A maiden Resource with the promise of more to come has emerging copper play Ventnor Resources (ASX: VRX) looking forward to a very happy 2013.

For those unfamiliar with the Ventnor story the company’s flagship is the Thaduna/Green Dragon copper project.

The project consists of the Thaduna copper mine located 175 kilometres north of the Western Australian town of Meekatharra and the Green Dragon mine, which is approximately 4km further north from Thaduna.

Thaduna/Green Dragon came to Ventnor as an advanced exploration prospect with a number of priority drill-ready targets.

Located 40km west of the DeGrussa copper/gold mine of Sandfire Resources (ASX: SFR), the project historically produced 30,290 tonnes at 8.7 per cent copper from the now-abandoned open pits.

“We picked up these projects, really because they had existing pits and they had been mined previously for copper,” Ventnor Resources managing director Bruce Maluish told The Inside Story.

“In fact, they are the only pits that have been mined specifically for copper in this region.”

Ventnor kicked off an intense drilling program in April 2011, since then it has drilled 38,000 metres of RC and Diamond drilling.

The bulk of that drilling contributed to the calculation of the company’s maiden JORC-compliant Resource for the project.

A total Indicated and Inferred Resource of 6.33 million tonnes at 1.6 per cent copper and 2.77 grams per tonne silver for 101,413 tonnes of contained copper and 563,000 ounces of silver has been estimated for both deposits at a nominal 0.5 per cent cut-off grade.

Recent drilling below the Resource has intersected significant bornite which from previous drilling has produced plus five per cent copper intersections.

The company believed these intersections were worthy of a follow up investigation into the possibility for any underground mining potential at Thaduna so it continued with its deep drilling campaign as well as committing to two deeper step-out holes.

The first step-out hole targeted a projected down plunge high-grade zone at 500 metres vertical depth, while the other was intended to investigate an identified EM anomaly at 450 metres vertical depth.

“In the last couple of months we have completed a lot of geophysics, downhole EM and Fixed loop EM (FLEM),” Maluish said.

“The bulk of the resource sits around 220 metres with some hitting down to 260 metres; the question is what’s underneath it.”

The answer to that question began to emerge with the EM work identifying the 450m deep conductor that appears to not fit in the same structural position as the rest of the ore body.

Already, from the very top of this modelled EM conductor Ventnor has recorded small intersections measuring 300 millimetres at 100 per cent chalcopyrite indicating the possibility of it being a dominant conductor.

“We just don’t know the extent of it but we do know it deserves to be drilled,” Maluish said.

“When we first acquired this project our expectation was that it was a lode system contained within the pit area three to five metres wide – maybe grading at three per cent copper, which we expected to drill out to around 150 metres.

“Our first surprise was the mineralised system, which has turned out to be about 1.5 kilometres long.”
 
Much of Ventnor’s drilling has been focused on the 1.5km mineralised system, which has identified the highest grade section to be underneath the northern end of the pit to about 180m.

There is also some value at the southern end of the pit where old stockpiles that were worked on by previous owners in the 1980s hold around net $8.5 million worth of material that is amenable to floatation.

Drilling has also been concentrated at the Central Zone with drilling reaching down to around 260m.

“Thaduna is emerging as a classic hydrothermal system, which is quite distinct from DeGrussa – geologically it is a totally different setting,” Maluish said.

“All of the drilling we have conducted below the pit has been in chalcocite and it is only at around 200 metres that we start to encounter chalcopyrite and at around 220 metres we started to encounter bornite.”

“Bornite is a significant copper sulphide as it is up to 63 per cent copper by weight and wherever we have encountered it we have had high grades”.

Ventnor’s current scale of the Thaduna/Green Dragon project is its Resource of 101,400 ounces of contained copper, the bulk of which is down to 220m at both prospects

This scale is set to improve when it is able to add outstanding assay results from a further ten holes drilled to around 260m and further holes to 300 metres to be drilled before Christmas, which the company anticipates to include in an updated Resource to be estimated early next year.

“Until then the current Resource provides us with the opportunity to commence a Scoping Study on the open pit potential and draw up some pit designs and start all the work that is required to get the project up and running,” Maluish said.

The company has also been highly-encouraged by the metallurgical testwork results it has achieved at Thaduna.

The system is predominantly chalcocite, however, the combination of the secondary and sulphide ores contains over 99 per cent of the copper.

Unusually, the only sulphide encountered is copper with very low levels of impurities.

Ventnor expects that a flotation circuit to recover the copper will result in high recoveries and a clean, high grade concentrate.

The metallurgical work carried out so far has attained extremely high copper recoveries – above 95 per cent and up to 98 per cent.

The mineralogy of the testwork concentrate resulted in very low levels of bismuth, mercury, arsenic, tungsten, lead and zinc.

Unfortunately, the copper purity of the project also extends to no meaningful presence of gold.

“However, when we do float off the sulphide we get the copper – all the copper,” Maluish said.

“We get up to a 30 per cent concentrate and in some cases even higher; we have achieved up to 50 per cent in the chalcocite.

“So we end up with a very high-quality, very sellable concentrate with no penalty metals.”

Ventnor is increasingly encountering sulphides at +220m depth, giving much credibility to its view of the project behaving as a classic hydrothermal system.

This has been supported with its intersections of bornite, some of which have assayed at five per cent copper leading the company to give serious consideration to the idea that it may be perched atop a primary copper source.

As the drilling has deepened the grades have increased to the point where Ventnor considers it is being presented with a potential underground resource.

“We are still encountering significant sulphides and the assay results we have received so far have indicated intersections of plus five per cent copper over plus 5 metres, which will support an underground mining operation,” Maluish said.

“It might seem strange – but all the drilling we have done to date has been leading up to the point at which we have arrived where we understand structurally what is happening here and being presented with obvious deeper targets into a potential primary copper zone.”

Ventnor Resources Limited (ASX:VRX)
…The Short Story

HEAD OFFICE
Level 1
6 Thelma Street
West Perth, WA, 6005

Ph: +61 8 9226 3780
Fax: +61 8 9226 3764

Email: brucem@ventnorresources.com.au
Web: www.ventnorresources.com.au

DIRECTORS
Paul Boyatzis, Bruce Maluish, Peter Pawlowitsch, John Geary

MAJOR SHAREHOLDERS
Goldbond Super Pty Ltd        4.44%
Ms Neeltje Elisabeth Renes    4.33%
Mash Super Pty Ltd        4.04%
Ms Deborah Mary Schwann    4.04%

SHARES ON ISSUE
60.4 million

MARKET CAPITALISATION
$28.1 million (at 28/11/12)

THE DRILL SERGEANT: Gold Road Resources (ASX: GOR) has identified four new gold geochemical anomalies at Tobin Hill East on the company’s wholly-owned Yamarna gold belt in Western Australia.

Tobin Hill East gold anomalies image (white and red) over larger magnetic image. Source: Company announcement

The latest finds bring the total number of new targets identified by Gold Road on the trend to nine since October 2012.

Tobin Hill is one of the five ‘high-priority gold camp targets’ the company identified on the Yamarna Belt earlier this year using its Conceptual Targeting strategy.

Gold Road said it intends focussing its exploration program on these five areas while it proceeds with Feasibility Studies over its advanced projects at Attila and Central Bore.

“These four new gold geochemical anomalies are located approximately two kilometres east of the five identified on the Tobin Hill Camp earlier this month – and emphasise the strong prospectivity of the wider Gold Camp Target area,” Gold Road chairman Ian Murray said in the company’s announcement to the Australian Securities Exchange.

“We look forward to commencing a 25,000 metre RAB drilling program across all these anomalies later this month.”

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

Potash West (ASX: PWN)

Potash West recently released a maiden JORC resource of 244 million tonnes of potassium rich greensands at the Dinner Hill prospect.

Encouragingly, only 20 per cent of the Dinner Hill prospect area (and none of the other nine high-priority targets) have been drill tested to date.

The mineralisation displays strong geological continuity providing scope for additional resources to be delineated with ongoing drill campaigns.

Significant progress has also been made on the processing flowsheet (currently patent pending) which has been developed to extract value from the glauconite within the greensands.

The straight forward process design is a major breakthrough and has major implications on the overall viability of the project.

The extraction of potassium from glauconite contained within the greensands appears to be relatively robust and well supported by over 1,000 bench scale tests undertaken by ‘Strategic Metallurgy Pty Ltd’.

However, processing is yet to be tested on a meaningful scale outside of the laboratory.

The proposed flow sheet is based on the leaching of the glauconite to produce potassium in the form of potassium sulphate.

The other components of the glauconite are also used to advantage and recovered as valuable by-products.

The flowsheet, which is in the process of a patent application, produces the following products from the glauconite:

–    Sulphate of Potash;

–    A mixed potassium/magnesium sulphate;

–    Aluminium sulphate;

–    Iron Oxide; and

–    Superphosphate.

The ability to produce numerous valuable by-products in addition to the primary sulphate of potash is a significant breakthrough which is likely to greatly affect the economics and overall attractiveness of the project.

A scoping study is currently underway and is due for completion in Dec 2012.

Following the likely positive outcomes of the study, Potash West intends to embark on a more comprehensive feasibility study with the ultimate aim of production by mid-2016.

Breakaway has been further encouraged by the recent unsolicited approach by a private Chinese company seeking to make a strategic investment in Potash West.

Under terms agreed (and yet to be finalised), Potash West will raise A$3 million via the issue of shares at a 35 per cent premium of 33 cents per share.

The funds raised will primarily be used for the upcoming feasibility study.

Recommendation: Speculative BUY

Wolf Minerals (ASX: WLF) (AIM: WLFE)

Wolf Minerals is an ASX and AIM-listed emerging tungsten producer focused on the development of the world class Hemerdon Ball tungsten and tin project, located in Devon, SW England.

Hemerdon currently hosts a JORC resource of 401 million tonnes at 0.13 per cent tungsten and 0.02 per cent tin, placing it as the third largest (known) tungsten deposit in the world.

A Definitive Feasibility Study (DFS), completed in May 2011, indicated robust economics based on a 3 million tonnes per annum (Mtpa) operation over a 9.25 year life of mine.

Production is estimated at approx. 350,000mtu [1mtu=10kg] per annum of a 65 per cent tungsten concentrate and a further approx. 450 tonnes per annum of tin in concentrate at C1 costs of US$105/mtu (after tin credits) versus the 2012 average APT price of US$400/mtu.

The current mining reserves of 26.7 million tonnes at 0.19 per cent tungsten and 0.03 per cent tin are bound only by the constraints of the open pit limits as per the parameters of the granted ‘Planning Permission’.

Significant opportunity therefore exists to extend the mine life should approval for a larger open pit be sought in due course.

Breakaway estimates the total funds required to advance Hemerdon into production to be approx. £130M (A$200M).

Wolf recently secured £75 million though a senior debt facility and retains full flexibility with respect to all of its funding options in terms of funding the balance.

The consensus outlook from respected tungsten commentators suggests ongoing supply side issues are likely to lead to an increase in tungsten prices over the longer term, further enhancing project economics.

Wolf ahead of most peers

The cornerstone of the robust economics outlined in the DFS, is the low estimated C1 costs of US$105/mtu.

This feeds directly into whether a project can attract senior debt to fund (in most cases) significant CAPEX, and thus rules out many of Wolf’s peers.

Meeting the CAPEX hurdle is a major accomplishment and provides confidence for the near term.

Preparing a peer comparison can be troublesome as many of the known projects also host other recoverable minerals such as tin, fluorine and molybdenum as well as additional projects within the portfolio.

Breakaway has compiled a peer comparison for projects with completed DFS’s and has converted the current market cap, and anticipated CAPEX and C1 costs to A$ (at current exchange rates). C1 costs take into account ‘credits’ received for additional recovered minerals.

Source: Breakaway Research.

As demonstrated, Wolf compares favourably.

Recommendation: Speculative BUY

Mutiny Gold (ASX: MYG) entered the realm of serious gold play contenders in 2011 after acquiring a 100 per cent interest of the Gullewa tenements in Western Australia.

The Gullewa tenements host Mutiny’s Deflector gold and copper project – which, after years in dry-dock is soon to launch at full sail.

Mutiny originally acquired an interest in Deflector in 2010 from Canadian company Red Hill Resources.

Initial encouraging exploration drilling led to a Scoping Study, which demonstrated the project to be robust and profitable.

Mutiny’s confidence strengthened in late 2011 when world-class gold investment bank, Credit Suisse and Snowdens completed project reviews to conclude Deflector had no fatal flaws and supported the Scoping Study.

Credit Suisse then advanced Mutiny an $11 million funding facility.

An important facet of the funding involved a 50,000 ounce Gold Hedging Facility allowing Mutiny to forward sell gold to Credit Suisse from July 2013 to December 2016.

It will do this at an average price of $1,847 per ounce, which is above historical Australian gold pricing.

The forward delivery price for the last delivery of gold is $1,920 per ounce, which is higher than the gold spot price has ever traded.

“The funding deal with Credit Suisse provided the project support from a specialist, gold-project-financing institution,” Mutiny Gold managing director John Greeve told The Inside Story.

“It also significantly benefited our shareholders by minimising share dilution and potentially maximising shareholders returns.

“To hedge a small component of our future gold production at record gold prices goes a long way towards de-risking both Mutiny and Deflector as we move towards production in 2013.”

Mutiny quickly put the Credit Suisse money to work completing a Bankable Feasibility Study in June, which confirmed Deflector as a low cost, highly-profitable and premium gold-copper development.

The company’s work rate continued and it released a new, substantially increased, Resource in August.

This was followed by a Reserve Statement and Life of Mine Inventory in October of 2.9 million tonnes at 4.8 grams per tonne gold, 0.8 per cent copper and 5.3 grams per tonne silver for 552,000 ounces of gold equivalent.

Mutiny recently released the results of a Definitive Feasibility Study for Deflector, which defined an initial mine life of seven and a half years based on a two year open pit mining operation and a five and a half year underground mining operation.

“Using the upgraded Mining Inventory enabled us to achieve a significant improvement on our previous BFS,” Greeve said.

“There is a lot of potential upside for extension along strike of the open pit and continuation of high-grade mineralisation at depth.

“The ore body is currently drilled to 300 metres but remains open at depth in all directions.

“The ore body grade increases at depth and we are starting with diluted mining grades of around 4.5 grams per tonne moving through to around six grams per tonne.

“This is with a cut-off of two grams per tonne, so it is a massively conservative estimate on our Life of Mine and also in relation to our production profile.”

The DFS forecast increased profits from the BFS by 30 per cent to $223 million at a forecast production rate of 65,000 ounces gold equivalent.

This is broken down to an annual range of 48,000 ounces in the first year working up to 71,000 ounces at an low average operating cash cost of $618 per ounce.

“What wasn’t demonstrated in the current DFS finance model is the very strong possibility we could raise the production from the forecast average of 65,000 ounces of gold equivalent to 105,000 ounces,” Greeve said.

The DFS also upgraded the current design of the processing plant at Deflector to provide flexibility to meet anticipated expansion at the end of the second year of production.

Mutiny conducted supplementary studies in association with the DFS which demonstrated the proposed underground infrastructure and orebody could combine to allow an underground mining rate of 480,000 tonnes as opposed to the originally modelled 380,000 tonnes.

“The underground development costs are minimised by our method of mining plus the stability of the host rock means there is no back filling necessary,” Greeve explained.

“The geometry of the ore body is such that we can actually mine it at plus-500,000 ounces on the current structure.

“What our studies have shown us is that spending another $30 million to add extra mill float cells can increase production to 105,000 ounces.

“Over the next two years we will be aggressively drilling to add some extra ounces so we can justify that increase in production.

“This could be achieved by spending as little as an additional $25 million to $35 million in capital to simply expand the project processing plant with a second line milling circuit.”

Greeve gave credit to the Mutiny metallurgy team highlighting its achievements in increasing the metallurgy recoveries of the project.

About 50 per cent of the production flow form Deflector emerges as gravity gold with the remainder as a gold-copper concentrate, which is floated and then transported overseas where it is processed in a refinery.

“All up we are getting about 90 per cent recoveries on our gold so the project is very efficient,” Greeve said.

“We still have ongoing work in that department but our big dream at the moment is to get another four per cent out of it.

“We are working on getting more gold out before it goes into the concentrate, because we lose around 3 to 4 per cent in the refinery.”

The Deflector project is anticipated to generate an initial net operating Cash Flow of $425 million, from which Mutiny can readily service its current Project Finance Facility (debt plus interest), government charges and taxes.

A major contributing factor to the increase in the project metrics was a successful drill campaign carried out at Deflector from November 2011 to March 2012.

The drilling culminated in a substantial increase in Deflectors resources to 2.9Mt at 6.4g/t gold, 0.9 per cent copper and 6.8g/t silver for 729,000 ounces gold equivalent.

Of the total resource, 2.02Mt at 6.4g/t gold, 1.1% copper and 8.0g/t silver for 390,000oz gold, 22,000t copper and 521,000oz silver are in measured and indicated resource categories.

The projects Reserves subsequently rose to 2.15Mt at 4.5g/t gold, 0.8 per cent copper and 6.1g/t silver for 403,000 ounces gold equivalent.

“We delivered a substantial gain in project value and forecast returns,” Greeve said.

“We accomplished that with a low budget $3 million drill program, which generated an increase of approximately 100,000 production ounces and an increase to forecast bottom line profits by $55 million.”

Mutiny has set an exploration target for Deflector of 9 to 14Mt tonnes at 4 to 8 grams per tonne gold for 1.65 to 3.5 million ounces of gold and 40,000 to 80,000 tonnes of copper.

The company is currently formulating plans for an aggressive exploration program targeting extensions of Deflector along strike and at depth as well as assessing anomalies within the Deflector corridor to commence next year.

“This is a company that is very serious about what it does and achieves what it says it is going to achieve,” Greeve said.

“We set out from day one to make a profit, we are all about making profits and that’s how we intend building our business.

“We believe this is a significant asset and we intend building it to the benefit of our shareholders.”

Mutiny Gold Limited (ASX:MYG)
…The Short Story

HEAD OFFICE
29 Charles Street
South Perth WA 6151

Ph: +61 8 9368 2722
Fax: +61 8 9367 9043

Email: mgl@mutinygold.com.au
Web:     www.mutinygold.com.au

DIRECTORS
Frank Lawson, John Greeve, Allan Brown, Benedict Kusni

MAJOR SHAREHOLDERS
ATW Gold Australia PL        8.61%
National Nominees Ltd        5.17%
Drake Private Investment    3.23%

SHARES ON OFFER
465 million

MARKET CAPITALISATION
$46.5 million (at 15/11/12)

ONE OFF THE WOOD: We welcomed Monteray Mining (ASX: MRY) director John Hannaford to the front bar this week as he settled in to tell us how exciting exploring for gold in Burkina Faso can be.

There are a lot of companies in Burkina Faso these days, where does Monteray Mining fit in amongst the crowd?

We are a start-up company in every sense of the term in that we are about to commence our first major drilling program in Burkina Faso where we have eight licences covering 1200 square kilometres.

Companies operating in Burkina Faso tend to have people on the ground. How are you placed on that score?

We are just in the process of appointing a CEO and looking to appoint in-country management in Burkina Faso in the near term.

As part of one of the Burkina acquisitions we welcomed Andrew Habets to the Board.

He is a very experienced geologist with extensive West African experience in terms of his knowledge of the region and contacts he has, particularly in the gold sector.

Andrew is a real asset for Monteray in being able to get things done on the ground as well as being able to identify new project possibilities for us.

Was Burkina Faso your first choice as a mining jurisdiction?

We looked at a number of opportunities around the world, but we were really after something with potential to become a plus-one million ounce gold project.

We looked at areas where there are not only known occurrences of mineralisation, but also mines being developed.

In that respect it didn’t matter where we stuck pins on the map our attention kept being drawn to Burkina Faso.

What was it that sold you on Burkina Faso?

We consider the country offers the best value for our exploration dollar – for a number of reasons.

A major one being it has the lowest discovery costs in Africa at around US$16 per ounce; if you take into consideration what an ounce of gold may be worth in the development scenario, it’s a really good leverage position versus the risk of putting your money into exploration activities.

Burkina Faso boasts the highest number of new mines brought on-stream in West Africa over the past five to six years, with a number of new mines ready to come on board.

One thing that did stand out as a very important factor for us as a junior company is the ease of getting exploration done in Burkina.

Its terrain is similar to that surrounding Kalgoorlie, which means you can easily access sites in four-wheel drive vehicles. The infrastructure throughout the country is really quite good.

A lot of service companies have based themselves in the capital city of Ouagadougou, pretty much in the geographical centre of the country. There must be some advantages in that too?

This means they are only a half a day to a day’s drive, tops, from all project areas around the country.

It just makes it easy to get around and for a small company it simply means we can accomplish things much quicker, such as commencing exploration drilling and getting the results of those programs out.

Can you tell us a bit about the projects you have acquired?

We completed two acquisitions in 2012, picking up 100 per cent rights to eight granted permits covering 1,178 square kilometres across three project areas.

All the tenements are located in regions that have yielded significant gold discoveries.

We consider the quality of the portfolio stems from its locations as well as what we would describe to be a clean ownership structure.

We own 100 per cent interest in all our projects, which all have long-life permits with a long way to run.

Are the projects all together or spread across the country?

Our project portfolio sits predominantly in two main areas.

We have five permits in the Mana region, which sits in the central western part of the country and follows the extensions of structures of TSX-listed Canadian company SEMAFO’s 6.8 million ounce Mana mine.

This is their flagship project, currently producing 140,000 ounces of gold per year and they are looking to expand to a scenario they have labelled the Super Pit, which is expected to take it up to around 300,000 ounces per year, making it the biggest gold mine in Burkina Faso.

Our focus there will be to identify something along strike from a major gold discovery and mine.

The second main area is situated in the central area of the country on the Sebacé shear zone and is along strike from the 1.7 million ounce Bissa project of High River Gold.

This is a highly-regarded project that is expected to commence production next year.

Our ground there is 500 square kilometres of completely untouched terrain sitting along strike of Bissa, a 1.7 million ounce ore body.

Let’s take them one at a time. What are you expecting to find on the Mana region tenements?

SEMAFO has a number of projects along the Mana shear zone where they have been conducting a lot of drilling adjacent to our licences.

What we are looking for on our tenements is extensions to that shear zone, both to the west and to the east.

On the western zone there is some sedimentary cover that we believe is covering up some parallel structures, which we have identified from aeromagnetic imagery.

Even though there is sedimentary cover our exploration work so far has shown good anomalies under that cover.

MMI work at the Tigan permit has uncovered a very strong gold and multi-element anomaly that is consistent with what we are seeing running off the Shear Zone.

Our plan is to commence auger drilling on that anomaly in the next month with a view to identifying targets to drill with a RC rig early in the new year.

We have also identified other soil anomalies on the southern group of tenements and we will be commencing infill soil sampling later this year, again with the outlook for conducting a drilling program early next year.

That sounds pretty exciting. Will the Sebacé shear zone projects be as good?

We consider that project area, the Pepin and Giumba permits, to be our most prospective.

It is completely virgin terrain. Nothing has ever been done there, apart from some artisanal mining.

It is in an area of great current activity; the 1.7 million ounce Kalsaka mine of Cluff Gold and the Bissa project has been permitted and High River Gold will be developing that early next year. Also, Riverstone’s Karma project, a little further to the north, with a 2.3 million ounce resource is planned to be developed in the next few years as well.

We are anticipating an extension here of the Sebacé shear zone that High River Gold has been successfully exploring.

Just to put this in perspective – the Bissa project is expected to be a mine of around 140,000 ounces per year at cash costs of around US$550 per ounce.

So, here we are sitting on un-drilled terrain, along strike from a major gold mine. This to me is why we are in the junior resources exploration game.

These sort of opportunities just don’t come along too often; we consider there to be obvious extensions to this shear zone that go right through our permit area.

The challenge for us is that it is 500 square kilometres of permit to be explored.

That means we have to go about things the correct way in order to narrow down the drilling opportunities, rather than just going in and poking holes in the ground.

We feel this area holds huge potential for Monteray to find a potentially one million ounce ore body.