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

 

 

Great Western Exploration (ASX: GTE)

Great Western Exploration recently executed a 50:50 Joint Venture agreement with Kazakhstan’s state owned mining company Tau-Ken Samruk (TKS).

This Joint Venture paves the way for a period of active exploration in a highly prospective, previously explored region.

The Joint Venture encompasses the 12,500 square kilometre Spasskaya project which hosts 120 historical copper prospects.

In the 1970’s, the Soviets conducted extensive, albeit incomplete, exploration on eight ‘high-priority’ sites.

Wide zones of ore grade and predominantly oxide mineralisation were intersected at all eight locations with widespread outcropping mineralisation evident at four locations.

Based on historical exploration results, just these eight projects have an exploration target of between 69 to 173 million tonnes grading approx. 1.10 per cent copper for approx. 750,000 tonnes and 2 million tonnes of contained copper.

Under the terms of the JV agreement, Great Western will earn its 50 per cent interest by sole funding the exploration phase and 50 per cent of the Bankable Feasibility Study.

Great Western has commenced a 2,500m maiden drill program aimed at testing the reliability of the historical Soviet exploration data.

Should the historical work be deemed reliable, resource definition drilling campaigns will then commence.

Great Western also has a quality portfolio of early stage, Australian based, exploration projects including the newly formed JV with Xstrata Glencore.

This JV incorporates the Cunyu project with Great Western’s existing Doolgunna project, creating a prospective tenement package of approx. 3,300sqkm.

Recommendation: Speculative BUY

 

 

Corazon Mining (ASX: CZN)

Top Up Rise – Copper Mineralisation Intersected

Corazon Mining Limited has intersected copper sulphide mineralisation (chalcopyrite) in the first diamond hole drilled into the Top Up Rise (TUR) gravity anomaly, Gibson Desert, Western Australia.

The copper exists in form of disseminated sulphide blebs over a drill interval from approx. 229m to 275m (approx. 46m).

The presence of copper mineralisation is potentially significant given the drill hole is located on the margin of the primary target (main part of the gravity anomaly).

However, the copper mineralisation intersected (to date) makes up less than 1 per cent of the overall rock mass (visual estimate), which implies generally low grade mineralisation.

The mineralisation is hosted in highly altered and deformed rocks (potentially mafic sediments) or volcanic origin.

The gravity anomaly (high) is still yet to be explained and more priority targets are now being drill-tested.

On current timing we would expect assays in late July 2013.

Large Gravity Anomaly Still Yet to be Explained

Corazon has an option to earn up to 75 per cent interest in the TUR project.

The project covers a large amplitude gravity anomaly (TUR anomaly) which has the characteristics of an iron oxide copper gold (IOCG) system, covering an area of 10 kilometres by 6 kilometres.

When comparing the TUR gravity anomaly to the gravity anomaly over Olympic Dam (IOCG deposit) it has similar size dimensions but TUR has a higher residual gravity response.

Due to the physical size of the TUR anomaly we are certainly encouraged by the reports of copper mineralisation so early into the exploration drilling program.

We remain hopeful that higher grade mineralisation will be encountered as higher priority targets within the gravity anomaly continue to be systematically tested.

Priority One Target now Being Drill-Tested

The drill information collected by Corazon will be used to reprioritise and adjust target ranking and drill hole positions as the program progresses.

The rocks intersected (to date) have not explained the gravity anomaly, but significant alteration and sulphide mineralisation (minor copper) within the bedrock is promising for more mineralisation to come.

Corazon is now drilling a diamond hole to test a ‘priority one’ target located some 3km to the southeast of the first completed diamond hole.

The target depth of the anomaly is interpreted to be closer to surface than the completed hole and RC drilling has now been completed to a depth of approx. 283m and a diamond tail is planned to be drilled to a depth of approx. 350m.

Cheap Option on Potentially Significant Upside

The TUR project is a highly speculative ‘greenfield’ play that could have massive upside.

The intersection of copper mineralisation, so early into the first-pass drilling program is a great result, though at this stage we would expect only low copper grades to be reported.

It is ‘proof of concept’ that mineralisation (copper) is present within the system.

The company is funded for the current drilling campaign.

With drilling ongoing to explain the gravity high, we continue to recommend Corazon as a Speculative Buy.

Disclaimer: The Roadhouse holds shares in Corazon Mining

 

 

 

Ascot Resources (ASX: AZQ)

Ascot Resources is an ASX-listed, Colombia-focused coking coal developer.

The company’s flagship asset is the Titiribi coal project in western Colombia.

Ascot Resources has completed a first phase drilling program at Titiribi; this returned some encouraging coal quality data that indicates coking coal at the project.

Preliminary results indicate that a semi-soft, high volatile coking coal could be mined at Titiribi.

The coal is likely to be relatively high in sulphur (although this is likely to be confined to certain seams), but exceptionally low in phosphorous; the latter quality is likely to be desirable to customers.

Drilling intersected some 25 coal seams with thicknesses varying from 0.3m to 13m.

Coal is reported to show good continuity across the project, with three seams (the thickest at 5m) likely to form the bulk of any future resources.

The seams are steeply dipping and likely to produce a profitable 250,000 to 750,000 tonnes per annum.

The project is located close to a sealed highway that is linked to both Atlantic and Pacific ports.

The coal is likely to be in demand in Brazil and/or Peru as well as domestically.

Management has done this before: MD Andrew Caruso and project director John Malysa have experience in mining steeply dipping coal seams.

Titiribi looks set to be a low capital project in a region with few barriers to entry in the junior coal space.

Ascot does not plan to wash the coal and this has resulted in relatively low capex.

Anticipated margins are expected to provide a healthy operating profit.

Titiribi is likely just a foothold in the country, with Ascot having plans to grow through future acquisitions in Colombia.

We see Colombia as a good mining investment environment.

The country is the fourth largest coal producer globally, and was recently ranked the seventh most attractive country in the world for mining investment.

Recommendation — SPECULATIVE BUY

 

 

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

THE CONFERENCE CALLER: Breakaway Resources (ASX: BRW) managing director Victor Rajasooriar used his presentation at the 2013 Australian Copper Conference to tell the audience how the company is advancing the discovery and development of high-quality standalone mineral deposits within the Cloncurry Mineral District of North West Queensland.
 

The bulk of the company’s current exploration activities are centred on its 100 per cent-owned Eloise exploration project where recent exploration activities have identified a copper – gold system at the Sandy Creek prospect and a pipeline of additional priority drill targets throughout the surrounding project area.

Source: Company presentation

 

The Eloise exploration project is a 510 square kilometre landholding, located in the Cloncurry District of Queensland.

Breakaway completed a diamond drilling program at Sandy Creek in November 2012, and subsequently reported an updated Mineral Resource estimate for the deposit in February this year.

This updated Inferred Resource comprises 2 million tonnes grading 1.32 per cent copper and 0.3 grams per tonne gold for 26,400 tonnes of contained copper and 21,400 ounces of contained gold.

“The Eloise exploration area is in a very well-endowed mineral district,” Rajasooriar told the conference.

“In the first six months of this year we have had some success, even though we are a junior with very little cash, we carried out some reasonable programs

“We did a ground based EM program at Eloise, which identified two new targets straight away, and these were very strong conductors.

“At the same time we conducted some heritage surveys, which included the new targets at our Sandy Creek deposit that we are planning to grow in to bigger results, so we have cleared that area for the next drilling program.”

Other strings to the Breakaway bow include a strategic partnership with Sandfire Resources over the Broader Altia project JV, located 70km south-east of Cloncurry in north-west Queensland, which Rajasooriar said provides the company with value for the Altia deposit.

Under the terms of the partnership agreement Sandfire is required to spend $4 million to earn a 60 per cent interest in the project over three years, followed by an option to spend an additional $4 million to earn a further 20 per cent.

Exploration activities already conducted at the Broader Altia JV has identified a number of targets, including Boralis, Capricorn, Coral Reef and Altia West.

Heritage surveys have been completed and drill pads ready for drilling scheduled to commence in July 2013.

The project has an Inferred Resource of 5.8 million tonnes at 4 per cent lead, 0.5 per cent zinc and 40g/t silver for 229,000 tonnes of lead, 29,000 tonnes of zinc and 7.5 million ounces of silver.

In other work Breakaway has completed some soil geochemistry at the Leinster gold project in Western Australia, which identified a number of drill-ready targets the company is planning to drill in the September quarter.

In what is currently, a very tight market, Breakaway was also able to sell the Scotia tenements north of Kalgoorlie to Minotaur Exploration (ASX: MEP) for $600,000.

“The Scotia tenement is prospective for gold,” Rajasooriar said.

“We owned the tenements but we only had 20 per cent of the gold rights – and that is what we are selling to Minotaur Exploration.”

Still in WA Breakaway has been able renegotiate some pre-emptive and claw-back rights involved with Norilsk Nickel.

“We have dissolved those clauses and have exchanged them for a 2.5 per cent Net Smelter Return.

“What that does now is it gives us more opportunities to go and do something with our nickel tenements in Leinster.

“We are also pursuing other opportunities for our non-core assets.

“Some of these are being sold at the moment and we are looking for other options with our Leinster and West Kambalda nickel assets as well.”

THE CONFERENCE CALLER: Antipa Minerals managing director Roger Mason told the 2013 Australian Copper Conference in Brisbane the company’s Calbre discovery may well have the potential to take the company from being an explorer to a developer.

Antipa Minerals (ASX: AZY) owns the 3,000 square kilometre Citadel exploration project in Western Australia.

 

Source: Company presentation

 

It is located 400 kilometres east of Port Hedland and just 20km north of Newcrest’s Telfer gold and copper mine and project stretches for 115km north to south as one continuous package.

“It is interesting just to reflect that if you took that package and placed it over the Eastern Goldfields of WA,” Mason said.

“it would extend from the St Ives goldfield all the way to 30 kilometres north of the Kanowna Belle gold mine, picking up Kambalda Nickel and the Kalgoorlie Super Pit along the way.

“The reason we believe this is important is that it is giving Antipa, statistically, a very strong chance and excellent opportunity to make several significant mineral discoveries in what is a grossly under-explored, world-class mineral province.”

The Citadel project hosts the Magnum Dome mineral camp.

The area is just 30 square kilometres in size, but RC and diamond drilling conducted by Antipa on six prospects, all within one to four kilometres of each other has delivered three mineral deposit discoveries, including Calibre, Magnum and Corker.

The Calibre prospect was Antipa’s second greenfield discovery last year with the first drillhole at the prospect intersecting gold-copper-silver-tungsten mineralisation.

“We have completed just six drill holes at Calibre, all of which intersected semi-continuous mineralisation over, virtually, their entire length – generating intersections between 250 to 450 metres in length,” Mason said.

Highlights of this drilling included:

–    373.3m at 0.67 per cent copper equivalent (CuEq);

–    450m at 0.5 per cent CuEq;

–    87.2m at 1.05 per cent CuEq; and

–    76m at 1.05 per cent CuEq.

So far drilling carried out by Antipa at the Calibre deposit has encountered mineralisation along 200m of strike across a width of up to 400m horizontally and to a depth below surface of 450m.

This mineralisation remains open in all directions, including across strike.

Mason said the Calibre mineralisation has, to date, correlated extremely well with the prospect’s magnetic anomaly, which is 800m long by 600m wide and extends to a depth of over 600m.

“Publicly-available, independent research reports propose that, depending on cut-off grade, the Calibre deposit could host between 50 to 300 million tonnes and 2.5 to 6.3 million gold-equivalent ounces,” Mason said.

“In copper terms, that is half a million tonnes to 1.3 million tonnes of copper equivalent.

Mason said geophysical surveys conducted at Calbibre suggest the deposit may continue to increase with depth.

This is most likely to occur at the 254 metre-long Conductor 4, which is the largest downhole EM anomaly Antipa has identified at either Magnum or Calibre.

With a conductivity three to four times higher than the region investigated by the existing Calibre drillholes, Mason intimated an increase in sulphide mineralisation – and therefore grade – could be expected.

In addition the company has noticed the gold grade at Calibre has been increasing significantly as it moves to the north.

The northern-most drill hole at Calibre generated the company’s best intersection to date and included a bulk intersection across the entire hole of 274 metres at 0.75 per cent copper equivalent.

“Whichever way you look at Calibre it is emerging as a very large, low-grade deposit – potentially amenable to open pit or underground bulk mining methods, with the potential to transform Antipa’s future,” Mason said.

The Antipa exploration team is scheduled to recommence drilling at Calibre next week to with the aim of testing the higher-grade targets and to also provide support to, what the company’s considers to be, large tonnage potential of the deposit.

CONFERENCE CALLER: As part of his address to the second-day audience at The 2013 Gold Coast Resources Showcase, Robert Milbourne of law firm Norton Rose Fulbright said investors should be aware of the introduction of the Queensland Government’s Common Resources Act (CRA).

The Queensland Government is proposing to replace the State’s five current Acts with the single Common Resources Act by 2016.

The Act will include multiple resource-specific regulations and will envelop the Mineral Resources Act, the Petroleum and Gas Act, the Petroleum Act, the Greenhouse Gas Storage Act, and the Geothermal Energy Act.

Milbourne said he considered the new Act would an improvement on the current status quo in Queensland and, although information regarding the Act has not been widely disseminated, it is important to maintain discussion about it.

“It is important for the resources investor to be aware this is happening,” Milbourne said.

“The government has made clear that their intent is that no existing rights will be jeopardised, in fact, there probably will be a strengthening of certain rights of resources investors and resources companies in project development in Queensland.

“Given the significant overhaul, I think this is perhaps one of the most ambitious legislative reforms I have seen.”

The reforms stem from electoral promises made by the Newman Government to reduce resources-related red tape by 20 per cent.

The Government recently completed a Streamlining Approvals project, which it claimed identified the benefits that could be achieved by the single-Act regulation of resource tenures.

The upshot was the current Queensland resources legislation had become unnecessarily complex and inefficient, which in an article by Clayton Utz lawyers Andrew Smith and Ben Cansdale was said to ha come as a result of having historically separate tenure regimes for minerals and petroleum, and cumulative amendments to legislation being made over time rather than genuine reform.

“The Government undertook an analysis of similar mining jurisdictions to compare various models of tenure legislation, and concluded that a model adopting a single Act with multiple resource-specific regulations was the preferred reform approach,” Smith and Cansdale wrote.

According to the Clayton Utz lawyers the Queensland Government has claimed the new Common Resources Act stands to be the most significant reform to Queensland’s resources legislation in over 150 years, and is aimed at harmonising the tenure processes and streamlining regulatory administration.

 

Source: Clayton Utz

 

“This will have an impact on many projects and it is something you do need to be alert to,” Milbourne said.

“It’s a good sign, in that the government will ultimately reduce the amount of legislation.

“The idea is to reduce the number of pages by 20 per cent…but in addition to that it really is aiming to simplify how the resources industry is regulated in Queensland.

“So in three or four years, we really may have best-in-class legislation, which is a very good sign.”

THE CONFERENCE CALLER: Uranium has always been a difficult commodity and telling its story is always challenging.

“The uranium story is a little bit different to that of other commodities in that the demand remains fairly constant and supply has been constant,” Laramide Resources managing director Peter Mullens told the 2013 Gold Coats Resources Showcase.

Currently there are 436 nuclear reactors operating around the world while a further 65 new reactors are being constructed.

“The 65 new reactors being built are important as they will be coming on and commissioning over the next five to eight years,” Mullens said.

“They will require significant new uranium production in order to operate.”

Laramide Resources’ (ASX: LAM) main project is the Westmoreland project, an advanced uranium exploration stage project located in Queensland, Australia, which the company claims to rank as one of the best undeveloped uranium assets in the world.

 

Westmoreland project location. Source: Company web page

Westmoreland has a JORC/NI 43-101 compliant resource of 51.9 million pounds (36m lbs. indicated) of uranium with average grade of 0.089 per cent (890ppm) and 15.9 million pounds with average grade of 0.083 per cent (830ppm).

Other highlights of the Westmoreland project include:

Simple mineralisation
Mineralisation is near surface and has significant resource expansion opportunities; 80 per cent of the resource is within 50 metres from surface

Excellent metallurgical results
High uranium recovery of 90.6 per cent and relatively low acid consumption. More recent uranium recoveries of 97 per cent were confirmed by ANSTO with the use of a conventional metallurgical processing route.

Simple mining operation
Westmoreland is intended to be an open cut operation using conventional acid leaching and solvent extraction technology to produce greater than 3 million pounds per annum.

“It’s one of the ten largest uranium deposits in Australia and is one of only two or three that is actually owned and controlled by a junior mining company,” Mullens explained.

“We’re looking at a long mine life of plus 12, probably 15 years producing between 4 to 5 million pounds of uranium per year.

“It is a good size project, no quite a Rio Tinto-scale project, but it is certainly a good mid-tier sized project.”