INSIDE UPDATE: S2 Resources (ASX: S2R) confirmed its commitment to its portfolio of Scandinavian and North American exploration projects by selling interests of its promising Western Australian gold project.
S2 Resources struck a deal for Westgold Resources (ASX: WGX) to acquire its interest in the Polar Bear project (100%), Eundynie Joint Venture (80%) and the Norcott project (100%).
The deal was a profitable one for S2 Resources, which received $3 million cash plus four million Westgold shares.
At the time of the deal, Westgold shares were around $1.50 per share, valuing the total consideration at approximately $9 million.
On executing the agreement, S2 indicated it was part of the company’s strategy to focus on those opportunities it considered to have the best potential to deliver a major discovery.
It also reduced the need to chase extra funding, keeping its capital structure as tight as possible so that in the event of exploration success its shareholder base would reap maximum value.
The WA asset sale strengthened S2’s balance sheet, taking it, with cash and investments, to approximately $25 million, providing the company with scope to focus its time and funds on the opportunities presented in its overseas exploration activities.
Of note, S2 retained exposure to the upside of the Polar Bear project’s nickel prospectivity, which includes the Taipan and Halls Knoll nickel prospects discovered by S2’s precursor, Sirius Resources.
“We can’t have everything and do everything,” S2 Resources managing director Mark Bennett explained to the Resources Roadhouse.
“We took a view based on an equation of how much we are going to spend versus how much we think we are going to achieve and we felt that our chances were better in Sweden, Finland and Nevada.
“Rather than the WA projects sitting there doing nothing and costing us money to hold, why not monetise them?
“That gives us more cash in the kitty and more time to focus on the international projects.”
S2 Resources has been drilling at the Storgroven target within its 100 per cent-owned Skellefte project in Sweden.
Base of till drilling identified two adjacent zones of gold/silver mineralization, with seven base of till holes ending in mineralization greater than one gram per tonne gold and 20g/t silver.
Peak end of hole assays included 2.5g/t gold and 60g/t silver in the southern zone and 2.3g/t gold and 42g/t silver in the northern zone.
Subsequent diamond drilling of the Storgroven prospect identified a VMS-prospective horizon containing lenses of massive and stringer sulphides strongly anomalous in precious metals.
First results through came from three of eight holes drilled at Storgroven, with the best intercept being 15.7 metres at 0.8g/t gold and 6g/t silver.
Historical drilling data from the Aliden prospect, located within the same prospective stratigraphy some 450m south along strike from Storgroven, has confirmed the presence of similar style mineralisation, with several gold-silver mineralized intercepts, including 23.4m at 1.5g/t gold, 41g/t silver and 1.5 per cent zinc from 57.2m drilled in 1969 beneath a VMS lens first identified by trenching in the 1930’s.
An electromagnetic (EM) survey identified two conductors immediately to the south of and subparallel to the recent drilling at Storgroven.
S2 Resources other international commitments involve three active earn-in agreements with TSXV-listed Renaissance Gold on three Carlin-style gold targets in Nevada in the United States of America.
S2 has commenced drilling on the first of two scheduled holes designed as an initial test of a blind Carlin-style gold target at the South Roberts project in central Nevada, where the company is earning a 70 per cent interest.
Previous drilling confirmed the presence of favourable stratigraphy, solution collapse breccias and anomalous gold, and also led to the inference of the presence of an anticline – an important trap site for Carlin style gold deposits.
Controlled source audio-magnetotelluric (CSAMT) surveying confirmed this interpretation, defining a north-south trending anticlinal crest hidden beneath transported gravels.
Follow up enzyme leach surface geochemical sampling, which is designed to detect mineralisation buried beneath transported material, identified several anomalous zones of gold and associated Carlin-suite elements broadly coincident with this anticline.
Each of the two initial holes is planned to be drilled to around 400m to test multiple target horizons associated with specific favourable stratigraphic units.
S2 Resources (ASX: S2R)
…The Short Story
North Wing, Level 2
1 Manning Street
Scarborough WA 6019
Ph: +61 8 6166 0240
Jeff Dowling, Mark Bennett, Anna Neuling, Grey Egerton Warburton.