Pioneer working up WA triple-play

/in /by

THE INSIDE STORY: For Pioneer Resources (ASX: PIO), 2015 has been an important year in the advancement of the company’s portfolio of emerging Western Australian gold and nickel projects.

Pioneer’s Acra gold, Blair Dome nickel and Fairwater nickel projects are located within some of the country’s hottest exploration postcodes, where recent exploration activities have achieved some very encouraging results.

Of the three projects, the Acra gold project is attracting more scrutiny from the company.

It would be fair to say that all three projects are pretty much level pegging in the company’s pecking order, however there are subtleties that differentiate each from the others.

At the Fairwater nickel project, located within the Albany Fraser Orogen of the Fraser Ranges region, Western Australia (75% PIO), Pioneer has identified a prospective, nickel sulphide-containing, ultramafic intrusive unit, which has been confirmed by a program of aircore drilling.

The success of that round of drilling encouraged the company to embark upon its next phase of testing, a program of diamond core drilling, which is currently in progress.
 
“We regard the Fairwater nickel project highly, simply because it is ticking all the boxes as far as Proterozoic intrusive nickel sulphide projects should behave,” Pioneer Resources managing director David Crook told The Resources Roadhouse.

“However, it has very high exploration risk, but there are areas of the market that are prepared to invest in the Fraser Range region of Western Australia.”

If Fairwater is to be categorised as ‘high-risk’, then in terms of being a much lower risk project, the Acra gold project puts its hand up, especially as it is targeting a commodity enjoying a recent renaissance of sorts.

The 100 per cent-owned Acra gold project covers an area of 370 square kilometres, 60 kilometres north east of Kalgoorlie in the Eastern Goldfields of WA.

Pioneer’s exploration strategy for the Acra project is highlighting areas within a 20km long structural corridor.

Work carried out by the company to date has shown this corridor to contain multiple occurrences of gold mineralisation.

Drilling conducted at Acra has demonstrated a number of its prospects hold potential to be high-grade, narrow vein, gold lode opportunities in addition to ‘open pit’ opportunities.

One such lode gold opportunity is the Kalpini South prospect where recent drilling returned very high gold grades, including:

KSDD001
0.2 metres at 116 grams per tonne gold from 131m;

KSDD002
1.2m at 20.8g/t gold from 145.71m, which included 0.2m at 84g/t gold;

KSRC004
10m at 6.38g/t gold from 61m;

KSRC005
9m at 5.31g/t gold from 36m;

KSRC007
15m at 2.93g/t gold from 94m;

KSRC010
3m at 5.44g/t gold from 128m; and

KSRC018
12m at 2.62g/t gold from 98m.

“At this stage the Acra gold project looks as though it could host a number of high-grade, lode style gold deposits,” Crook said.

“We’re not discounting the open pit scenario for Acra, because there is a paucity of drilling through large areas of the project, but at the moment the indications we have, are leading us more towards the high-grade lode situation.

“We acquired the ground in 2012, along with a substantial gold data base that was put together by earlier nickel explorers and we have been able to leverage off that pretty quickly.

“The drilling results we have put out over the past two years have demonstrated the prospectivity of the project and we are accelerating our exploration there now.

“In fact the capital raising we have just completed is dedicated to drilling at Acra.”

Pioneer completed a placement, receiving commitments for 35 million shares at 1.5 cents per share, to raise $525,000 before costs, including $61,250 from company directors.

Funds will be spent on further exploration programs at the Acra project, with work scheduled to commence in December 2015.

Work to be carried out includes:

Down plunge diamond drilling of the emerging high-grade gold lode at the Kalpini South prospect;

RC drill testing for shallower supergene gold mineralisation overlaying the high-grade gold lode;

Aircore testing of a new gold-in-soil geochemistry called the Kalpini Knight prospect, located 120m south of, and parallel to, the Kalpini South prospect; and

Aircore testing three EM conductors near Kalpini South.

“We have drilled four prospects so far at Acra, and all have encountered grades that are the kind you want to see around a mine,” Crook said.

“It’s just a matter now of tracking down where the mine is actually going to be.

“The Kalpini South project is the first one we have been drilling and that is looking as though it is a high-grade shoot.

“Soil geochemistry and historical records are leading us to believe the area is prospective for a series of these shoots within about three kilometres of Kalpini South.

“So we are hoping for a swarm of high-grade shoots within the Kalpini area and that’s where our next drilling program will be targeting, before Christmas.”

Although the bulk of the company’s focus is on Acra for now, the project Crook considers to hold the greatest potential to become a company maker is the Blair Dome nickel project

“That is because the nearby nickel camps at Kambalda, Tramways and Widgiemooltha all have clusters of deposits,” he explained.

“Blair is the exception as to date only two deposits have been located.

“A lot of the preparatory, high-level exploration work was successful, and identified a number of targets with nickel mineralisation vectors.

“But there hasn’t been much work done chasing these targets since WMC in the 1990s.

“The volume of follow-up exploration work carried out away from the immediate mine area remains very little, so we believe the potential for finding significant amounts of high-grade nickel – because the Blair mine was a high-grade mine – remains very good indeed.”

The 100 per cent-owned Blair Dome nickel project is also located in the Eastern Goldfields region of WA.

At just 29sqkm, it is smaller than Acra, however its proximity to infrastructure, being mid-way between Kalgoorlie (35km) and the Kambalda processing facility, offers great benefit through lower establishment capital costs.

The most recent work by Pioneer’s geologists conluded the Blair Mine sits at the southern end of a south-plunging anticline or dome structure.  

“The new model that we have put out – called the Blair Dome – recognises that Blair sits atop a dome structure of the same size scale as the major nickel producing Kambalda and Tramways Domes,” Crook said.

“The new model provides better directions to areas that should be prospective, and then the historical records can be used to prioritise the resulting targets.”

Pioneer believes the proposed geological dome model it has established, while not unique within the Goldfields, changes the company’s understanding of the Blair project, with important, positive exploration ramifications.

More importantly, the revised geological model brings coherence to geology and the observed targets.

“What we offer investors is diversification in terms of exploration risk and commodity choice.  

“Fairwater is a real greenfields play, as opposed to the Blair Dome which is in an established nickel domain,” Crook said.

“And this is balanced with the extremely compelling gold targets at Acra, which are ready to go, and that’s where we plan to be for the rest of this year.”

Pioneer Resources Limited (ASX: PIO)
…The Short Story

HEAD OFFICE
21 Ord Street
West Perth WA 6005

Ph: +61 8 9322 6974
Fax: +61 8 9486 9393

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

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

MAJOR SHAREHOLDERS
Lobster Beach PL 3.52%
Xstrata Nickel Australasia 3.02%
Talyor Justin John 2.45%

Core Resources arsenic cleaner nominated for Innovation Challenge Award

/in /by

INDUSTRY NEWS: Brisbane based mineral processing laboratory and engineering group, Core Resources has been selected as a finalist in the Australian Innovation Challenge awards.

Core has been nominated in the Minerals and Energy category of the awards for the development of a new technology for removing arsenic from copper, lead and nickel concentrates.

Called the ‘Toowong Process’ – after the Brisbane suburb – core describes the new development as a new hydrometallurgical technology that enables operations to remove arsenic, antimony, tin and mercury at the mine site prior to shipping a cleaned concentrate product.

The breakthrough is of some significance to the mining industry as arsenic has always been an issue for the copper industry.

However, with average arsenic grades are increasing, as well as restrictions on the amount of arsenic smelters are willing to accept, this is placing increasing pressure on many existing copper operations, and making several major global copper mineralisation occurrences unviable for mining.

The Toowong process selectively leaches arsenic, antimony, tin and mercury from specific minerals using a patented Alkaline Leach technology.

Its selling point is its ability to remove unwanted elements without substantially affecting the copper minerals – the cleaned concentrate is then suitable for shipping directly to smelters, eliminating the need for downstream copper metal recovery processes.

Using process chemistry developed at Core, the alkaline leach process is also largely self-sustaining.

Most of the reagent requirements are either generated from the concentrate in situ in the leach, or recovered downstream and recycled.

The leached arsenic is fixed using standard technologies into a stable, non-toxic form that can be managed in its original native location at the mine site – instead of being shipped to smelters across the world.

Core has been working to develop the process over several years.

This came to a head in 2012, with Core designing, constructing and operating a $2.5 million hydrometallurgical pilot scale demonstration of the process.

Over 34 days, 1.2 tonnes of Tampakan concentrate was treated.

Arsenic removal greater than 90 per cent was demonstrated at steady state conditions, lowering the arsenic grade from 1.1 per cent to 0.1 per cent.

The product from the pilot plant was a cleaned copper concentrate suitable for sale.

The technology is now the subject of a worldwide patent.

Core is unsurprisingly confident in the Towong Process being a potentially game-changing technology.

Its confidence buoyed by Professor David Way of JKTech who said, “The Toowong Process has the potential to unlock sites throughout the world that are currently considered unviable mineralisations for sustainable mining.”

Peter Munro, Senior Principal Consulting Engineer at Mineralurgy was also effusive in his support of the technology, saying, “This really looks like a ‘win-win’ situation as by using this Toowong Process the miners will be able to treat ore from existing operations that are high in arsenic and develop new deposits containing arsenic.”

“Smelters will receive ‘clean’ copper concentrate minimizing the problem of disposing of toxic wastes and residues which is becoming a major issue for operations even in China.”

Core is currently seeking commercialisation and development partners to enable the roll-out of the Toowong Process to industry.

“We have seen strong interest from a number of groups from across the industry,” Core Resources CEO Peter Rohner said.

The Australian Innovation Challenge winners will be announced on November 25 at the awards ceremony at the Questacon in Canberra.

The Toowong Process is the only mining related technology in the Minerals and Energy category.

Fire Assays set Impact Minerals alight

/in /by

THE INSIDE STORY: There has been much activity, resulting in highly-encouraging results, at Impact Minerals’ (ASX: IPT) Broken Hill project in New South Wales.

Impact believes the project could, potentially, host over one million ounces of platinum Group elements (PGEs) with associated nickel and copper from three exploration licences.

The licences cover a 40 kilometre trend of rocks prospective for nickel-copper-PGE and lead-zinc-silver in ‘Broken Hill-style’ deposits.

Two licences are 100 per cent-owned by Impact with the company waiting on Ministerial approval for to acquire the third licence, E7390 (via its wholly-owned subsidiary Siouville Pty Limited), from Golden Cross Resources (ASX: GCR).

This deal will entitle Impact to 100 per cent of the nickel-copper-PGE rights, previously in Joint Venture with Golden Cross and will cost just $60,000 cash and a one per cent gross production royalty on all metals, to which Impact and/or Siouville has the rights for.

Impact also has the right to buy back the royalty for $1.5 million at any time up to a Decision to Mine, or leave the royalty uncapped during any production.

The acquisition of E7390 will also take Impact to an 80-20 JV for Broken-Hill style mineralisation with Silver City Minerals (ASX: SCI) and free-carry that company’s 20 per cent interest to a Decision to Mine with a payment to Silver City of $50,000 cash.

Having come on to the company shareholder register in July with a cornerstone $3 million investment with the possible injection of a further $2.3 million subject to results, Squadron Resources, the private mining investment vehicle of the Andrew Forrest-led Minderoo Group, also has the right to invest $1 million for a 19.9 per cent interest in the nickel-copper-PGE rights.

This would bring Squadrons total investment to $7.3 million if all goes according to plan.

A fully subscribed rights issue raised a further $1.9 million, sending Impact out into the field, potentially armed with around $9.3 million.

“Raising such an amount by a junior explorer in the current climate is no mean feat, however it was missed by some sections of the investment community,” Impact Minerals managing director Dr Mike Jones told The Resources Roadhouse.

“Private equity groups, such as Squadron are constantly presented with investment opportunities by companies with similar exploration potential as us, however this investment is a clear statement of the potential of Impact’s projects to deliver major discoveries.

“Our main focus is to use these funds wisely to progress exploration on all of our projects, in particular at Broken Hill where to our knowledge, we encountered the highest grades of platinum group metals ever recorded in Australia.”

Impact wasted little time in hitting both the ground and mineralisation at Broken Hill, with first drilling efforts on EL E7390 encountering extremely high-grade platinum group metals, gold, copper, nickel and silver from Hole RHD012.

RHD012 returned true width of 1.2 metres at:

10.4 grams per tonne platinum, 10.9g/t gold, 294g/t (9.5 ounces) palladium, 7.4 per cent nickel, 1.8% copper and 19g/t silver

WITHIN a thicker zone of:

3.5m at 5g/t platinum, 6g/t gold, 144g/t (4.6 ounces) palladium, 2.9% nickel, 2.3% copper and 14.5g/t silver, and also including 0.5m at 5g/t platinum, 6.6g/t gold, 141g/t (4.6 ounces) palladium 1.3% nickel, 10.4% copper and 82g/t silver.

High-grade assays of the same metals were also achieved from RHD008, which returned unknown true width of 29m at:

2.7g/t platinum, 0.5g/t gold, 5.5g/t palladium, 0.5% nickel, 2.4% copper and 57.8g/t silver.

These samples were originally assayed using the fire assay technique at the Intertek laboratory in Adelaide.

The company sent sample pulps for repeat assays for the rare PGM’s, again using the fire assay technique with nickel sulphide-collection, this time at the Intertek laboratory in Perth.

The repeat assays (three in total) confirmed previously reported palladium, platinum and gold grades returning gold ranges from 10.8g/t to 14.8g/t, platinum from 10.3g/t to 12.5g/t and palladium from 280g/t to 300g/t.

The follow-up assays of hole RHD012 returned:

3.5m at 159g/t (5.3 ounces) 6PGE+gold 2.9% nickel, 2.3% copper and 14.5g/t silver from 67.3m down hole (50 m below surface) where the 6PGE+gold equals 1.7g/t rhodium, 2.6g/t iridium, 2g/t osmium and 1.1g/t ruthenium, 5g/t platinum, 6g/t gold, 144g/t (4.6 ounces) palladium;

Including: 

1.2m at 335.8g/t (10.8 ounces) 6PGE+gold, 7.4% nickel, 1.8% copper and 19g/t silver from 68.5m where the 6PGE+gold equals 4.6g/t rhodium, 7.2g/t iridium, 5.6g/t osmium and 3.1g/t ruthenium 10.4g/t platinum, 10.9g/t gold, 294g/t (9.5 ounces) palladium.

“These results, combined with the earlier high grades of rare PGM’s were exceptional to say the least,” Jones said.

“Even on a global scale they indicate a potentially deep source exists at Broken Hill for the parent ultramafic magmas, which themselves contain evidence of having absorbed, or contaminated if you like, extensive amounts of the surrounding metasedimentary rocks.

“These two criteria, a deep source and contamination, are considered important components of models for the formation of major nickel-copper-PGM deposits and we considered them to be encouraging for further exploration to be carried out through the Broken Hill project area.”

Fortified by the early drilling success, Impact followed up with further high-grade platinum group metal (PGM) mineralisation and the first major intercept of zinc-lead-silver mineralisation from the Red Hill prospect.

The results from the drilling program were akin to a darts player throwing a succession of triple twenties, left handed, whilst blind-folded.

Drill hole RHD014 was drilled to test the western part of the ultramafic unit at Red Hill and underlying metasedimentary rocks.

The hole returned:

25.4m at 0.6gpt platinum, 1.3g/t palladium and 0.1g/t gold (2g/t Pt+Pd+Au), 0.3% copper and 0.3% nickel from 11m down hole, including 3.3m at 2.1g/t platinum, 4.9g/t palladium and 0.4g/t gold (7.4 g/t Pt+Pd+Au), 0.7% copper and 0.6% nickel from 32.4m down hole.

These results were achieved from sampling of the ultramafic In RHD014 from just 11m down hole with mineralisation open towards the surface.

Hole RHD009 was drilled to test a modest gravity anomaly immediately north west of the main Red Hill intrusion, intersected the lower contact of the ultramafic unit at 88.5m down hole and encountered:

82.5m at 0.3% zinc, 0.2 per cent lead and 1.5g/t silver from 91m down hole; including 0.8m at 4.1 per cent zinc, 4.6% lead and 18.6g/t silver from 132m; and

2.9m at 2.8% zinc, 0.4% lead and 3.7g/t silver from 141m.

This footwall sequence of rocks are part of a regional package of rocks colloquially called the ‘Broken Hill Sequence’, similar to the host rocks at the Broken Hill mine.

Impact considers the sequence to be prospective for similar mineralisation and two of these sequences have been mapped at surface at Red Hill.

“The position of these rocks in Hole RHD009 was unexpected and is likely to reflect unrecognised folds at depth,” Jones said.

“We are now drilling to test Target T2, an EM conductor interpreted to be down dip of mineralised Broken Hill sequence rocks at surface.

“The prospectivity of the Red Hill area for zinc-lead-silver mineralisation will be assessed following completion of the current drill program.”

Impact Minerals Limited (ASX: IPT)
…The Short Story

HEAD OFFICE
26 Richardson Street 
West Perth WA 6005

Ph: +61 (8) 6454 6666
Fax: +61 (8) 6454 6667

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

DIRECTORS and MANAGEMENT
Peter Unsworth, Dr Mike Jones, Paul Ingram, Dr Markus Elsasser, Aaron Hood, James Cooper-Jones, Leo Horn

MAJOR SHAREHOLDERS
Bunnenberg Family 31%
Directors 11%

What the Analysts Say

/in /by

WHAT THE ANALYSTS SAY: This week our team of experts run the ruler over Elementos and Pilbara Resources.

Website: www.beerandco.com.au

Elementos Limited (ASX: ELT)

The Cleveland tin‐copper mine was operated by Aberfoyle, from 1969 to 1986.

It closed due to the tin price collapse.

Elementos has published a pre‐feasibility study on re‐processing the existing tailings, and scoping studies on developing a small open cut resource and re‐starting under‐ground operations.

Cleveland has tin‐copper resources, with a tungsten deposit at depth.

Elementos has published a PFS to re-process 3.7 million tonnes of tailings, grading 0.30% tin and 0.13% copper, at a rate of 650,000 tonnes per year, recovering 47% of the tin, producing 900 tonnes per year of tin at an all-in cost of US 467 censt per pound.

The tailings project is expected to come into operation during 2017 at a capital cost of $21 million.

It will generate enough cash, even at today’s prices, to develop opportunities identified in published scoping studies on hard rock operations, including a tungsten Resource at depth.

Cleveland, Tasmania
Cleveland is a tin‐copper deposit that was mined by Aberfoyle until 1984, and shut when the tin price collapsed.

It is about 60 kilometres from Burnie in North‐ West Tasmania.

Elementos’ Development Plan
There have been significant advances in tin metallurgy since Cleveland was first developed, with advances in gravity technology for finer grained material, plus flotation and leaching.

Elementos’ testwork confirms modern gravity and flotation technology with re‐grind and leaching of the tails should recover 47% of the tin to a concentrate grading 51% tin from the tailings.

Later Stages
Elementos has published Resource estimates of:

840,000 tonnes in an Open Cut, grading 0.8% tin and 0.27% copper;

6.6 million tonnes under‐ground, grading 0.63% tin and 0.25% copper; and

A separate tungsten Inferred Resource of 4 million tonnes grading 0.3% tungsten.

These will be developed subsequently.

Elementos will generate sufficient cash from the tailings operations that it will not need to raise further equity for later development.

Website: www.beerandco.com.au

Pilbara Minerals (ASX: PLS)

Pilbara Minerals has 100% of the Tabba Tabba tantalite project, which is expected to be in production in September 2015.

In May 2014, Pilbara Minerals announced the acquisition of 100% of Pilgangoora, 55 kilometres from Tabba Tabba in the Pilbara region.

Pilbara Minerals is progressing a feasibility study for Pilgangoora and is awaiting a permit to begin production at Tabba Tabba

Tabba Tabba first product delayed to November
The delays continue, but Pilbara Minerals is funded to cover this problem.

Increased Resource Estimate, PLUS increased Exploration Target
Pilbara Minerals announced an increase in its Resources Estimate from 23.8 million tonnes to 5.2 million tonnes, PLUS an increased Exploration Target, from 50 – 60 million tonnes to 80 – 90 million tonnes.

This makes Pilgangoora the second largest hard rock spodumene deposit in the world, after Greenbushes, which has 120 million tonnes in Resources in December 2012.

Pilbara Minerals’ previous Resource estimate was in July.

The rate of increases shows that it clearly has the potential to be the largest deposit in the world.

Strong Demand
Due to strong demand for lithium, due to Electric Vehicles and emerging off‐grid battery demand, coupled with supply uncertainties, Pilbara Mineals has signed MOUs for more than 200,000 tonnes per year of lithium oxide (Li2O) concentrate.

Pilbara Minerals reported, in presentations, of prices up to US$ 450 per tonne for low iron, 6% Li2O, concentrate for chemical or battery grade, and higher prices for very low iron concentrate for industrial (glass or ceramic) applications.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Dalgaranga demands development status

/in /by

THE INSIDE STORY: There has been a misconception floating around, for some time in fact, that all the near-surface multi-ounce gold projects that are to be found in Western Australia – have been developed.

Aspiring Perth-based gold mine developer, Gascoyne Resources (ASX: GCY) is more than happy to debunk this myth.

It’s hard to dismiss the company’s version of the WA gold story, especially when it holds such an exciting portfolio of gold mine development opportunities.

First is the 100 per cent-owned Glenburgh gold project in the Gascoyne Region of Western Australia where Gascoyne has compiled a JORC-compliant Measured, Indicated & Inferred Mineral Resource of 21.3 million tonnes at 1.5 grams per tonne gold for one million ounces of gold from several prospects within a 20 kilometre long shear zone.

The project is located on the company’s 1,000 square kilometre tenement package within the prospective and underexplored Glenburgh belt, which is considered to have geological similarities to the eight million ounce Tropicana district.

Gascoyne also has an 80 per cent interest in the Dalgaranga gold project, located in the Murchison Province of Western Australia.

A 2015 Scoping Study on Dalgaranga determined a low capital cost development scenario costing $37 million to produce 60,000 ounces per annum for approximately six years from 1.5 million tonnes per annum throughput, with cash costs of $813 per ounce (all in costs $1025 per ounce), and life of mine revenue of $612 million.

A Pre-Feasibility Study is currently underway on the development of the Dalgaranga project.

“The studies we have completed on both of our projects have clearly demonstrated strong economics and that each warrant being progressed into more advanced studies,” Gascoyne Resources managing director Mike Dunbar told The Resources Roadhouse.

“While the projects already have very large defined resources, massive exploration potential remains at both projects with high priority targets yet to be drilled.”

Gascoyne recently completed a program of RC and Diamond drilling at Dalgaranga, some of the first drilling to be carried out at the Gilbeys deposit in over 15 years.

The drilling was designed to test the continuity of the gold mineralisation immediately below and along strike from the existing Gilbeys open pit and to test potential resource extensions in poorly drilled areas within the Gilbey’s Stage 3 pit design.

Results include:
39.9m at 2g/t gold, including 9.5m at 3.9g/t gold (and 0.5m at 48.4g/t gold);
26 metres at 1.5 grams per tonne gold, including 14m at 1.7g/t gold;
13m at 2.7g/t gold from 46m, including 5m at 5.6g/t gold;
21m at 1.5g/t gold, including 10m at 2.1g/t gold; 
15m at 1.5g/t gold and 3m at 4g/t gold; and
34m at 1.0g/t gold, including 16.55m at 1.2g/t gold and 5.15m at 1.3g/t gold.

The results Gascoyne achieved from its most recent drilling campaign, along with historical RC and Diamond drilling results, were incorporated into a revised Mineral Resource, which will in turn form the basis for the current PFS.

The combined Dalgaranga Measured, Indicated and Inferred Mineral Resource now stands at 23 million tonnes at 1.4 grams per tonne gold for 1.02 million ounces of gold, of which 21.8 million tonnes at 1.4g/t gold for 949,000 ounces is within the Gilbeys deposit.

Unsurprisingly, Dalgaranga has emerged as the front-runner in the company’s development pipeline.

“The drilling certainly went well and I always believed the Dalgaranga Resource could grow to around the one million ounce mark, but that could be just the start for the project,” Dunbar said.

“The data suggests that we could conceivably keep a two million tonnes per annum plant full, which would result in the production of 80,000 to 100,000 ounces,” Dunbar explained.

“That establishes Dalgaranga as a great base-case project, however there is a clear development path towards Gascoyne eventually becoming a plus-150,000 ounce producer, and that’s by bringing the Glenburgh project on line later, through cash flow generated at Dalgaranga.

To some industry watchers, Gascoyne’s decision to work-up the Dalgaranga project to a producing mine in favour of the already one million ounce Glenburgh project may seem odd.

The company’s rationale is that it expects to add substantial ounces to the Glenburgh Resource over time, and its preference is to fund the Glenburgh exploration from cash flow generated at Dalgaranga, which, as the 2015 Scoping Study determined, is emerging as the company’s lowest capital cost entry point into cash flow.

“Glenburgh will be a standalone plant and operation, which will come at further capital cost, funded from Dalgaranga and the dual project aspect basically de-risks both operations.”

Gascoyne has completed a comprehensive review of historical data on the Dalgaranga gold project, which identified a further six high-priority exploration targets close to established Resources.

The company expects the targets to provide the ideal follow-up to the Golden Wings deposit where it has established an initial Indicated and Inferred resource of 1.2 million tonnes at 1.8g/t gold for 70,000 ounces.

“Golden Wings is smaller than Gilbey’s, but it is unmined and slightly higher grade, so that is where we would commence our operation,” Dunbar said.

“Up until Dalgaranga became such a compelling case, Glenburgh had been our flagship project, but now it is our second development option to be developed using cash flow generated from Dalgaranga.”

Glenburgh may be second place in Gascoyne’s running sheet, but with a one million ounce Resource, within which is a high-grade core of 2.1 million tonnes at 4.1 grams per tonne for 273,000 ounces of gold, with plenty of lower grade material surrounding, it too presents a compelling case for development.

The current Glenburgh Mining Lease runs for 12 kilometres, however Gascoyne has identified mineralisation continues for around 18 kilometres of strike length, basically sticking out of the ground, which means no big pre-stripping is required, or sand dune cover to drill through.

“We completed a Preliminary Feasibility Study on Glenburgh in mid-2013 – right in the middle of the high-cost cycle – but even then we had five million tonnes at two grams per tonne gold producing 73,000 ounces per annum for over four years,” Dunbar said.

“Life of mine revenue was estimated at just under $450 million with All In Sustaining Costs of $994 per ounce.

“Capex of $70 million included $10 million of working capital, however we do expect the PFS update, which is due for completion next year, is likely to deliver a substantial capex and operating cost reduction, driven partly by the change in the economic environment since the previous study was completed.

“There is no better time than now to be building a project, especially when you have a project that has already been worked-up to a one million ounce Measured and Indicated Resource with substantial exploration upside.”

Gascoyne Resources Limited (ASX: GCY)
…The Short Story

HEAD OFFICE
Level 2, 33 Ord Street 
West Perth WA 6005

Phone: +61 8 9481 3434
Fax: +61 8 9481 0411

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

DIRECTORS and MANAGEMENT
Mike Joyce, Mike Dunbar, Stan Macdonald, Graham Riley, Gordon Dunbar, John den Dryver

MAJOR SHAREHOLDERS
Board and Management 25%
JP Morgan Asset 9.4%
Citicorp Nominees 7.1%
National Nominees 6.6%

What the Analysts Say

/in /by

WHAT THE ANALYSTS SAY: This week our team of experts run the ruler over Aurora Minerals and Kibaran Resources.

Website: www.breakawayresearch.com

Aurora Minerals Limited (ASX: ARM)

Aurora Minerals Limited (ASX: ARM) is a Perth based ASX-listed junior exploration company with a strategy of growth through direct investments in other ASX-listed junior exploration companies.

As part of the strategy Aurora also facilitates funding via loans to associates.

Investments to date include Predictive Discovery (ASX: PDI, 43.9%), Golden Rim Resources (ASX: GMR, 13.4%) and Peninsula Mines (ASX: PSM, 37.5%).

Between them, Predictive and Golden Rim control most of the Samira Hill Greenstone Belt in eastern Burkina Faso.

Predictive has an 184,000 ounce, 2.58 grams per tonne Indicated and Inferred Resource at its Bongou prospect within the 95 to 100 per cent-held Bonsiega project.

Within 10 kilometres of the Bongou resource Predictive has recently reported an Exploration Target of 460,000 to 563,000 ounces at between 1.5 and 1.7g/t gold.

Golden Rim has reported an Exploration Target of 500,000 to 611,000 ounces at between 1.8 and 2.2g/t gold within its 90 per cent-held Korongou permit, some 40 kilometres from Bongou.

The third investment is a 37.5 per cent controlling stake in Peninsula, which has two projects in South Korea.

The main focus to date has been on the 100 per cent-owned, historically mined Daewha molybdenum/tungsten project, with drilling intersecting narrow high-grade molybdenum and tungsten veins.

Sampling of polymetallic veins at the second project, Osu, has returned high-grade assay values, with a conceptual blind porphyry target also being defined.

Website: www.breakawayresearch.com

Kibaran Resources (ASX: KNL)

Kibaran is an ASX-listed graphite explorer and developer, concentrating efforts in Tanzania.

The key project is the Epanko graphite project, located in southern Tanzania.

With the completion of a BFS, and offtake agreements in place, the company is now looking towards financing and development.

The second project, Merelani-Arusha, is located adjacent to the previously operated Merelani graphite mine.

This is viewed as a potential second mine, with the company now to commence a Pre-Feasibility Study (PFS).

Kibaran is also actively investigating the opportunity for value add operations in Dar es Salaam, including the production of spherical and expanded graphite to supply the expected increased demand for these products, and to provide an alternative source to the current largely Chinese production.

A recently completed BFS for the Epanko graphite project returned positive results, with a pre-tax NPV of US$197 million, with an expected capital outlay of US$77 million.

A key to the project is the quality of the graphite concentrate – test work indicates the production of a low contaminant, dominantly large flake concentrate suitable for most applications, including production of the value added expanded and spherical forms.

The quality is superior to that of most other ASX-listed graphite hopefuls, and this has been backed up by the signing of key offtake agreements with European parties for 75 per cent of the planned initial 40,000 tonnes per annum production.

The Merelani-Arusha graphite project in Northern Tanzania is also a potential company-maker in its own right, with metallurgical testwork returning excellent results that are comparable to Epanko and a JORC-complaint resource with considerable upside.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

What the Analysts Say

/in /by

WHAT THE ANALYSTS SAY: This week our team of experts run the ruler over Legend Mining and Metalicity.

Website: www.breakawayresearch.com

Legend Mining (ASX: LEG)

Legend Mining (ASX: LEG) is an Australia-based junior explorer focussing activities on nickel-copper sulphide exploration in the Fraser Range area of Western Australia.

The key project is Rockford, located over the highly-prospective Fraser Zone of the Albany-Fraser Orogen, some 300 kilometres east of Kalgoorlie, which the company recently acquired a 70 per cent stake in from the Creasy Group.

In the 70 per cent-owned 2,939 square kilometre Rockford project, Legend has a quality tenement package, considered highly-prospective for Nova-Bollinger style nickel-copper sulphide mineralisation.

The project is located over the Fraser Zone, the same tectonic package that hosts the 13.1 million tonnes Nova-Bollinger project, which is located some 150km to the south-west.

Project-wide early stage exploration carried out by the Creasy Group (the project vendors) has highlighted the prospectivity of the tenements.

This previous work has also resulted in a comprehensive and high quality geophysical and geochemical database, which has allowed Legend to progress straight into advanced exploration, potentially saving $1.2 million and two to three years in early stage work.

The company is now undertaking electromagnetic surveying over three key areas to define bedrock conductors for subsequent reverse circulation and/or diamond drilling.

With an enterprise value of around $7 million Legend is well leveraged to exploration success – this is a similar position that Sirius Resources was in when the Nova discovery was made in 2012.

Being cashed up will allow Legend to carry out effective exploration, without activities being compromised by a restricted cash position.

Website: www.breakawayresearch.com

Metalicity (ASX: MCT)

Metalicity is an ASX-listed company which has recently changed its business from Health Care to Mineral Exploration.

The company’s initial project was Rocky Gully, considered prospective for Nova-style nickel-copper mineralisation, which the company has been actively exploring to date.

The acquisition of the flagship Admiral Bay zinc project was announced in late 2014, with completion and re-compliance with Chapters 1 and 2 of the ASX Listing Rules now finalised.

The company has commenced a Scoping Study on Admiral Bay.

Metalicity Limited (previously PLD Corporation) is commencing the Scoping Study following completion of the acquisition of the Admiral Bay zinc deposit, located in the Canning Basin of Western Australia.

This is one of the world’s largest undeveloped zinc projects, and there is significant scope for a Resource upgrade and expansion given that mineralisation has been intersected along a mineralised trend with a strike length of 18 kilometres.

The acquisition and proposed initial six month work program through to the completion of a Scoping Study are fully funded, with agreements in place to the tune of US$5 million with Resource Capital Funds (RCF).

The RCF funding includes a completed $0.68 million share subscription and a US$5 million royalty purchase.

The acquisition of the Rocky Gully nickel-copper project has also been finalised, which was previously held under option agreements.

Exploration work to date on this project, located near Albany in southern Western Australia has returned encouraging results for sulphide nickel-copper and VMS style mineralisation.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Agriculture to feast on Dinner Hill potash

/in /by

THE INSIDE STORY: Mining and Agriculture are two sectors that, it could be said, make strange bedfellows and very rarely do they find themselves the dual focus of one company.

Perth-based Potash West (ASX: PWN) is doing all it can for Mining and Agriculture to attain dynamic duo status with the two-stage potash and phosphate development of the company’s Dinner Hill prospect in Western Australia and the East Exploration potash project in Germany.

The company recently updated its Scoping Study into the production of single superphosphate (SSP) from the Dinner Hill project, within the 100 per cent-owned Dandaragan Trough project, 225 kilometres north of Perth in Western Australia.

The economics of a proposed $205 million WA phosphate mine have been boosted by the results, which considered an average mine production rate of 3.8 million tonnes per annum to produce an average of 400,000 tonnes of SSP per annum over a 40 year mine life.

Key outcomes are from the updated Scoping Study include:

Mining rate at an average 3.8 million tonnes per annum;

Mining grade, average 3.5 per cent P2O5;

Mine life of 40 years;

64 per cent of the mining plan consumed over 40 years;

Average revenues per year around $128 million;

Average operating cash costs per year around $76 million;

In June 2015 Potash West announced a new indicated phosphate resource at Dinner Hill of 250 million tonnes at 2.9 per cent phosphorous pentoxide (P2O5), an increase of 108 per cent from its previous reported resource.

There are plenty of reasons to believe there will be a worldwide increase in the demand for fertilisers

World population is forecast to grow to somewhere between 9.5 and 10.5 billion people by 2050 from its current base of around seven billion.

Much of that growth is expected in countries developing very quickly, such as China, India and Brazil.

As population increases, the arable lands available are not predicted to follow at the same rate with arable land per person falling from a quarter of a hectare to around 0.15 of a hectare.

Combining these factors, most food experts believe that by 2050 we will need to produce more than twice as much food as we currently do.

One of the most cost effective ways of increasing production per hectare is the more effective and greater use of fertilisers.

Potash West anticipates the Dinner Hill project to become a supplier into the global fertiliser market, which is estimated to be worth US$172 billion this calendar year.

Nitrogen will account for approximately half of that at around $85 billion, phosphorous at 30 per cent, or $50 billion, and Potash is the smallest market – about 20 per cent of the industry – roughly $30 billion.

“In the fertiliser business there are three elements the Agriculture sector uses hundreds of kilograms per acre every year to get maximum output from the soil,” Potash West managing director Patrick McManus explained to The Resources Roadhouse.

“These are Nitrogen (N), phosphorous (P), and potassium (K) and they each have separate benefits and you cannot substitute one for the other, so to get maximum output you require the correct amount of each.

“Most soils around the world now are deficient in N, P and K with different crops needing different amounts of each element to grow.”

Phosphates are mined widely around the world, with most international trade focused on two areas: Morocco, and Saudi Arabia.

There is not much production in our region, which means Western Australia and South East Asia are large import markets for phosphates.

This provides an opening for a much-needed domestic source and opportunities don’t come more domestic than Potash West’s Dandaragan Trough, which is located just north of Perth.

“This is a wonderful region for producing phosphates,” McManus said.

“All the infrastructure is already in place: we have rail lines within 30 kilometres of the deposit; we have high-voltage power; roads; towns; water supply; everything we need.”

The phosphate potential of Dinner Hill began to emerge as Potash West progressed its exploration program in early 2015.

Defining a new resource, which basically doubled its inventory estimate this year, from new drilling programs, led the company down the path to taking the decision to revise and update the existing scoping study findings for Dinner Hill.

“The drilling program identified a significant high-grade section of the deposit,” McManus said.

“The high grade start-up delivers 5.5 per cent P2O5 ore for the first five years, 90 per cent higher than the resource average.”

McManus explained these factors had led to a number of changes being made to the project plan, which include the installation of a sulphur burning acid plant that, while increasing the initial capital cost, substantially reduces operating costs as well as doubling the mine life predicted by earlier estimates.

The updated Scoping Study has reinforced Potash West’s belief in the Dinner Hill project and that its phosphate resource will provide a long term supply of single superphosphate to agriculture across Western Australia and the local region.

The company’s confidence is understandable given the project will make the most of the advantages of low cost mining, low sovereign risk, world class infrastructure in place, and a short logistic chain to end users.

“All these factors combine to make the economics of this project compelling,” McManus continued.

“Our plan is to develop this phosphate project as Stage 1 of a plan to ultimately produce potash, phosphates and alum from the extensive greensand deposits at Dinner Hill.

“In particular, the new 40-year project mine life uses only 64 per cent of the current mine plan resource defined to date at Dinner Hill, indicating that there are expansion options available.”

Potash West has commenced a preliminary feasibility study, including new metallurgical testwork, and in addition to the process design for single superphosphate will continue to investigate potential for rock phosphate production.

Earlier this year Potash West entered into an agreement with private interests to earn 55 per cent interest in a German Joint Venture with East Exploration Pty Ltd, which is developing high-grade potash deposits in Germany.

The deal brought with it two exploration licences Küllstedt and Graefentonna, located in established potash producing areas in the South Harz region.

“By examining the existing exploration data on Kullstedt we have been able to report an exploration target of four to five billion tonnes of ore,” McManus said.

“Because the data is all from good-quality Soviet era drilling, we only need to drill a small amount of holes ourselves to bring it up to an Inferred Resource.”

McManus said the company’s next move for East Exploration will be to take its 55 per cent of the project and its partner’s 45 per cent and vend into an ASX-listed company, called Davenport Resources, which is currently undergoing an IPO.

“The plan is for that to be completed by Q1 2016,” McManus said.

“Potash West will eventually own around 29 per cent of that company.

“We hold under the Potash West umbrella three extremely exciting opportunities.

“The main objective of the company, for now, is to continue the development of the Dinner Hill project.”

Potash West (ASX: PWN)
…The Short Story

HEAD OFFICE
Suite 3
23 Belgravia Street
Belmont WA 6104

Ph: +61 8 9479 5386
Fax: +61 8 9475 0847

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

DIRECTORS
Adrian Griffin, Patrick McManus, Chew Wai Chuen, Gary Johnson

MAJOR SHAREHOLDERS
Venture Frontier Ltd 15.97%
Choy Thai Yap 6.51%
Uob-Kay Hian Pte Ltd 4.77%

Resources & Commodities – Is it now time to re-think?

/in /by

Resources & Commodities – Is it now time to re-think?

GUEST COMMENTATOR: 2014 and 2015 to the end of September has been plagued by weak commodity demand on the back of softening world growth, particularly in China, and a lack of meaningful production cuts which has led to building inventories.

Bulk commodities, particularly iron ore, dominate the earnings of the major miners and stoic statements by iron ore miners like Rio Tinto that China with produce one billion tonnes of steel by 2030 are met with undermining by Chinese predictions of lower production rates and market disbelief.

However, is this really market disbelief or is it that the market doesn’t really care now what the demand is in 2030 but rather sees a short to medium term outlook of increasing production into potentially stagnant demand?

While thermal coal supply has been weaker in response to the softening demand, the metallurgical coal market still remains well over supplied and waits for US supply cuts which may never occur.

So what has changed? In base metal markets Glencore surprised the market with both copper production cuts (400ktpa) and zinc production cuts (500ktpa) – the zinc cuts announced only this month and before London Metals Exchange Week.

Commodity prices rallied on the back of the announced cuts but importantly it potentially pushes both the copper and the zinc market into deficit next year.

Indeed while the volatility in the Glencore share price reflecting its debt position may have stimulated Glencore into this action, it nevertheless provides an important catalyst to these commodities markets – in the very least it now makes it high risk for hedge funds to short these markets.

Breakaway is of the view that while the bulks may go nowhere for some time, it is the base metals (and in the short term, gold) that may signal the start to an upswing to a steady recovery without the exuberance of the 2003 to 2007 cycle.

In traditional commodity upcycles, there is a pattern for commodities to move in sequence: initially gold followed by base metals and then bulks.

Oil often moves with gold to reflect inflationary movements potentially occurring at that time.

Minor metals are more complicated and follow individual supply/demand fundamentals – in some cases a function of new technology and also supply dynamics from China where China dominates supply.

In terms of sequencing of commodity price movements in normal cycles, this time there are variations:

• The very low interest rate environment and the likelihood that the US will raise rates during the remainder of 2015

• New sources of oil from shale oil and gas, particularly in the US and its impact on energy supplies

• Increasing investor negativity towards thermal coal production, particularly from University funds

Throw into the mix the relentless increases in iron ore production by the majors and you have a commodity cycle that may be slower and more selective in its participants.

So what about world growth projections…

The International Monetary Fund has recently published The World Economic Outlook with a subtitle, Adjusting to Lower Commodity Price.

This is an important report as it sets a base line for investors to contemplate what resource movements might occur over the next two years and while this view is subject to frequent revision, investment risk has moved to one of timing rather than a risk of further commodity price and resource market falls – in certain commodities!

Our first analysis is the composition of world growth which itself defines where the commodity demand may occur.

The forecasts are encouraging as the clearly highlight an improvement in 2016 from what is a considered a low point in 2015.

However the drivers of this growth differ between the Advanced Economies and the Emerging Economies as summarised from the IMF as follows.

Advanced Economies

The IMF forecasts growth in advanced economies to increase modestly in 2015 and 2016.

The IMF highlight that 2015’s developments reflect primarily a strengthening of the modest recovery in the euro area and a return to positive growth in Japan, supported by declining oil prices, accommodative monetary policy, and in some cases, currency depreciation.

The pickup in advanced economies is tempered by lower growth in commodity exporters—particularly Canada and Norway—and in Asia outside of Japan (in particular, Korea and Taiwan Province of China).

Unemployment is declining, but underlying productivity growth remains weak, including in the United States, where the recovery is more entrenched.

This heightens concern about the medium-term outlook. Some pickup in growth is expected in 2016 (especially in North America), but medium-term prospects remain subdued, reflecting a combination of lower investment, unfavourable demographics, and weak productivity growth.

The recent further decline in oil prices, as well as in prices of other commodities, should support demand in the majority of advanced economies that are net commodity importers, but the slowdown in emerging markets.

Emerging Economies

The IMF reports that growth prospects in emerging markets are very different across countries and regions, but the outlook is generally weakening, with growth projected to decline for the fifth year in a row.

This reflects a combination of factors:

• weaker growth in oil exporters;

• a slowdown in China with less reliance on import-intensive investment;

• adjustment in the aftermath of credit and investment booms;

• and a weaker outlook for exporters of other commodities, including in Latin America, following declines in other commodity prices; and

• geopolitical tensions and domestic strife in a number of countries.

What encourages Breakaway is that the outlook factors in declining rates of growth in China.

However when we look at the areas that are actually forecast to drive the growth they come from economies like the US and Euro zone where there is tangible evidence that this is occurring. There what are the potential surprises?

We think they are:

• Advanced economies do not meet growth expectations – we think this is unlikely  but if it does occur it is more likely to push out growth forecasts rather than generate sentiment towards a recession

• Chinese growth may surprise on the upside. We believe that while the Chinese economy is slowing, the Government is actively taking measures to boost growth while at the same time ensuring that data released at least meets market expectations.

We believe this combination of risks tends to be skewed more to the upside than downside.

There is no doubt short term volatility will continue and which is expected at this point in the cycle when economic data is variable. It is also being enhanced by the expectation that US Fed will raise rates by the end of 2015 and many believe it should have occurred already.

From an investment perspective now is the time to dabble in a few shares although the better approach is to acquire advanced mining assets as most companies are still feeling the pain of low commodity prices while the market is already anticipating a modest recovery in 2016.

Dr Stephen Bartrop
Executive Director 
Breakaway Investment Group

www.breakaway.com

This article originally appeared in 

Mithril Resources welcomes Chesser Resources as Kurnalpi Farm-in partner

/in /by

THE BOURSE WHISPERER: Mithril Resources (ASX: MTH) has executed a Binding Letter Agreement with Chesser Resources (ASX: CHZ).

Under the terms of the agreement Chesser can earn up to an 80 per cent interest in two tenements Mithril has recently been granted (EL28/2506 and PL28/1271) located at the company’s Kurnalpi project, approximately 60 kilometres north east of Kalgoorlie in Western Australia.

Chesser will be required to reimburse Mithril’s tenement acquisition costs and complete exploration expenditure of $250,000 over four years.

The two new Kurnalpi project tenements are both wholly-owned by Mithril and cover Archaen ultramafic / mafic sequences, which the company considers to be prospective for both nickel sulphide and lode gold mineralisation.

The terms of the farm-in agreement are as follows:

Chesser will reimburse Mithril its tenement acquisition costs ($17,389);

Chesser can earn an initial 51 per cent interest in the two tenements by completing expenditure of $150,000 over two years;

Chesser can elect to earn an additional 29 per cent interest through further expenditure of $100,000 over a further two years (in total 80 per cent by spending $250,000 over four years);

Once Chesser has earnt 80 per cent interest, Mithril has the right to contribute on a pro rata basis or dilute as per industry standard formula. If Mithril’s interest dilutes below 10 per cent it will be deemed to have withdrawn and will be entitled to receive a 1.5 per cent Net Smelter Royalty on all minerals;

Chesser is required to keep the tenements in good standing at all times and can only withdraw (following 30 days’ notice) if the tenements are in good standing; and

The agreement is subject to Chesser obtaining Ministerial Consent within 30 days of executing the Letter Agreement.

“The introduction of a new farm-in partner for the Kurnalpi project is significant as it not only sees externally – funded exploration activities commence at the project, but allows Mithril to maintain its focus on the emerging Stark copper-nickel-PGE discovery which is located 80 kilometres south east of Meekatharra in Western Australia,” Mithril Resources said in its ASX announcement.

In its complementary announcement, Chesser said it would continue to carry out a strategic review of investment opportunities available to the company taking into consideration its cash reserves, which currently total a comfortable $4.25 million.

Email: admin@mithrilresources.com.au; info@chesserresources.com.au;

Website: www.mithrilresources.com.au; www.chesserresources.com.au;