 1.41 per cent Li2O from 60m;

PDRC059
5m at 2.08 per cent Li2O from 37m.

Pioneer declared the drilling had “confirmed unequivocally” the project hosts a rare-metal lithium caesium tantalum (LCT) Pegmatite system where highly fractionated pegmatite zonation is evident, including ore grade mineralogical phases.

The largest use of caesium is in the manufacture of very high value caesium formate brines, used for high-pressure/high-temperature oil and gas drilling and exploration.

“These were exceptional results for a first round of drilling,” Crook said.

“The discovery of a mineralised LCT pegmatite system is exciting enough, but add to that encouraging intersections of lithium and an extremely unusual, geologically rare, but potentially very significant occurrence of high grade caesium, and they become exceptional.

“We are currently compiling assay, geology and petrography results, as we look forward to the next phase of drilling.”

In June 2016, Pioneer advanced its lithium project collection by earning into the Mavis lithium project, situated in the Canadian province of Ontario, under a strategic alliance with Toronto-listed International Lithium Corp. (TSX.V: ILC).

This was followed by a second Option Agreement between the companies in July, whereby Pioneer can earn a 51 per cent interest and, subject to ILC’s participation, up an 80 per cent interest, in the Raleigh lithium project, located 60km southeast of the Mavis Lake project.

Pioneer has been busy at Mavis Lake, completing a 58 line kilometre ground magnetic survey.

The imagery received from the survey, along with historic assays from 100 litho-geochemical samples has provided a number of new targets for spodumene mineralisation.

A further 400 litho-geochemical samples are to be taken in priority areas from Mavis Lake, including extensions to the spodumene pegmatite targets in a new that has been subsequently acquired known as the Mavis West Area.

The inclusion of the Mavis West Area increases the Mavis Lake project area by 640 hectares and is prospective for extensions to the western-most spodumene-bearing pegmatites of the Mavis Lake project.

The highest lithium values recorded to date on the Mavis Lake property occured in albite-spodumene-type pegmatites, where grab samples graded up to 3.14 per cent Li₂O, with one composite channel sample grading 1.22 per cent Li₂O 2 over 5.3m.

Pioneer’s Canadian activity hasn’t been confined to Mavis with field work underway at the Raleigh project resulting in the pegging of a further claim taking the total project area to 936ha.

Extensional drilling of known spodumene-bearing pegmatites is scheduled for early 2017 after a 500 litho-geochemical sample program with accompanying mapping is completed this year to infill large lithium litho-geochemical anomalies.

A comprehensive airborne magnetic survey will be flown across the entire project to delineate pegmatites and enable drill hole placement.

“A budget of one million has been allocated across the Mavis and Raleigh lithium pegmatite projects,” Crook said.

“Since the formation of the JV exploration activities have primarily been centred at the Mavis Lake project.

“Following completion of the exploration program at the Mavis Lake project the field crews will move to the Raleigh project.”

Pioneer Resources is living up to its mantra of being an active junior exploration company focused on the exploration for global demand-driven commodities.

The company is determined to continue to strengthen its project portfolio through acquiring, pegging and reviewing new opportunities, and targeted exploration programs.

Pioneer Resources Ltd. (ASX: PIO)
… The Short Story

HEAD OFFICE
21 Ord Street
West Perth WA 6005

Ph: (08) 9322 6974

Email: pioneer@pioresources.com.au
Web: www.pioneerresources.com.au

DIRECTORS
Craig McGown, David Crook, Wayne Spilsbury, Allan Trench

THE INSIDE STORY: History, they say, never repeats, but when it does, sometimes the story takes less time to complete.

Doray Minerals (ASX: DRM) recently celebrated the official opening of its latest producing gold mine, the 100 per cent‐owned Deflector gold project, located 160 kilometres east of Geraldton in Western Australia.

Doray Minerals’ gave its contemporaries in the gold sector something to think about in 2014 when it became one of Australia’s highest-grade and lowest-cost gold producers at its flagship property, the Andy Well gold project, located in the Murchison region of Western Australia.

Doray had done what many people – those who are supposedly in the know about these things – said was beyond the uppity new kid on the block, and transformed from explorer, to developer, to producer in just under four years.

“We always knew Andy Well was the ideal project to be a springboard for our young company,” Doray Minerals managing director Allan Kelly told The Resources Roadhouse.

“Bringing it on as quickly as we did enabled us to move into production and cash flow whilst building an operations team and a track record of development and production with banks and investors.

“Soon after successfully delivering Andy Well and after making significant headway into repaying debt funding, we started looking around for what might be a suitable second project.”

In the Quarter ending 30 September 2016, the Andy Well gold project milled 84,494 tonnes of ore delivering production of 14,943 ounces at an average head grade of 5.6 grams per tonne at cash operating (C1) costs of $841 per ounce and All‐In‐Sustaining Costs (AISC) of $1,432 per ounce.

The September Quarter also marked the first full quarter of production at the company’s latest foray, the recently commissioned Deflector gold project.

Doray commenced production of gold bullion and gold‐copper‐silver concentrate at Deflector in a shorter time frame than Andy Well, this time only taking approximately 14 months after acquiring the project from Mutiny Gold.

Granted there was a lot more infrastructure in-situ this time, however that didn’t mean it was a matter of just walking up and pressing the button.

As far as first Quarters go, Deflector’s performance was highly satisfactory, milling 105,721 tonnes of ore to produce 8,215 ounces of gold through the plant’s gravity and flotation circuits in addition to 883 tonnes of copper.

Of note is that these production figures exclude approximately 70 tonnes of native copper concentrate, produced from the gravity circuit, which are estimated to contain approximately 5,000 ounces of gold.

The presence of native copper at Deflector deposit is well known to gold industry observers, who have watched the deposit closely since its original discovery by Sons of Gwalia in the early 1990’s.

“There has been a lot of focus on this native copper and in reality it is such a small issue,” Kelly explained.

“We’re talking about 5000 ounces of gold with some copper out of 365,000 ounces of gold for the entire project.

“I actually get a bit sick of talking about it to be honest.”

Throughout its life, the project was tagged with a misguided reputation for being difficult, due to the presence of copper in the high-grade gold mineralisation.

The main problem – as is often the case in such scenarios – was that those running the operation were unable to come up with a solution as to how to treat this ore through the nearby Gullewa gold plant.

The problem, and project’s poor reputation, was exacerbated by one former owner in the early 2000s, which tried to treat oxide ore from a trial pit through the Gullewa gold plant.

The presence of high-grade copper in the oxide ore didn’t mix with a typical CIL circuit and the project’s reputation for having ‘difficult metallurgy’ was cast.

“The copper introduces a different process to a normal gold mine,” Kelly said.

“Basically we have oxide material, transitional material and sulphide – all of which are different mineralogy.

“We have pretty much completed the ramp up stage on the oxide material and are now starting to introduce the transitional material.

“By early 2017 we should be largely through the transitional ore and moving into  the primary underground ore.

“That’s the main game and what the processing plant has been designed around.”

Doray recently completed an institutional placement to raise around $24.9 million, which has been earmarked to reduce the company’s debt balance and to conduct near‐mine and regional exploration with a focus on identifying additional ore sources for both Andy Well and Deflector.

The exploration work is likely to include RC and diamond drilling and the acceleration of a potential development decision by mid‐2017 for the Gnaweeda project.

Doray recently announced a maiden Inferred Mineral Resource for the Turnberry prospect at Gnaweeda, located some 15km south east of Andy Well, of 4.6 million tonnes at 1.8 grams per tonne gold for 266,000 contained ounces.

“Establishing a maiden resource of 266,000 ounces at Turnberry provided further proof of the exploration potential that is sitting in our tenement holdings to host additional ore sources within trucking distance of the Andy Well processing plant,” Kelly said.

“With the development of both of our – now producing – mines, we used debt to build them because they had very quick pay back, so using debt rather than issuing a lot of stock meant we didn’t dilute our shareholders.

“However, we realised having debt around Deflector could become quite restrictive on how we can spend our money in regards to exploration and advancement of the project.

“There was also an expectation circulating through the market that we were going to be carrying out a raising, which was having an effect on how our shares were being traded and subsequently on our share price.”

Upon completion of the placement, Doray will have approximately 356.9 million shares on issue, which is among the lowest of any current ASX-listed gold producer and, more importantly it will also boast a cash balance of $44.8 million.

“That was the key behind the recent raising, partly to ensure we had good exploration capital on hand and to make sure we had a strong cash position, from which we can negotiate a re‐sculpting of our current debt repayment profile as we go through the ramping up phase at the Deflector mine,” Kelly said.

For a project that had gone a long time unloved and thought to be too difficult, Deflector has every right to bask in the glory of its resurrection.

Once in steady-state production in primary ore the mine is projected to produce 60,000 ounces of gold per year, plus copper and silver, with an initial mine life of six years.

There is plenty of exploration upside both within the Deflector orebodies and within the wider tenement package surrounding the mine.

“Deflector is Western Australia’s newest high-grade underground gold mine and is the second high-grade gold mine and processing plant that Doray Minerals has funded, built and commissioned within the last four years,” Kelly said proudly.

“We look forward to operating our new project and extending the mine life through successful near-mine exploration and using our experience at Andy Well and Deflector to continue to build Doray Minerals into Australia’s next great gold company.”

Doray Minerals Limited (ASX: DRM)

HEAD OFFICE
Level 1
1292 Hay Street
West Perth WA 6005

Ph: +61 8 9226 0600

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

DIRECTORS
Peter Lester, Allan Kelly, Jay Stephenson, Leigh Junk, Peter Alexander

THE CONFERENCE CALLER: Addressing the Paydirt 2016 Australian Nickel Conference in Perth, Alto Capital senior analyst Carey Smith gave the audience plenty to think about.

A long-time believer in nickel, Smith declared his thoughts on nickel’s prospects by forecasting a nickel price outlook from a low of US$17,400 per tonne to a mid-range of US$23,100 per tonne, peaking at a top out price of US$30,800 per tonne.

The root of his prediction is Chinese stainless steel production, which Smith said holds the key to higher nickel orders for Australian miners pointing to key growth indicators emerging of late despite the flat lining of both global and Chinese output in recent years.

Smith intimated that nickel’s time was due, saying that most base metals were enjoying an up-trend, with lead, tin and zinc trading above their 10 year averages.

“Nickel is looking better, but still remains the only base metal to have fallen below GFC lows,” Smith said.

“Its price bottom comes at a time there is uncertainty around a possible relaxation by Indonesia of its current ban on laterite nickel exports, countered by nickel mine closures in the Philippines due to alleged environmental violations – and to such an extent that country’s nickel output is down to 55 per cent of 2015 levels.

“In China, production of Nickel Pig Iron (NPI) is estimated to have fallen to approximately 300,000 tonnes nickel equivalent for 2016 compared to more than 500,000 tonnes nickel equivalent in 2013.
 
“Its NPI output had increased six-fold between 2006 and 2013 (25,000t to +500,000t) but has decreased on Alto’s estimates to around 300,000 tonnes for 2016 with a reliance since 2014 almost exclusively on sourcing laterite ore from the Philippines – the supplier now closing nickel mines – and from stockpiles.

“This contributed to a picture of nickel laterite imports into China more than halving since the end of 2013 at a time China is outperforming when it comes to production of stainless steel – of which nickel is a key ingredient.”

According to Smith, global output of stainless steel, excluding China, has been flat for the past five years, and appeared to have stabilised at around a total of 20 million tonnes per annum.

He declared there to be no visible catalysts to suggest this production profile will increase significantly from current levels anytime soon.

“Yet in the same period, despite two recent flat years, Chinese stainless steel production has grown strongly over the past decade to a point China now produces over half of the world’s consumption of that commodity,” he said.

“This has contributed to total combined world outputs of between 41 to 42 million tonnes per annum though that figure has currently flat-lined.

“It raises the question of where will future stainless steel demand and therefore nickel demand, growth come from.”

The Alto Capital analyst pointed to China’s very strong June quarter this year for stainless steel production and it was likely it was the beginning of a new trend rather than a one-off figure, at a time global nickel consumption had averaged at least 3.2 per cent in the 56 years since 1960.

“The upside comes when you consider Chinese imports of unwrought nickel have climbed dramatically since mid-2015, up from around 150,000 tonnes per annum to 400,000 tonnes per annum currently,” Smith said.

“This trend should be viewed as a positive growth indicator for nickel.

“In addition, London Metals Exchange (LME) nickel stocks had peaked at more than 450,000 tonnes but have eased currently to slightly more than 350,000 tonnes or down more than 100,000 tonnes – also another positive indicator re potential future demand.”

As far as Australian nickel producers go, Smith said, the South East Asian politics surrounding nickel laterite exports would be the issue to watch over the next 12 months but the AUD/USD exchange rate would continue to be an added bonus.

“The bottom line is, we will look back on this time in a couple of years and say ‘that was a massive opportunity’ as it is not easy to recognise the bottom when you are in the middle of it,” he said.

THE INSIDE STORY: Stavely Minerals (ASX: SVY) has broadened its copper-gold horizons beyond the limits of the company’s multiple Victorian drill-ready discovery opportunities to include prospects in the historical copper-gold regions of Queensland.

Early this year, Stavely Minerals acquired the highly-prospective Ravenswood West project (EPM26041) in North Queensland subsequent to the acquisition of private company Ukalunda Pty Ltd.

The Ravenswood West project is located historical Ravenswood mining centre, which has yielded over four million ounces of gold production.

The project came with four identified porphyry copper-molybdenum-gold prospects: The Bank, Keane’s, Barrabas, and Turkey Gully.

None of these prospects have been touched by an exploration drill bit since the early 70s, although they have provided historic rock chip results of up to 49 per cent copper, 0.24 grams per tonne gold, two per cent molybdenum, and 1793g/t silver.

Historical drill results from the Keane’s molybdenite prospect, as impressive as they may be, are old enough to be recorded in Imperial measurements of:

45 feet 3 inches (13.8m) at 0.26 per cent molybdenum;
1’ 7” (0.38m) at 2.26 ounces (70.3g/t) silver; and
9’ (2.74m) at 9.6 pennyweight of gold plus silver (15g/t), of which 0.58g/t was gold.

“In technical terms, Stavely acquired an orogenic and intrusive related gold and porphyry base metals and gold project with outstanding exploration potential,” Stavely Minerals managing director Chris Cairns told The Resources Roadhouse.

“In everyday speak, we have a project located in a proven mineral district, which has seen very little modern exploration.

“One that offers us an opportunity to target large mineralised systems at reasonable depths.”

It didn’t take Stavely long to identify one of the targets – The Bank – as being an “exceptional gold target” of such strength and quality the company took the decision to commence a program of diamond drilling as soon as it could.

Rock chip samples from The Bank have returned gold up to 0.25g/t with high silver to 45.7g/t associated with strong arsenic and antimony to 4310ppm and 1720ppm respectively.

According to Stavely this geochemical association is considered by those in the know to be typical of a peripheral/high-level in the well documented zonation pattern of these intrusive systems.

The company believes the geochemical anomalism at The Bank breccia system is an indicator that the prospect’s best developed gold mineralisation is likely to be preserved at depth.

“From what we have seen to date, I do believe The Bank breccia prospect to be one of the best discovery opportunities I have come across in the 25 years I have been exploring for gold,” Cairns said.

“The Bank has, so far, ticked all the necessary technical boxes to indicate it to be a genuine intrusive-related gold system with multiple phases of brecciation creating excellent penneability for later gold-bearing fluids.

“The work we have completed tells us those gold mineralising fluids have flowed through this system and the geochemical element associations we have observed at surface are saying the best gold grade zones should be preserved right beneath where we are standing.

“Of course the only way to be certain is to deploy the rotary lie detector and get out there and drill it.”

Stavely Minerals (ASX: SVY)
…The Short Story

HEAD OFFICE
First Floor
168 Stirling Hwy 
Nedlands, WA 6009

Ph: +61 (8) 9287 7630

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

DIRECTORS and MANAGEMENT
William Plyley, Christopher Cairns, Jennifer Murphy, Peter Ironside

THE INSIDE STORY: It would appear somebody forgot to tell Kairos Minerals (ASX: KAI) that extensive exploration programs carried out across a number of project areas are not the current modis operandi for junior exploration plays.

Kairos Minerals’ 100 per cent-owned Mt York lithium-gold project is located 120km south-east of Port Hedland in the East Pilbara region of Western Australia and has a current gold resource of 2.8 Million tonnes at 1.53 grams per tonne gold for 135,000 ounces of gold (JORC 2012).

Earlier this year, Kairos expanded the gold potential of the Mt York project by identifying thick zones of high-grade gold mineralisation located directly below a number of historical mining areas from a review of the project involving a geological reinterpretation of the Iron Stirrup, Main Hill, Breccia Hill and Old Failthful gold prospects.

Two of those four prospects, Iron Stirrup (714,000 tonnes at 1.99g/t gold for 45,000 ounces) and Old Faithful (2.069 million tonnes at 1.37g/t gold for 90,000 ounces) contributed to the calculation of a Phase 1 JORC 2012 Indicated and Inferred Mineral Resource at Mt York of 2.8 million tonnes at 1.53g/t gold for 135,000 ounces of gold.

“This was a great result and easily exceeded our expectations,” Kairos Minerals managing director Joshua Wellisch told The Resources Roadhouse.

“The work doesn’t stop there, however, and we are pushing on with our efforts to update Minerals Resources estimates for Breccia Hill and Main hill as well, which we anticipate will add further ounces to our gold inventory in the near future.”

There can’t be two commodities causing as much market buzz at the moment as Lithium and gold and with both in the Mt York project title it is sure to start receiving some notice.

The project adjoins the tenements of both Pilbara Minerals (ASX: PLS) and Altura Mining (ASX: AJM), companies which have both made important lithium discoveries in recent times.

“Both the gold and lithium prices have performed very well lately,” Wellisch said.

“Our strategy is to unlock the gold and lithium potential at Mt York to take advantage of this extraordinary opportunity to add near-term value to the company.”

Gold is also the main flavour of the company’s 100 per cent-owned Roe Hills gold project, located 120km east-southeast of Kalgoorlie in WA.

An assessment carried out to ascertain the project’s gold potential by Kairos’ geological team confirmed the presence of gold-bearing structures and favourable mafic host lithologies within the Ginger Kiss and Terra prospect trends.

Both targets possess strong geological similarities to Silver Lake Resources (ASX: SLR) Aldiss project and a subsequent review of the French Kiss deposit therein, highlighted the possibility of gold mineralisation occurring within a conjugate shear set.

Kairos’ team have interpreted a similar structural setting at Ginger Kiss and Terra and both trends will be targeted in an upcoming drilling program.

“The Mt York project is our main focus, but the potential at Roe Hills can’t de denied,” Wellisch said.

“The Roe Hills gold exploration opportunity, located in the heart of the one of the most active gold exploration districts in Australia, has been highlighted by Lake Roe project of Breaker Resources, just 10 kilometres away.

“We’re also very close to Silver Lake’s key deposits, and work has revealed many the structures hosting those deposits extend onto our ground, allowing us to identify promising exploration targets, which we plan to evaluate with gravity surveys next month before commencing our next drilling program in October.

“With resource development and exploration activity also gearing up at Mt York, the next few months will be very active and exciting on a number of fronts.”

Kairos Minerals (ASX: KAI)
…The Short Story

HEAD OFFICE
Level 1, 14 Outram Street 
West Perth, WA 6005

Ph: +61 (8) 9226 1141

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