Drillsearch claims new gas discovery

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THE ROADHOUSE BOWSER: Drillsearch Energy (ASX: DLS) has announced a new wet gas discovery on the Western Wet Gas Fairway of the Cooper Basin, the sixth from seven wells drilled in FY2015 by the company’s Joint Venture with Santos (Drillsearch 40%, Santos 60% and Operator).

The Emery-1 near-field exploration well in PEL 513 was drilled to a total depth of 3,262 metres.

Gas shows were observed across the Patchawarra Formation from 2,641 metres to 3,174.5 metres, with stacked reservoirs identified.

Drillsearch’s preliminary petrophysical interpretation of wireline logs calculated approximately 18.6 metres of net pay across several zones in the Patchawarra Formation with a gross interval of 533 metres and approximately 7.7 metres of net pay in the Tirrawarra Sandstone with a gross interval of 37 metres.

In addition to the conventional pay, several zones with potential for unconventional pay were also observed.

Based on the results of this preliminary analysis, Emery-1 has been cased and suspended as a future gas producer.

“Our FY2015 work program continues to deliver exceptional outcomes, with Emery-1 our sixth wet gas discovery with Santos, and our eighth this year overall,” Drillsearch managing director Brad Lingo said in the company’s announcement to the Australian Securities Exchange.

“We look forward to working closely with Santos to commercialise these new discoveries as part of our longer term strategy to build a material Cooper Basin gas supplier.”

Emery-1 is located 7 kilometres and 10.3 kilometres southeast of the Moonanga-1 and Raven-1 wells respectively, both of which are producing gas fields operated by Santos.

The new discovery is also located close to the Santos-operated Gidgealpa oil and gas fields to the northeast.

Following casing and suspension, the rig will move to drill the final well of the program, Moonanga South-1.

Drillsearch is free carried by Santos throughout FY2015 under the terms of the JV agreement.

Website: www.drillsearch.com.au

LNG Limited readies EPCC for Magnolia project

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THE ROADHOUSE BOWSER: Liquefied Natural Gas Limited (ASX: LNG) announced its wholly-owned subsidiary, Magnolia LNG (MLNG) has completed two important steps in preparation for the engineering, procurement, construction and commissioning (EPCC) phase of the Magnolia LNG project to be located in Lake Charles, Louisiana, USA.

In January MLNG initialled off on the EPCC contract with SKE&C Group.

Kellogg Brown & Root LLC (KBR) then joined the Magnolia LNG project party as lead partner in an integrated Joint Venture with SKE&C (together, the KBR‐SK JV or KSJV).

MLNG and KSJV have now agreed to terms and jointly initialled off on the updated EPCC contract including terms and conditions, full scope of work and all supporting contract schedules and attachments.

In addition, MLNG has completed a tender process and has selected Clough‐CH∙IV to fulfil the roll of owners engineer for the EPC phase of the project.

This will include providing technical and project execution support personnel to MLNG as oversight to the KSJV contractor activities as the project moves through detailed design, construction, commissioning and start‐up in support of delivering LNG from the first of the four planned two million tonnes per annum LNG trains by the end of 2018.

“The alignment of the project activities and planning with the regulatory process is critical to advancing the project at a pace to meet our commitments to deliver LNG to our customers by the end of 2018,” MLNG chief operating officer John Baguley said in the company’s announcement to the Australian Securities Exchange.

“Our execution plans and activities are established on this basis and also optimized to enable the sequential completion of the full four train, eight million tonnes per annum MLNG facility.

“The agreement with KSJV on the contract terms and conditions marks an important step, in that it forms the basis for the final lump sum turnkey pricing reflecting current market conditions, and timed to initiate site works consistent with the availability of the necessary permits and authorizations.

“This also allows the project to initiate an early works program to de‐risk the project schedule and maximize the use of the time available until our actual site works can begin.”

Email: LNG@LNGLimited.com.au

Website: www.LNGLimited.com.au

Doray’s completion of Mutiny takeover adds to impressive Quarter

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COMMODITY CAPERS: It is Quarterly season so we are currently swamped by reports from companies telling us what they have and haven’t been up to.

A fair percentage of reports at present don’t have much to tell, except how much money some companies aren’t putting in the ground, but are probably paying for private school fees.

Gold companies are proving to be something of an enigma at the moment with many of them doing well, especially producers, but they seem to be keeping a lot of ‘we’re all doing very well’ proclamations reasonably quiet.

Whether that has anything to do with not bringing unnecessary attention to themselves following the Western Australia State Governments recent decision not to increase gold royalties is a subject for a debate between smarter industry watchers than The Roadhouse.

All that besides, one of WA’s more recent gold success stories, Doray Minerals (ASX: DRM) released its Quarterly Activities Report with the company’s managing director Allan Kelly declaring he was pleased with the company’s overall performance during the period.
 
According to Kelly, Doray delivered a record monthly gold production result in March while the company remained on track to meet its increased 2015 financial year production guidance of 85,000 to 90,000 ounces with cash operating costs expected to be in the range of $600 to $700 per ounce.

These costs have come down from the company’s previous costs estimates of $700 to $800 per ounce.

During the recent Quarter Doray’s gold production from its Andy Well mine was 21,328 ounces with C1 cost of $556 per ounce and All-In Sustaining Costs (AISC) of $1,214 per ounce during the period.

A total of 80,091 tonnes of ore were milled during the Quarter with a head grade of 8.58 grams per tonne gold.
 
Doray reduced its C1 cost for the Quarter to $556 per ounce, bringing its Year-To-Date (YTD) C1 costs to $648 per ounce.

The company’s AISC was $1,214 per ounce, which it said included a one-off capital cost relating to the Stage 2 open pit pre-strip.
 
“The company achieved these operational targets while also completing the compulsory acquisition of Mutiny Gold in mid-March – which is a testament to the dedication and focus of our teams in the corporate office and onsite,” Kelly said.
 
Kelly said completion of the Mutiny takeover meant Doray could now focus on building a leading mid-tier, high-grade Western Australian gold company with the development of the Deflector gold project.
 
On the corporate side of things Doray has appointed PCF Capital to act as an advisor in respect to securing finance for the construction and development of Deflector.
 
Doray is in a healthy – some might say envious – financial position with $30 million cash and gold on hand.

This includes $4 million in a debt servicing reserve account (DSRA).

The company has also forward-sold 55,538 ounces of gold at an average price of $1,524 per ounce to June 2016.  
 
“The company will continue to evaluate opportunities to hedge future gold production as appropriate in order to reduce the impact of the current volatility in the spot gold price on the company’s earnings,” Kelly said.

Doray announced a maiden high-grade Resource during the Quarter for the Suzie Zone, which is located parallel to the operating Wilber Lode underground mine and the Judy Lode.

This is the third high-grade gold Resource defined by Doray at Andy Well.
 
The Indicated and Inferred Resource for the Suzie Zone comprises 468,000 tonnes at 8.1g/t gold for 123,000 contained ounces and takes the Andy Well Resource inventory to over 500,000 ounces from three deposits.

Email: info@dorayminerals.com.au

Website: www.dorayminerals.com.au

What the Analysts Say

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WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.breakawayresearch.com

Company: TNG Limited (ASX: TNG)

The company’s flagship project is the 100 per cent-owned Mount Peake vanadium-titanium-iron project, located 235 kilometres north of Alice Springs in the Northern Territory, which has resources of 160 million tonnes grading 0.28 per cent vanadium, 5.3 per cent titanium and 23 per cent iron (with significant upside), and the potential to become a major, low-cost global vanadium producer.

TNG has continued to make good progress on the Definitive Feasibility Study (DFS) and commercialisation of its Mount Peake project.

Key recent advancements include the signing of binding offtake and technology transfer term sheets with WOOJIN, a major player in the global vanadium field, and a potential financing and development partner.

The final technical elements of the DFS are also underway, with completion expected mid-2015.

The key will be the TIVAN® Pilot Plant testwork, to be overseen by SMS Siemag, a leading global metallurgical engineering group.

More encouraging exploration results at McArthur River have boosted the potential of this project, with this set to be a key element of the proposed spin out of non-core assets into Todd River Resources.

The project has the potential to be a major global supplier of premium grade vanadium, as well as high purity iron and titanium products.

The TIVAN® hydrometallurgical process is being developed by TNG and partners to be a low cost method of leaching titano-magnetite concentrates to extract all valuable components, including vanadium, iron and titanium.

The company also holds a number of other base and precious metals projects in the Northern Territory, which it plans to spin out, via IPO, into Todd River Resources.

Website: www.beerandco.com.au

Company: Energia Metals (ASX: EMX)

Energia Metals purchased the Gorno zinc project in Italy in 2014.

Gorno has an Exploration Target of six to 10 million tonnes at 7 to 10 per cent zinc plus lead.

It has been mined previously, and the mine is fully developed for a quick re‐start, subject to the processing plant being constructed.

EMX is continuing refurbishment of 1,400 metres of pre-existing tunnels at Gorno, which will give access to the un-mined and partly developed Colonna Zorzone deposit.

EMX expects to begin resource definition drilling in July with Resource estimation by end 2015, and production in 2017.

Zinc price is firm, as exchange inventories continue to fall
LME zinc stocks have fallen consistently, from 1.22 million tonnes at the start of 2013, to 933,000 tonnes by the end of 2013, to 692,000 tonnes at the start of 2015 and 487,000 tonnes now, at about 8.5 days of consumption.

At the present rate, LME stocks will be exhausted about year end.

Century mine in Queensland, which is currently producing at a rate of about 425,000 tonnes per year, is set to close in September.

The 160,000 tonnes per year Lisheen mine, in Ireland, will also close during 2015.

Zinc price set to lift; Very little zinc exposure on ASX (or other markets)
We expect the zinc price to rise significantly, but that the price will fall back.

Many companies will use the price spike to raise equity to bring a mine into production, but there are few that will be producing zinc within two years, AND will have zinc account for the bulk of their revenue.

EMX is the lowest cost of this small number.

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.

Impact Minerals builds confidence on high-grade exploration success

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THE INSIDE STORY: Depending on your glass-half-empty-half-full perceptions, a time frame of six months can seem an eternity or an instant, depending, of course, if you are willing to take control and make things happen.

For Perth-based multi-commodity-focused exploration play Impact Minerals (ASX: IPT) the past six months has gone by in a flash.

The Roadhouse last visited Impact Minerals in October 2014, as it was preparing a maiden drilling program for the Broken Hill Joint Venture nickel-copper-PGE project, in New South Wales, where it had just earned a 51% interest in the rights to nickel-copper-PGE mineralisation from Golden Cross Resources (ASX: GCR).

In March, Impact’s interest increased to 87% on the back of the discovery of high-grade copper-nickel-PGM at the Red Hill prospect.

An exciting development at Red Hill has been further assays of drill core confirming the presence of high-grade and potentially economic platinum group metals (PGM), including the rare PGMs osmium, iridium, rhodium and ruthenium, which Impact believes has increased both the mineralised and economic appeal of the prospect.

Drill intercepts from the Upper and Lower Zones at Red Hill upgraded to: (Note 3PGM = platinum-palladium-gold and 7PGM = 3PGM + osmium, iridium, rhodium, ruthenium where assayed)

Upper Zone:
9.5 metres at 9 g/t platinum equivalent (4.7 grams per tonne 3PGM, 1.5% copper and 0.8% nickel), including 5.1m at 15 g/t platinum equivalent (11g/t 7PGM, 1.9% copper and 0.9% nickel in RHD001); and

5.2m at 12.7 g/t platinum equivalent (7.9g/t 7PGM, 1.1% copper and 1.6% nickel in RHD006).

Lower Zone:
9.9m at 9 g/t platinum equivalent  (6.7g/t 3PGM, 1.4% copper and 0.3% nickel, including 4.2m at  15 g/t platinum equivalent (11.8g/t 7PGM, 2.6% copper and 0.5% nickel in RHD001); and

13.8m at 8.1 g/t platinum equivalent (6.6g/t 7PGM, 1.1% copper and 0.3% nickel in RHD006).

 

The market reaction to the improved drilling assays clearly demonstrated an appetite for good news from the exploration sector with the company’s share price jumping a healthy 60% with approximately 1.3 million shares changing hands over a four day period.

The investment community was obviously impressed with Impact’s claim the assays confirmed Red Hill contains some of the highest grades of PGM ever reported in Australia with the rare PGMs almost doubling the total grade of PGM’s within the Broken Hill mineralised zones.

The market reaction was hardly surprising when you consider the approximate current spot metal prices in Australian dollars per ounce for these metals are rhodium: $1,506 per ounce; iridium $763 per ounce: osmium $500 per ounce and ruthenium $65 per ounce, in addition to platinum $1,528 per ounce, palladium $1,015 per ounce and gold at $1,581 per ounce.

The market attention for the Broken Hill announcement, however, was not the only time Impact has turned investor heads this year.

At our last meeting Impact had just completed a maiden drilling program at its 100%-owned Commonwealth gold, silver and base metals project, located 100 kilometres north of the major mining centre of Orange, also in NSW.

In February this year, Impact released a JORC 2012 Code-compliant maiden Inferred Resource at Commonwealth of 720,000 tonnes at 4.7 grams per tonne gold equivalent for a contained 110,000 gold equivalent ounces comprising 2.8g/t gold, 48g/t silver, 1.5% zinc, 0.6% lead and 0.1% copper using a 0.5g/t gold cut off.

The resource is open along trend and at depth and Impact is of the opinion further drilling could rapidly increase the size and grade of this deposit.

The resource also contains a lens of high-grade massive sulphide mineralisation at the Main Shaft prospect and Impact has calculated a separate Inferred Mineral Resource for this of 145,000 tonnes at 10g/t gold equivalent for a contained 47,000 gold equivalent ounces comprising 4.3g/t gold, 142g/t silver, 4.8% zinc, 1.7% lead and 0.2% copper to demonstrate the high-grade nature of the type of deposit its exploration program is targeting.

Impact’s confidence of discovering new gold-rich massive sulphide lenses stem from results such as 4m at 41g/t gold, 93g/t silver, 5.5% zinc and 2.3% lead at the edge of the current resource which have not been closed off.

Impact was also watching its Mulga Tank project, located on the Minigwal greenstone belt in the eastern part of the Yilgarn Craton in Western Australia, where it had identified priority target areas for nickel-copper and copper-gold deposits.

Impact recently purchased the remaining seven exploration licences in the Mulga Tank project that were in JV with Golden Cross for $275,000 in cash taking a 100% interest in all 13 licences within the project area.

The company has discovered three styles of nickel sulphide mineralisation at Mulga Tank with drilling encountering high tenor veins at the base of the Mulga Tank dunite: 0.25m at 3.8per cent nickel, 0.7% copper and 0.7g/t PGE and 0.3m at 0.7% nickel.

The drilling also hit high tenor nickel sulphide in multiple komatiites returning results of: 0.75m at 0.85% nickel, 0.35% copper and 0.28 g/t PGE (Pt+Pd+Au); and 6.7 m at 0.5% nickel.

Extensive disseminated nickel was identified in the Mulga Tank Dunite with drill results of: 2m at 1.3% nickel, including 1m at 2% nickel and multiple zones of 0.5m at 0.5% to 1.2% nickel within an intercept of 115m at 0.3% nickel.

“Every dollar we have put into our three projects has been paid back with increasingly better results,” Impact Minerals managing director Dr Mike Jones told The Resources Roadhouse.

“It’s not often you see that, and so all three of these projects are still well and truly alive – and each one of them demonstrates huge potential.”

Jones puts Impact’s recent exploration success down to the fact the company is out on the ground and not sitting in the office ruminating over its next move.

“The projects are telling us we are on good ground,” he said.

“Telling us we are in the right areas, we just have to buckle down and do the work to prove them up.

“The Board’s position has always been to keep pushing ahead, judiciously spending money of course – but we have been determined to continue with our exploration activities.”

Impact has a drill program planned soon for Broken Hill focusing on six targets with the aim of extending the known mineralisation.

One of those targets is around the known mineralisation and the other five have been identified around the edge of the host intrusion.

Impact is confident this round of drilling at Broken Hill will determine the extent of the mineralisation of the deposit, and hopefully provide indications of further mineralisation.

 

At Commonwealth, the company aims to follow-up the high-grade intersections it encountered whilst drilling out the current Resource.

“The purpose of the two programs is to really open up both deposits and to establish whether or not we really are on to something substantial,” Jones continued.

“We are really excited about the potential, however the truth – as they say – is always at the end of the drill bit and that is what we are waiting to see.

“We have lots of activities planned for the next six months and if the trends we have established at Broken Hill and Commonwealth continue this could – fingers crossed – be the year we find ‘the big one’.”


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, James Cooper-Jones, Leo Horn

MAJOR SHAREHOLDERS
Bunnenberg Family 31%
Directors 11%
Top 20 58%
Top 50 69%

South Australia leads race to be country’s ‘Home of Graphite’

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COMMODITY CAPERS: The South Australia Department of State Development (DoSD) has released a fairly bullish outlook on the potential of the state’s graphite sector.

The DoSD’s fondness for graphite mining is being driven by, what it perceives to be, a global growth in demand for the commodity.

It cites declarations by the US State Department, British Geological Survey and the European Commission of graphite as a Critical Raw Material with it expected to continue to be used in a raft of industries, including steel refractories, battery manufacture and lubricants.

Around the world there have been announcements by car manufacturers committing to the development of electric vehicles.

“The demand for graphite – a key material in the lithium-ion batteries that power them – is also increasing,” The DoSD said.

“As each battery produced requires 10 to 15 times more flake graphite than lithium, the production of electric vehicles creates an ideal opportunity for producers of high quality, coarse-flake graphite.”

It is in the flake graphite department South Australia considers to be a potential mover and shaker, particularly in the Eyre Peninsula where recent discoveries have demonstrated potential for large and jumbo-sized flake graphite.

Its confidence is understandable, given around 60 per cent of Australia’s economic demonstrated graphite Resources are located within its state borders, boasting some 1.47 million tonnes of contained graphite.

“Due to South Australia’s highly prospective there are substantial opportunities to discover further deposits,” the DoSD declared.

The Eyre Peninsula is the home address of Australia’s only operating graphite mine, which is one of six graphite projects and prospects being worked up by four companies: Archer Exploration (ASX: AXE), Lincoln Minerals (ASX: LML), Oakdale Resources (ASX: OAR), and Valence Industries (ASX: VXL).

 

Source: South Australia Department of State Development

 

Three of these companies have formed research and development partnerships with the University of Adelaide, focused on the production of graphene from graphite sourced from the Eyre Peninsula projects.

Graphene is what graphite aspires to be when it grows up.

“A single layer of carbon packed in a two-dimensional hexagon lattice, it is the first 2D organic crystal with unique electronic, optical, mechanical, and thermal properties,” the DoSD explained.

Graphene possesses many of qualities, the major ones being its strength – 200 times stronger than steel, its conductivity – 100 times better than copper, and its ability to improve the current density of capacitors and lithium-ion batteries.

Archer Resources has teamed with the University’s School of Chemical Engineering for a two-year, $200,000 research program looking at the development of scalable production of graphene from its graphite deposits.

Lincoln Minerals also has a working relationship with the Chemical Engineers at the University, which has resulted in the production of graphene and graphene products from the company’s Koppio mine.

Valence Industries inked a Joint Research, Development & Commercialisation Agreement with the University in 2014 covering the development and commercialisation of all new graphene research and for the development of a new Australian Graphene Research Centre – to be based in South Australia.

Valence has allocated $800,000 over 3.5 years to the research program.

South Australia Graphite Operations

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COMMODITY CAPERS: The Eyre Peninsula region of South Australia plays host to six graphite projects, all at various stages of development.

Operating Mines

Uley Graphite Mine – Valence Industries (ASX: VXL)

Located 23 kilometres from Port Lincoln, the Uley mine was re-opened in November 2014 after ceasing production in 1993 and is currently the only operating graphite mine in the country.

Valence Industries re-commenced graphite mining in 2014 when it brought the project’s existing 14,000 tonnes per annum manufacturing and processing plant off care and maintenance.

In January this year the company released a Bankable Feasibility Study for the Phase II expansion of its currently operating Phase I graphite mining, processing and advanced manufacturing capacity.

The expansion is anticipated to provide additional processing capacity in 25,000 tonnes per annum increments to reach a total of 64,000 tonnes per annum.

 

Developing Graphite Projects

Eyre Peninsula – Archer Exploration (ASX: AXE)

The Eyre Peninsula graphite project of Archer Exploration comprises a number of deposits spread across several tenements covering the Campoona Shaft, Central Campoona, and Waddikee deposits, collectively representing the largest JORC 2012-compliant graphite resources in Australia.

Waddikee hosts the 6.38 million tonnes at 8.8 per cent graphitic carbon Wilco South flake graphite deposit and seven additional drilled graphite prospects (Wilco, Cut-Snake, Ridgestone, Francis, Lacroma, Balumbah, and Argent).

Wilco, Wilco South, Francis, Cut-Snake, and Argent all host large and extra-large flake.-style graphite.

Further exploration is expected to increase graphite resources indicated by prominent multi-kilometre airborne EM signatures that require drill-out.

 

Kookaburra Gully – Lincoln Minerals (ASX: LML)

The Kookaburra Gully project is located on the southern Eyre Peninsula approximately 35 kilometres north of Port Lincoln, and contains one of the highest grade graphite deposits in the world at 15.1 per cent graphitic carbon.

Metallurgical studies have demonstrated a high-grade 93 per cent to 98 per cent total graphitic carbon (TGC) graphite concentrate can be extracted with 80 per cent to 90 per cent recovery from a four-stage flotation process.

Scoping studies proposed processing of 200,000 to 400,000 tonnes per annum of graphite ore.

The proposed mining lease will cover around 300 hectares with infrastructure including a processing plant with an annual rate of between 25,000 to 55,000 tonnes of graphite concentrate.

Combined exploration targets across Kookaburra Gully and the company’s Koppio prospect stand at 33 to 94 million tonnes.

 

Graphite Prospects

Gum Flat – Lincoln Minerals (ASX: LML)

Lincoln’s Gum Flat Exploration Licence (EL) 4643 is located approximately two kilometres along strike from Valence’s Uley graphite project and is considered to be prospective for graphite and iron ore resources.

Lincoln has announced an Indicated and Inferred Mineral Resource of 109 million tonnes at 24.8 per cent iron.

Re-sampling of drill cuttings has returned graphitic intervals in the Gum Flat area, including 13 metres at 12 per cent TGC from 57 metres depth.

 

Koppio – Lincoln Minerals (ASX: LML)

The historic Koppio graphite mine was intermittently mined from the early 1900s to 19444. The mine contains high-grade lenses of coarse flake graphite. Up to 100 tonnes of graphite was mined from Koppio during the 1940s.

In 2014 Lincoln announced graphite assays of up to 42.8 per cent TGC from its exploration drilling, which has extended graphite mineralisation from a strike length of 50m to over 525m at a depth of around 100m.

 

Oakdale – Oakdale Resources (ASX: OAR)

The Oakdale graphite prospect is within the company’s Brimpton Lake tenement (EL 4537), some 120km northwest of Port Lincoln on the Eyre Peninsula.

In February this year, Oakdale received approval to commence drilling. The company has an initial program of 10,000m of aircore drilling planned as well as four diamond holes to collect in-situ metallurgical samples for further testing.

 

Regal Resources pleased with Kalongwe Scoping Study results

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THE DRILL SERGEANT: Regal Resources (ASX: RER) has completed a Scoping Study to assess the technical and economic feasibility of developing a HMS Stage1 – starter project at the company’s Kalongwe project, located in the Katanga Province of the Democratic Republic of Congo to produce a high-grade copper/cobalt concentrate.

 

Source: Company announcement

 

“The completion of a Scoping Study just some 15 months after the start of the company’s first drilling program at Kalongwe represents a significant achievement for both Regal and the Kalongwe Mining JV,” Regal Resources managing director David Young said in the company’s announcement to the Australian Securities Exchange.

“The outcomes of the Study greatly enhance the project’s economic and development potential.

“Results confirm the company’s exploration strategy of identifying and securing an interest in very high-grade copper/cobalt oxide deposits that have the potential to be developed as stand-alone, low CAPEX, open pit mining operations generating strong cash flows allowing for a very short payback period.

“And the results of the Study are considered to be especially robust as the outcomes are based on a Measured and Indicated JORC Mineral Resource estimate.

“While we view the HMS processing option as an efficient and cost effective way to fast track the development of a mining operation, the Study has highlighted multiple opportunities to improve the project economics and to significantly extend the mine life.”

Regal now has further studies underway to evaluate transitioning from a starter Stage 1 HMS project to a longer mine life Stage 2 SX-EW development.

The company explained the JV’s shorter term outlook is to improve the project economics, through such means as reducing concentrate transport costs through a truck lease agreement, generating higher grade copper and cobalt concentrates and identifying alternative ways of marketing the product.

At a corporate level Regal indicated it is progressing towards finalisation of an agreement to acquire Traxys Europe’s 30 per cent interest in Kalongwe Mining that would take its direct holding in the Kalongwe asset to 60 per cent.

The company is also wanting to maximize value from any potential mine development at Kalongwe by entering into JV agreements covering some of the areas surrounding the Kalongwe permit considered to be highly prospective for similar types of deposits,” Young continued.

“Kalongwe Mining has recently submitted an application to the DRC Mines Department to convert the Kalongwe Permit to a mining licence.

“While this process is underway the Board will be seeking consent from its JV partners to complete a bankable feasibility study.”

Website: www.regalresources.com.au

Nickel – a welcome distraction

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ROADHOUSE COMMENT: Are there any other commodities to talk about other than iron ore?

As it turns out there are, and one likely to be turning a few heads in the not too distant future is nickel.

At this year’s PDAC Convention in Toronto, Royal Nickel Corporation president & CEO Mark Selby presented his insights into the current state of the nickel market and where it most likely could be heading.

According to Selby nickel is now entering a multi-year period of structural nickel supply shortages.

These, he said, are to be caused by nickel demand continuing to be robust, following the recent trend which has seen growth averaging 6.3 per cent since 2010.

In 2014 alone nickel demand grew by more than five per cent and strong demand for the commodity is expected to continue in 2015.

Selby indicated that although there was a large increase in LME stocks this was offset by massive destocking in China adding that existing sources of nickel supply will struggle to provide required overall supply, which is likely to decline in 2015-2016 with net supply growth of just over two per cent by 2020.

He explained that the ‘Big 15’ nickel operations, which accounted for more than 60 per cent of supply in 2005, have actually shrank by three per cent and are likely to continue to decline going forward with little expansion potential.

 

Big discoveries of nickel having been wanting over the past few decades, in the 1990s we had the Voisey’s Bay and Enterprise discoveries, which were followed up by a productive time in the 2000s with the Eagle, Nickel Rim South, Musgrave, Araguia, and Sakatti discoveries.

However the 2010s are light on in the discovery category, with only the Nova Bollinger discovery by Sirius Resources (ASX: SIR) doing any serious cage rattling.

“The nickel project cupboard is largely empty and the pace of discoveries is at a fraction of what’s required,” Selby said.

“What we now need is the discovery of around two Voisey’s Bay and three to four Nova-Bollinger deposits each year.”

Selby identified Indonesia, and the country’s ban on commodity exports, as a critical factor in the upcoming fortunes of the nickel market.

“With the ore ban resolutely in place, Indonesia is positioned to become the world’s largest nickel producer and one of the largest stainless steel producers,” he said.

The question Selby raised was how quickly can 350,000 tonnes of nickel projects be built to replace current nickel pig iron (NPI) production from Indonesian ore in China?

China, he explained, took six years to create 450,000 tonnes per annum of nickel production.

Could Indonesia, he hypothesised be able to replicate that capacity given that country’s lack of infrastructure, skilled labour, and power?

Will it happen by early 2020s? Mid 2020s? Late 2020s?

Selby also pondered on the willingness of financial institutions to provide the billions of financing required to replace 350,000 tonnes of Chinese NPI production from Indonesian ore, given financing requirements would be US$17 to US$28 billion (at recent global examples of US$50,000 to US$85,000 per tonne).

With the number of nickel projects needed to come on line, would these institutions, he wondered, require projects to be successfully commissioned before financing the next ones?

Whatever the answers to these questions may be, Selby suggested we have a long way to go to find out in the current nickel cycle, which he indicated we have only hit the 15 month mark of, highlighting these cycles typically take 16 to 29 months to unfold.

Past cycles, he said, indicate that nickel prices could get to US$30,000 to US$50,000 per tonne by early 2016 and structural supply shortages to maintain prices at above average price levels through end of decade.

Whatever unfolds, it would be wise to strap yourself in tight. It could be a wild ride.

What the Analysts Say

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WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.breakawayresearch.com

Company: Thunderlarra limited (ASX: THX)

Recent drilling and geophysics by Thundelarra has reinforced the prospectivity of its key Doolgunna and Allamber projects.

Drilling at the Red Bore area within Doolgunna has supported the Company’s exploration model, and confirmed the depth extension of the known pipes. Geophysical surveying has delineated new targets, as well as supported the exploration model for the underexplored Curara Well tenement.

Recent drilling at Allamber tested a number of geochemical and geological targets, with encouraging results from some, and downgrading others.

Thundelarra has a portfolio of advanced exploration properties, with the flagship being the Doolgunna project, located adjacent to Sandfire Resources’ (ASX: SFR) DeGrussa volcanic-hosted massive sulphide copper-gold operation, which has a current resource of 13.4 million tonnes at 4.7 per cent copper and 1.9 grams per tonne gold.

Recent work by the company has been concentrated at Doolgunna, and in particular the Gossan prospect, with high-grade copper being intersected in structurally controlled mineralised pipes down to 94m depth (and still open), which are interpreted as being offshoots from a larger body at depth; the main exploration target.

The company is also actively exploring its Allamber project, with this area, located over the Pine Creek Orogen in the Northern Territory, being prospective for a range of skarn-hosted base and precious metals, as well as uranium, for which a resource of 1.4 million tonnes at 304ppm uranium has been defined, and which is still open.

Lower priority, but still highly prospective holdings include the uranium prospective Ngalia Basin project and a number of tenements in the East Kimberley region of Western Australia.

Substantial Progress

Thundelarra has made substantial progress on its key Doolgunna (Red Bore and Curara Well) and Allamber (Pine Creek) projects since November 2014.

Work completed subsequent to November has included:

Reverse circulation (RC) drilling at Red Bore (11 holes for 1,432m), testing the Gossan, Impaler and other targets;

Detailed airborne magnetics survey over the Red Bore and Curara Well areas;

Audio magneto-telluric (AMT) surveying over Red Bore and Curara Well;

Downhole electro-magnetic (EM) geophysical surveying on selected Red Bore holes;

3,482m of RC drilling in 21 RC holes at Allamber, testing a number of targets; and

Downhole EM surveying on selected Allamber drillholes.

This work has returned very encouraging results, with further exploration programs now in the planning stage, with drilling expected to commence at Doolgunna in late April/early May, and Allamber later in the year.

Website: www.beerandco.com.au

Company: Syndicated Metals (ASX: SMD)

Syndicated Metals has over 5.9 million tonnes of Resources containing 83,000 tonnes copper, 27,000 ounces gold and over 400,000 ounces silver in its 2,469 square kilometre tenement package N‐W of Cloncurry.

SMD has a JV with CopperChem to supply ore to its recently closed mill.

In January 2015, SMD announced the JV had decided to expand the feasibility study, to increase the volume of mining inventory so the plant could be shifted to near the mine, saving US32 cents per pound in cash costs for minimal capital to SMD.

However first product is delayed by 12 months from the original projection.

First sales delayed

The original plan, when the JV agreement was first announced in September 2013, was for ore from Barbara to be processed through CopperChem’s mill near Cloncurry from 2014 Q4.

That was later revised to completing a feasibility study by end 2014.

Exploration Success

However, the mill closed earlier than originally expected and as SMD found more high‐grade mineralisation, the economics of shifting the processing plant to the mine site became more attractive as mine life increased.

In addition to the exploration target of 2.5 million tonnes to 4 million tonnes below the planned open cut at Barbara, SMD has 225,000 tonnes in Resources at nearby Lillymay, plus a further exploration target of 400,000 tonnes to 800,000 tonnes, and 177,000 tonnes in Resources at the company’s 100 per cent-owned Blue Star project.

SMD is presently undertaking an under‐written rights issue to raise $2 million.


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