Independence Group Celebrates Nova Opening

OUT AND ABOUT: The Roadhouse flew out as a guest of Independence Group (ASX: IGO) to help the company celebrate the official opening of its Nova nickel-copper-cobalt operation.

We were in good company, which included Western Australia minister of mines and petroleum Bill Johnston who applauded the company for getting the operation up and running as quickly as it has.

“On behalf of the McGowan Government, I congratulate all Independence Group staff, project partners, stakeholders and the Ngadju people, on the official opening of Nova,” Johnston said.
 
“Production commencing at Nova is excellent news for the mining sector, especially as this is the first mine of its scale in the highly prospective Fraser Range.”

Johnston’s sentiments were echoed by Independence Group managing director and CEO Peter Bradford, who declared the opening of the Nova operation to be, “an outstanding achievement” that Nova reached commercial production only five years after its discovery and is expected to reach nameplate capacity twelve months earlier than expected in the bankable feasibility study.

“Nova is IGO’s flagship asset and…is a truly world-class project,” Bradford told the gathered throng.

“It has been rapidly progressed to commercial production within five years of its discovery in July 2012.

“Five years to complete Resource definition drilling, feasibility studies, permitting, financing, and construction and development is a rare achievement and underlies the quality of the Nova orebody.

“This fantastic deposit could have lain in the ground, undiscovered and undeveloped, and we would not be here today for this official opening without the collective contributions of all those people who have dreamed of what could be and have made it happen.

“To make it happen has required a combination of daring, sacrifice, commitment, persistence, and collaborative effort.”

Bradford acknowledged the varied contributions behind the development of Nova from its discovery through to production, including:

“Mark Creasey for his foresight in securing the original land position on the Fraser Range, and for the systematic work that his people did – and have continued to do,” he said.

“Mark Bennett and the Sirius team for their persistence to drill that discovery hole and for the accelerated Resource definition, feasibility study, and permitting to bring Nova to a decision to mine.”

Independence Group has invested $456 million of capital in the construction and development of Nova, and has now commenced the operational phase, which is just a touch beyond the project’s January 2015 uninflated budget estimate of $443 million.

Production at Nova for this financial year – the company’s first full year of production – at the mid-point of guidance, is expected to be about 25000 tonnes of nickel, 11000 tonnes of copper, and 925 tonnes of cobalt in concentrates, at a cash cost of $2.20 per payable pound of nickel.

That makes Nova the lowest cost nickel operation in Australia over the coming year.

“Nova is our flagship asset and represents the type of operation that IGO wants in its portfolio,” Bradford said.

“A quality asset that is high margin, with scale and a long mining life, which anchors our presence in the Fraser Range where we are actively exploring to find the next Nova.”

Triangle Energy and Norwest Energy Enjoying Time in Dongara

CONFERENCE CALLER: Triangle Energy (ASX: TEG) director Darren Bromley outlined the company’s recent progress to the RIU Good Oil Conference in Perth.

After completing the sale of its Indonesian oil & gas asset to Indonesian company PT Enso Asia, Triangle Energy has taken its market cap from around $3 million to around $22 million.

Triangle Energy recently completed a Share Purchase Agreement with Roc Oil Company for the purchase of its 42.5 per cent Participating Interest in and Operatorship of the Cliff Head Oil Field and associated production facilities, located in the offshore Perth Basin, Western Australia.

“Triangle Energy now controls 78.75 per cent of the Cliff Head and we see a great opportunity to progress exploration of nearby appraisal targets and the larger offshore Perth Basin while maintaining strong cash flow from our current production,” Bromley said.

Bromley added that the Cliff Head acquisition combines well with the company’s 30 per cent farm-in interest in the TP/15 Joint Venture with Norwest Energy (ASX: NWE) to drill the neighbouring 160mmbl Xanadu-1 prospect as it provides Triangle immediate exposure to exploration upside along with additional strong exploration targets within the Cliff Head Oil Field.

Triangle’s 78.75 per cent interest in Cliff Head has come relatively cheaply, costing approximately $5.7 million.

Triangle estimates annual revenue from Cliff Head crude oil production at around $30.4 million, of which the company has rights to $23 million based on US$53 per barrel and $0.795 AUD/USD exchange rate.

Triangle acquired an initial 57.5 per cent interest in the Cliff Head Oil Field in June 2016 from AWE Limited (ASX: AWE).

Bromley indicated the Cliff Head facilities are the only offshore and operating onshore infrastructure in the Perth Basin, adding that they are therefore important for any development in the surrounding area.

“Cliff Head’s onshore Arrowsmith Stabilisation Plant is the only operating crude oil plant in the Perth Basin and is vital infrastructure in the development of exploration success by any explorer in the area,” he continued.

“The Cliff Head Oil Field currently produces approximately 1,204 barrels of oil per day (bopd) gross through the Arrowsmith facility, which has a processing capacity of up to 15,000 bopd, so is more than capable of processing third party crude.

“The acquisition of Cliff Head provides Triangle with a cash flow generating operation, strong production rates, exploration opportunities and the capacity to service third party crude in the highly-prospective and underexplored Perth Basin.”

Triangle’s JV partner Norwest Energy is making strong progress with the drilling of the TP/15 Xanadu-1 prospect, also located near Dongara in WA.

The Joint Venture contributions towards drilling costs and subsequent interests include:

Triangle Energy to contribute 40 per cent of the costs to earn a 30 per cent interest;

3C Group to contribute 40 per cent of the costs to earn a 30 per cent interest;

Whitebark Energy Ltd to contribute 20 per cent of the costs to earn a 15 per cent interest; and

Norwest Energy free-carried for a 25 per cent interest.

The JV considers Xanadu-1 to be a significant well for the northern Perth Basin.

Norwest has previously announced the Xanadu prospect having an unrisked recoverable resource of 160 million barrels.

The primary target for the Xanadu-1 well is the Permian Dongara Sandstone, with secondary targets in the Irwin River Coal Measures and the High Cliff Sandstone.

It is situated in very shallow water immediately adjacent to the coast, and is being drilled from onshore by way of a deviated well.

Xanadu is structurally similar to Triangle’s Cliff Head Oil Field and the potential oil will come from the same source, and will fit seamlessly into the Arrowsmith processing plant.

“We have made excellent progress to date at Xnadu-1, and we are ahead of budget and time,” Norwest Energy chief executive officer Shelley Robertson told the conference.

“We are expecting the primary and secondary targets to be intersected by the end of the week, so it is pretty exciting times.

“We have a challenging bit of drilling ahead of us, but everything has gone to plan so far, so there is no reason to suspect it will be any different going forward.

“At TP/15 we have a new work program commencing in May 2018 and the results at Xanadu will help to define the forward planning on that work program.

“Our JV partners are all fully committed to ongoing exploration on TP/15 as there is huge exploration potential on this new shore block and drilling Xanadu 1 is really just the beginning of this program with such a dynamic and committed Joint Venture.”

WA Budget Raises Gold Royalties Anger

IN THE LOBBY: Western Australia Treasurer Ben Wyatt provided a nasty shock for gold miners as he handed down his first state budget.

Leading up to the budget, Premier Mark McGowan claimed more than $5 billion in revenue has been lost since February’s pre-election financial statement, which showed a $3 billion deficit and $33.2 billion in debt for 2016/17.

Debt, he said, was forecast to eclipse $41 billion in 2019/20.

One avenue the government has decided upon will be the raising of royalty rates for gold miners from the current 2.5 per cent to 3.75 per cent.

The Treasurer said the measure is expected to raise $392 million over the forward estimates.

The royalty rise comes at an inopportune time for gold producers as they are just starting to make some headway with the gold price currently enjoying a positive run.

The measure is to take the form of a tiered royalty rate for gold that will be introduced from 1 January 2018, whereby an increased rate of 3.75 per cent will apply on the full royalty rate when the price is above $1,200 per ounce.

When the gold price is $1,200 per ounce or less, the current 2.5 per cent rate will apply.

In addition, from 1 July 2018, the WA government will remove the current exemption for the first 2,500 ounces of gold production for miners who produce more than that amount in a financial year.

The government claims the rise brings WA closer into line with other states, such as Queensland where the gold royalty rate is 5 per cent and New South Wales it stands at 4 per cent.

The next producers that could find themselves in the treasury firing line are former state Nationals Leader Brendan Grills’ mates in iron ore, which currently get hit with a higher 7.5 per cent royalty rate.

His suggestion that the bigger end of town producers should be hit with a $5 per tonne penalty, instead of the current 1960s-struck 25 cents per tonne deal will strain their necks looking over both shoulders to avoid attack.

The response from the Association of Mining and Exploration Companies (AMEC) was as swift as it was predictable with the lobby group acting chief executive officer Graham Short declaring the measure as being, “a short sighted, baffling cash grab that will have serious and unintended consequences as it will cost Western Australia in jobs and investment.”

“The decision to increase the gold royalty rate was based on a flawed Mineral Royalty Rate Review undertaken for the Barnett Government which used an inaccurate methodology and pre-2014 financial data.

“Benchmarking against other Australian jurisdictions is misleading, as 70 per cent of Australian gold is produced in Western Australia, compared to only six per cent in Queensland, and 13 per cent in New South Wales.

“The royalty increase represents a 50 per cent hike in a major business input cost for the gold industry.

“This is significant and cannot be easily met without consequences. It will be paid for in jobs, investment and mineral exploration activities.

“The perplexing issue is that the majority of the revenue raised will go out the backdoor to other Australian States and Territories through the GST re-distribution process, whilst the jobs will be lost in WA.”

Singing from the same song-sheet, Chamber of Minerals and Energy of Western Australia (CME) acting chief executive Nicole Roocke said the decision would have a devastating impact on the State’s gold sector, which may be forced to close mines and cut jobs.

“To introduce such austere measures at a time when the gold sector is just experiencing an improvement in production and sales is unjustified, especially when the majority of royalties raised from this increase will eventually be redistributed to other states through GST after four years,” Roocke said.

“Gold companies are a significant contributor to WA Government by way of royalties and account for about $238 million, or 5 per cent, of total resources industry royalties.

“The gold sector employs 25,000 people – around 23 per cent of the total WA mining industry workforce – and many of these jobs may now be put at risk due to this royalty increase.

“The Government should be encouraging investment in the sector, given its positive flow-on effect in job creation and economic growth, not hampering it with higher royalties and taxes.”

Rooke pointed to the Labor Party’s previous comments on the matter, saying it was disappointing the party is on the record in saying that any increase to gold royalties would have a negative impact due to the marginal nature of the industry.

“Gold companies, who have only recently started expanding and constructing new mines, will feel betrayed by this decision and concerned about the future of the industry,” she continued.

“CME will be strongly opposing this increase in gold royalties on behalf of our members as it will have long-term consequences for the resources industry and the WA economy as a whole.”

Investment Returning to Junior Exploration Sector

THE CONFERENCE CALLER: Queensland Government resources investment commissioner Todd Harrington opened the Brisbane Mining 2017 conference this week by acknowledging the recent tough times endured by the resources sector.

“It’s been a pretty rough five years, or more, for investors and the mining community,” Harrington told delegates.

But he was emphatic in declaring the industry, particularly the junior end of town, was getting back on its collective – steel-capped feet.

“About a year and a half ago we saw a meaningful rebound in the coal space and then foreign exchange,” he continued.

“A whole series of other sequences have kicked back in that has brought us out of being a dire straits sector to being the sector to be getting a lot of positive attention, and rightly so.”

Harrington said that when investors look to put their money to work they are clearly looking for the most favourable resource destination, which made investing in the Australian resources sector a smart thing to consider.

“The Australian advantage is our very favourable foreign exchange position,” he explained.

The Australian dollar – in US Dollar terms – has been hovering around the 75 cents to 80 cents mark over the past 12 months.

In 2010 when we cracked US$300 per tonne for our coal we were at dollar parity, so US$300 was basically AUD$300 

When the coal price recently hit that US$300 spike again, the Australian dollar was at 75 cents, basically generating revenues of over $400 per tonne.

“We have a natural hedge – call it a benefit – for our producers here that sees us stand in front of some of our competitors that are equal in jurisdiction and opportunity,” Harrington said.

So, with this increased sentiment for the industry, what does Harrington say are the commodities that investors are chasing?

“Go back a year ago, and it was all about lithium, cobalt, and gold was hot to trot about a year ago,” he said.

“These days we are receiving a lot more zinc enquiries, copper is hot and bauxite is very much in favour.”

The renewed interest in the junior resources sector, for both the traditional and newly favoured commodities, is hardly surprising given its long-term relationship with the Australian investment community.

As with all such relationships, there has been plenty of ups and downs, however the recent second – perhaps third – honeymoon phase most probably has plenty to do with the fact that Australian investors understand the junior resources sector.

According to Lanstead Fund director Andrew Sparke there are currently some 730 resources companies listed on the Australian Securities Exchange.

Metals and mining companies have the biggest representation on the board taking up some 30 per cent of the space.

“It’s good to see the sentiment is turning and I think we are certainly heading into a better resource cycle which is great to see,” Sparke said when taking his turn at the podium.

“I think we will start to see some more longer-term money start to come to this sector, once the current cycle starts to mature even further.”

 

Junior Exploration Rise Supported by Global Commodity Demand

THE CONFERENCE CALLER: The recent rise in activity for junior resource companies is directly proportional to the rise in investment cash flowing towards the sector.

Austex Mining executive director Rob Murdoch provided the wakeup call for the second day audience at Brisbane mining 2017 with results of research that showed there to be, on average, around $700 million every quarter available for the junior resource market.

“That’s what the financial capital world will put up for projects, and of course companies have to fight for that money,” Murdoch said.

Murdoch explained that due to a spike in the average share price for junior resource companies back in 2016, companies could raise cash more readily

This resulted in an increase in Q2 this year where companies have been able to raise about $800 million.

The momentum has kicked on into Q3 with some substantial raisings currently underway.

This has led to an increase in exploration spending this year with companies committing to spend around the $400 million mark.

“The estimates companies make are amazingly accurate so they have a pretty good judge, overall, of what they are going to spend over the next quarter,” Murdoch said.

Murdoch’s rise in exploration thesis garnered some support in the late afternoon session when CRU Group associate consultant Dr Allan Trench declared we are currently seeing, “the return of the exploration IPO and the majors even are talking about exploration – something that hasn’t been on the agenda for the past five years”

“There is definitely a rising tide out there in the exploration world,”

Trench supported this ideal with facts and figures indicating a rise – albeit small – in market growth, in terms of overall GDP.

“Only 12 months ago we were talking about the new mediocre,” he said.

“It may not feel like it, but things are actually outperforming expectations by a few fractions of a per cent in terms of global GDP growth this year versus last.

“That’s part of what is driving the actual uptick in what we’re seeing and what we’re forecasting going forward.

China, he said, has borne the responsibility of setting metal consumption rates, but now the rest of the world is beginning to pull its weight in that area.

Price growth and volume growth in terms of billions of dollars in value from 2016 to 2017 has been substantial.

Trench said that’s why, hopefully, and we are already seeing it, company share prices should be on the rise for those exposed to the right commodity.

Zinc is a $37 billion market and prices have recently jumped up to the $3000 per tonne mark.

The current outlook for zinc is that the world will continue to require production as demand outstrips supply.

Trench described the copper market as being “Interesting”, due mainly to the lack of global stocks taking it into the realms of “a real scarcity”.

“There may be hidden stocks that are coming out, people do all sorts of tricks with stocks, of course – hold metal off exchanges – but nevertheless, copper is looking very exciting.”

Apart from the graphite and lithium that goes into an electric car it also requires four times the copper of regular cars.

Trench said it appears analysts have “got it right” and the uptick in the market is happening declaring there to be, “a large uptick still to come”.

Nickel isn’t as scarce as the likes of copper at present and as such, the market isn’t as capricious as it can be.

“Nickel has been amazingly boring,” Trench said.

“Nickel is usually exceptionally volatile, but it has been relatively boring.”

Trench explained that gold had become one of the toughest commodities to forecast.

He provided three reasons for this difficulty being that analysts were uncertain whether the current pricing for gold was a US Interest Rates Story, a China-Demand Side Story, or a Global Uncertainties Story.

Trench demonstrated that CRU has gold remaining relatively flat in US dollar terms.

“To put that into context – the Australian dollar gold price is around $1650 per ounce – approx.  US$1300,” he continued.

“The median cost of production on an all in sustaining cost basis in Australia is around $1100

“So, there is a five hundred dollar margin there.

“If gold prices stay where they are right now, in Australian dollar terms, people are making a great deal of money in gold.”

Musgrave Minerals Moves to 100% Stake in Cue Project

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Drill hole 17EPRC010 intersected elevated gold including:

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

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

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

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

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

HEAD OFFICE
28 Richardson Street
West Perth WA 6005

Ph: +61 8 9324 1061

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

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

Ruby, Ruby…Ruby Will You Be Mined

THE INSIDE STORY: Mustang Resources (ASX: MUS) stands out from the regular pack of ASX-listed mining companies, simply due to its choice of focus commodity…rubies.

Mustang Resources is developing the Montepuez ruby project in Mozambique, which is producing world-class rubies expected to generate strong cashflow through rough ruby sales.

Mustang recently ramped up ruby recoveries at Montepuez, increasing the project’s ruby inventory by over 70 per cent to approximately 120,000 carats.

Mustang is confident the enlarged ruby inventory will enable it to achieve a 200,000- carat inventory, which the company expects to demonstrate the cashflow potential of the Montepuez ruby project.

This confidence allowed Mustang to revise its sales strategy for the Montepuez gem-ruby inventory, and to announce plans to complete an auction/tender to bulk rough buyers of the anticipated 200,000 carats targeted for October 2017.

The change in strategy resulted from discussions Mustang held with key ruby buyers, and was inspired by the success enjoyed by its neighbour, AIM-listed ruby market leader Gemfields (AIM: GEM).

Gemfields’ Mozambique rough ruby auctions have set a benchmark yielding total sales of US$280 million from eight auctions over three years, which Mustang is eager to replicate.

The decision is a notable strategic shift, as it manoeuvres the company from selling its rubies in both the cut and polished and rough forms to selling them all as rough stones.

Mustang believes the new strategy will not only generate substantial cashflow, it, importantly, can ensure the company avoids entering into any competition with their rough ruby customers who will most likely have high-profiles in the cut and polished ruby market.

A contributing factor to the recent ruby recovery ramp up was the recent commissioning of the upgraded Montepuez processing plant.

The upgraded plant is designed to achieve a feed/throughput rate of 250 tonnes per hour and Mustang’s initial plans are to operate the plant for one seven-hour shift a day.

This would be sufficient for the company to achieve or exceed its daily total processing target, which represents a 580 per cent increase in the throughput rates recorded before the $1 million plant upgrade was undertaken.

It also demonstrates scope for further substantial increases in processing rates by operating additional shifts in the future.

Mustang’s ramp up in ruby inventory was boosted by the acquisition of a 65 per cent interest in Mining Licence 8245L from Regius Resources Group, located three kilometres from the Montepuez plant.

The processing of gravels from initial bulk sampling at the new licence is already yielding high-quality secondary rubies.

Initial manual test pitting by Mustang across a broader area of 8245L generated strong results, with 11.75 carats (9.45ct ruby and 2.3ct corundum) recovered from 2,726 kilograms of gravel.

“Licence 8245L is highly strategic because it borders our existing Montepuez licence areas on one side, and Gemfields’ lucrative ruby project on the other,” Mustang Resources managing director Christiaan Jordaan told The Resources Roadhouse.

“Just as importantly, it lies along the south-east, north-west ruby mineralisation trend, which also transects the adjacent Gemfields licences.”

In the recently-completed June quarter, Mustang processed, 5,692 cubic metres (8,823 tonnes) from an initial bulk sample from its current focus area to the south east of the processing plant, delivering 4,445.3cts of rubies, including consistent recovery of high-quality stones larger than 3cts – classified as Special/Premium Stones.

Processing of 4.5 tonnes of gravel from test pits through Bushman Jigs yielded 10.7cts of rubies.

Mustang is mapping the full size of the secondary ruby deposit/s in this key target area and beyond.

From its 80 per cent-owned Caula graphite project, along strike from Syrah Resources’ (ASX: SYR) Balama project in Mozambique, Mustang received strong results from initial beneficiation testwork conducted on both oxide and fresh samples.

Mustang interpreted the results to confirm Caula as a Tier 1 graphite project.

“Caula hosts extensive high-grade graphite mineralisation and our preliminary metallurgical testing demonstrates it also has over 55 per cent large and jumbo Flakes in the fresh ore,” Jordaan said.

“These results highlight Caula’s potential to be a low-cost graphite supplier to the lithium battery and expandable graphite industries.”

Caula’s high head grade indicates a smaller process plant (lower CAPEX) could generate similar products to other lower grade deposits in the region.

Mustang Resources Limited (ASX: MUS)
…The Short Story

HEAD OFFICE
Level 10
20 Martin Place
Sydney NSW 2000

Ph: +61 2 9239 3119

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

DIRECTORS
Christiaan Jordaan, Ian Daymond, Cobus van Wyk, Peter Spiers

Alliance Resources Keeps Drill Spinning Across Project Portfolio

THE INSIDE STORY: Alliance Resources (ASX: AGS), as operator of the Wilcherry Joint Venture in South Australia, completed a RC drilling program on the Zealous tin-base metals, Telephone Dam zinc-lead-sliver, and Weednanna gold prospects.

Alliance Resources (51%) and Tyranna Resources (ASX: TYX) (49%) entered 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 Zealous tin-base metals prospect was identified as a first-order conductive target via a helicopter-borne electromagnetic (HEM) survey during December 2016 and confirmed by a high-powered moving loop electromagnetic (MLEM) survey completed in March 2017.

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.

The first two RC drill holes (SW hole and NE hole) of the recent program encountered deep regolith consisting of kaolinite (clay) and very fine sand.

However, the southern hole failed to reach target depth and the northern hole entered the top of the target zone but failed to reach final target depth.

Alliance completed a total of 366m before suspending the RC drilling to source a diamond drilling rig to further test the prospect, which commenced early July.

The company’s attention then turned to the Telephone Dam zinc-lead-silver prospect, moving the RC rig from Zealous.

At Telephone Dam, the southernmost and shallowest planned hole was completed to 210m.

The company decided not to RC drill two planned northern holes at Telephone Dam, instead electing to diamond drill the relatively untested northern conductor once the remaining holes at Zealous are completed.

Results from the diamond drilling program at Telephone Dam are expected in late August to early September.

The RC rig was then moved to the Weednanna gold prospect where 25 holes were drilled (17WDRC025 to 17WDRC049).

Final results from RC drilling at Weednanna are anticipated to be available by mid-August, hopefully for presentation at Brisbane Mining 2017.

Drilling results achieved at Weednanna and reported to date, intersected bonanza gold grades, including:

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

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

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

Alliance Resources’ project portfolio stretches beyond SA and includes the Nepean South nickel-gold project in Western Australia’s Eastern Goldfields.

A large new gold anomaly was recently identified at Nepean South, which the company was quick classify as being, “significant in terms of the indicated size and location”.

The Nepean South project is located southwest of Coolgardie and is considered prospective for both komatiitic-hosted nickel sulphide deposits and greenstone-hosted orogenic gold deposits.

Results from recently-conducted phases of auger soil sampling defined a coherent gold in soil anomaly greater than 7.5ppb gold, measuring approximately 3,000m east to west by 1,500m north to south, located to the north of a previously defined (southern) anomaly.

The recent gold in soil sampling results are of higher tenor than results previously returned from the area, with anomalous samples from all soil sampling now determined to range between 8 and 15ppb gold and highly anomalous samples greater than 15ppb gold.

The results included 79 highly anomalous samples, returning peak results of 108ppb gold, 44ppb gold and 41ppb gold.

The two highest grade samples recorded are positioned more than 500m from a tenement boundary.

Alliance has interpreted these results to demonstrate the highly anomalous samples form two strong clusters in the central to eastern part of the overall anomaly.

The company outlined its next phase of exploration to be carried out at the Nepean South project will be infill auger soil sampling in the north of the survey area, enabling it to better define the distribution of gold as a vector towards primary gold mineralisation.

A 396-sample program is proposed using a 50m by 50m spaced grid.

This work will conclude auger soil sampling at the Nepean South project and provide targets for aircore drill testing.

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

Sliver City Minerals Drill Ready at Copper Blow

THE INSIDE STORY: Silver City Minerals (ASX: SCI) is generating a good deal of excitement around the company’s historic Copper Blow copper project, located 20 kilometres south of Broken Hill in New South Wales.

The Copper Blow project is a Joint Venture between Silver City (75%) and CBH Resources (CBH; 25%), which owns and operates the Rasp Mine and sulphide flotation facility at Broken Hill. 

Mining commenced at Copper Blow in 1887 producing 715 tonnes of copper ore at grades up to 13 per cent copper during that initial phase.

Drilling carried out by previous owners over 60 years from 1949, included around fifty-three holes testing a zone measuring one kilometre in strike.

Silver City recently completed a review of historic Copper Blow drilling as part of a broader review of its southern tenements, which identified a series of diamond drill holes completed between 1982 and 1994, six of which were drilled to depths of greater than 250 metres, encountering high-grade copper mineralisation.

The review unearthed diamond and RC holes at Copper Blow that returned high-grade copper and gold results over estimated true widths of 15 metres, including:

11.8 metres at 6.7 per cent copper, 1.92 grams per tonne gold and 13.7g/t silver;

19.8m at 1.8 per cent copper, including 3m at 4.6 per cent copper;

15m at 2.7 per cent copper, 0.53g/t gold and 3.7g/t silver; and

2.1m at 3.2 per cent copper, 0.65g/t gold, 5g/t silver and 0.038 per cent cobalt.

As good as these results were, Silver City was unable to locate any evidence of systematic follow-up exploration of these holes by previous explorers to ascertain the existence of steeply plunging, high-grade deposits.

Its appetite whetted by the historic drilling results, Silver City collected sixteen Copper Blow rock chip samples from over a strike length of one kilometre to gain a better understanding of the trace element assemblage of the copper-rich mineralisation.

The samples were analysed for 36 elements with results showing them to be oxidized with abundant copper carbonate minerals, including malachite.

They were also highly elevated in copper, returning results like those encountered by the historic drilling in deeper sulphide zones.

Copper results ranged from 0.01 per cent to 6.89 per cent with an average of 2.6 per cent, which Silver City interpreted to suggest several anomalous trace elements may hold economic potential.

These include gold (to 1.84g/t), silver (to 12.6g/t), cobalt (to 749ppm), lanthanum (a rare earth element to 590ppm) and molybdenum (to 198ppm).

The company concluded potential exists for other economic elements associated with copper – especially gold, silver and cobalt – and that the signature of these elements is typical of IOCG deposits.

It didn’t take long for Silver City to start planning a 2,600m drilling program, consisting of two groups of drill holes.

The first will assess the southern group (south of Stenhouse shaft) and will comprise combined RC and diamond holes designed to outline plunging bodies of copper-rich mineralisation near existing high-grade intersections.

North of the Stenhouse shaft four reverse circulation percussion holes will assess an area of broad copper mineralisation within the strongest magnetic anomaly in the area.

“The initial drilling program at Copper Blow will test a mineralised strike length of approximately 750 metres to vertical depths of between 50 and 200 metres,” Silver City Minerals managing director Chris Torrey told The Resources Roadhouse.

“This zone lies at the southwestern end of a highly-prospective, poorly explored and poorly outcropping magnetic horizon, which extends for four kilometres.

“We are also currently planning an exploration program for the horizon to the northeast of Copper Blow, which is likely to include Rotary Airblast (RAB) drilling and ground geophysical surveys.”

Silver City is undertaking a placement of new shares to sophisticated investors for a total value of $428,000, as well as conducting a Share Purchase Plan to existing eligible shareholders to raise a maximum of $250,000.

The anticipated $0.7 million to be raised has been earmarked to fund the high impact drilling program on the high-grade Copper Blow project.

“We believe Copper Blow is an exciting exploration program and the high-grade historical results of up to 6.7 per cent copper over 11.8 metres underpins the confidence we have in the project,” Torrey said.

Silver City Minerals Limited (ASX: SCI)
…The Short Story

HEAD OFFICE
Level 1
80 Chandos Street
St Leonards NSW 2065

Ph: +61 2 9437 1737
Email: info@silvercityminerals.com.au
Web: www.silvercityminerals.com.au

DIRECTORS
Bob Besley, Christopher Torrey, Gregory Jones, Ian Plimer, Josh Puckridge

S2 Resources Puts Down North American Roots

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

S2 Resources (ASX; S2R)
…The Short Story

HEAD OFFICE
North Wing, Level 2
1 Manning Street
Scarborough WA 6019

Ph: +61 8 6166 0240

Email: admin@s2resources.com.au
Web: www.s2resources.com.au

DIRECTORS
Jeff Dowling, Mark Bennett, Anna Neuling, Grey Egerton Warburton