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Investigator Resources Explores Paris Silver Lining

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THE INSIDE STORY: Infill drilling conducted at a silver-copper project in the southern Gawler Craton, South Australia, supported Investigator Resource’s (ASX: IVR) belief that its Paris project is Australia’s best undeveloped silver deposit.

“The infill program completed in late 2016 achieved a significant increase of 26 percent to 42 million ounces of contained silver at a grade of 139 grams per tonne, which is way above any of our peer deposits as far as grade goes,” Investigator Resources managing director John Alexander told The Resources Roadhouse.

“It’s a very robust project.

“With the infill drilling we confirmed the geological model for the project and believe there’s potential to add another 20 percent from an area we now recognise we haven’t drilled, but we’re happy with where the resource now stands, especially with the upgrade which converted 55 percent of our contained ounces to indicated.

“We’ve now got ourselves into a position where we can now move into a pre-feasibility study.”

The component of the recently announced resource – classified as Indicated – largely corresponds with the area of infill drilling and shows a 41 percent increase in grade to 163g/t silver over the 2015 Inferred resource of 8.8 million tonnes at 116g/t silver for 35 million ounces of silver.

The revised resource was independently prepared by H & S Consulting Pty Ltd (H&SC) using the Multiple Indicator Kriging (MIK) method of estimation, considered the most suitable estimation method for the complex mineralisation style of the Paris deposit.

The mineral resource estimates were reported using a silver cut-off grade of 50g/t and were constrained to above the 25 metres relative level (mRL).

As well as the high grades for the open pit development scenario the tonnage grade profiles also offered flexibilities by adjusting the cut-off grades for more ounces at times of higher silver prices; e.g. to 30g/t cut-off for 50 million ounces silver or to higher grades at times of lower silver prices; e.g. to 70g/t cut-off for 6.2 million tonnes at 179g/t silver for 36 million ounces.

The retention of the bulk of the ounces at the high cut-off is a reflection of the robust grade profile for the Paris project.

Investigator discovered the Paris silver resource in 2011 and then developed flow-on discovery opportunities for copper-gold porphyry-style deposit at Nankivel, five kilometres southeast of the Paris project all within the company’s 100 percent-held Peterlumbo Tenement.

The Paris silver deposit is the first solid discovery in South Australia of an epithermal deposit style.

The Peterlumbo tenement is 583 square kilometres in size and located in the pastoral country of the northern Eyre Peninsula district approximately 350 kilometres northwest of Adelaide and 60 kilometres northwest of the town of Kimba.

Anderson said that company would now concentrate on the pre-feasibility study and does not need to go back to drilling Paris at this time.

“The extent of the resource has been pretty well defined and we’ve closed the drilling,” he explained.

“However, having said that there’s lots of exploration potential to add resource to Paris in satellite deposits, in fact Paris may be a satellite deposit to something bigger going on with regards to the mineral system.

“It’s quite shallow with the shallowest mineralisation coming to within 5m of the surface and stems down to about 160 metres.

“It’s a breccia so it’s highly variable in grade and distribution of the resource box but we’ve been drilling with a lot more confidence knowing that high-grade parts of the deposit are very much part and parcel of the resource population.

“That’s the main reason we’ve been able to increase the grade and resource to contained ounces basically by infill drilling an area that had previously been drilled.”

On the subject of production, Anderson said that once the pre-feasibility had been completed he expected the company to move quickly onto full feasibility, but he felt it would be several years before the decision to mine was made. 

In the meantime, optimisation studies are being conducted regarding high-grade starter pits, mineralised waste and the type of metallurgical options available to treat the ore.

“The choices we’re looking at came out of our original metallurgical work in 2013 which produced positive results in both leaching and flotation.

Standard leaching is the likely best option but we are also looking at flotation as an alternative to produce a concentrate we could possibly sell to a smelter.”

The soft host rock and shallow depth of the Paris deposit offers the potential for an open pit mining operation and H&SC has modelled and classified the Paris resource in accordance with this assumption.

“We’re a lot smaller than a project like Carrapateena but we’re at the surface and the Paris project is a very good fit for a company of our size, however we are aiming higher,” Anderson said.

“There’s potential for more silver, but more importantly larger copper-gold targets in the immediate Paris area.

“We believe the Nankivel prospect, just five kilometres south of Paris, is the start.

“We’ve located a large intrusive system, which is the centre to the whole mineral system, to which we think Paris is a satellite epithermal deposit and we see potential for other shallow epithermal deposits over the Nankivel area.

“We’re postulating that there’s porphyry copper-gold potential deeper under the epithermal outcrops.

“That’s a real breakthrough for South Australian geology because we believe these rocks are Olympic Dam age and that’s really challenging the dogma that Olympic Dam is a style where you wouldn’t expect porphyry deposits to be associated within the same province.”

Co-funded by the South Australian Plan for Accelerating Exploration (PACE) drilling initiative, results from Investigator’s first hole at Nankivel in August, 2016, strongly implied the hole was on the margin of a copper-gold mineralised porphyry system.

Four diamond drill holes were drilled in early 2017 aimed at Induce Polarisation chargeability anomalies within a large demagnetised zone.

All holes intersected potassic-altered porphyritic monzodiorite over the drilled area variously showing the fracturing, veining and multiple intrusives expected in a mineralised porphyry system.

The potassic alteration has the minerals expected in a mineralised porphyry – potash feldspar, biotite, magnetite and tourmaline.

The assays are pending, but the copper mineralisation is visually estimated to be low to modest in content and is not expected to produce significant grades.

The mineral zoning suggests that any higher-grade copper shell to a modelled late intrusive is at least 500m below the surface beneath current drilling.

Although deep, there is alteration and intrusive evidence for multiple porphyry events at Nankivel that implies shallower (telescoped) porphyry deposits.

The nearest town to the project is Kimba about 60km to the southeast with the Iron Road iron ore project to the west and the major town of Whyalla another 140km to the east.

Anderson said railway and port facilities were not a consideration as the company planned to produce silver dore that could be trucked quite easily.

A likely water source has been identified in a large palaeochannel aquifer 12km east of the Paris project through prior Investigator drilling and collaborative airborne electromagnetic surveying by CSIRO.

Investigator Resources Limited (ASX: IVR)
…The Short Story

HEAD OFFICE
18 King Street
Norwood SA 5067

Ph: +61 8 7325 2222

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

DIRECTORS
David Ransom, John Anderson, Bruce Foy, David Jones

Sheffield Resources in Preparation for Thunderbird landing

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THE INSIDE STORY: Sheffield Resources (ASX: SFX) expects to have preliminary approval in August/September for the company’s giant Thunderbird mineral sands project. By Ron Berryman

The Thunderbird project is located on the Dampier Peninsula about 60 kilometres west of the township of Derby in Western Australia.

As it approaches development of Thunderbird, the company is currently in what managing director Bruce McFadzean described as a funding phase.

“We’ve got engineering, procurement and construction (EPC) negotiations going on at the moment,” McFadzean told The Resources Roadhouse.

“We’re down to the last two contractors tendering and we’re doing all the offtake so there’s a million things going on in parallel right now.”

On the funding front, Sheffield has engaged Azure Capital to run two legs of the funding – these being the debt and joint venture sides respectively.

These are running in parallel, but quite separate to each other.

As the project has grown, so too has the company’s team, reflecting the amount of work Sheffield has already carried out and what it will be required to do going forward.

“We’re quite excited by the interest the project is generating amongst international financial and strategic investors,” McFadzean said.

“We haven’t been seeking any money at all because that’s not we’re doing right now other than engaging with overseas investors.

“It is going to require a funding solution that delivers at least $355 million in new capital via debt, equity and/or joint venture options.”

Much of the interest currently being shown in funding the Thunderbird project was generated courtesy of the recently completed pre-feasibility study.

Sheffield Resources has been kept busy having non-binding talks with European, Indian and Chinese off-takers, which have subsequently signed Memorandum of Understandings (MoU) for 70 percent of the project’s premium zircon.

“We are now negotiating the last bit of that,” McFadzean said.

“We’ve got 45 percent of our zircon concentrate going into China because China is the only one that takes the concentrates, and we’re just now completing the last 55 percent of that.

“We’ve done approximately 43 percent of our primary ilmenite and we’re now negotiating with other parties for the other 57 percent, so that’ll all be done.

“That just leaves our leucoxene which is four percent of our revenue and our titano-magnetite which is a by-product of ilmenite, and we’ve just talking to groups about the offtake of that.

“Clearly our focus is on zircon, which will be 62 percent of our revenue and ilmenite, which will be 30 percent.”

McFadzean explained that offtake discussions were currently non-binding because binding agreements had to be done in conjunction with the debt provider as they had to be tripartite agreements.

“The process of doing non-binding agreements is only on volume, we haven’t done anything on pricing, there are no discounts being discussed,” he said.

He pointed out that there were international consumers who wanted to secure long-term output from a stable jurisdiction.

“I think we’re one of the key players in this space,” McFadzean mused.

“The ilmenite market has already taken off; the zircon market has started taking off.

“We just want a steady market but already the ilmenite market is exceeding our bankable feasibility study (BFS) price and the zircon price is growing faster than our BFS – we’re already ahead of where we said we would be in 2019.”

The current timeline is for Sheffield to have its mine lease granted by the Department of Mines and Petroleum; finalise funding and offtake into the third or fourth quarter; commence pre-works – roads, camp, site preparation – in the second half of the third quarter; and finalise the engineering, procurement and construction (EPC) in the next month or two.

“From there we’ll move straight into commencing engineering and long lead purchases so we can start construction in the fourth quarter,” McFadzean explained.

“We want to be well set up and established before the start of the wet season, so we are currently concluding all of the environmental permitting.

“We’ve been through all of the public phases of that permitting and received overwhelming support from the local community for the project.

“It’s benign mining and they’re benign products.

“This project will have an enormous impact on the township of Derby and Broome including about 140 fulltime jobs and business opportunities with a focus on Aboriginal participation.”

In June this year, Sheffield received notification from the National Native Title Tribunal that the lease upon which the Thunderbird project is located has been granted.

This will enable the Department of Mines and Petroleum to finalise the grant of the company’s mining lease after the current appeal is finalised.

Construction is scheduled to continue until late 2018 or early 2019 with progressive commissioning of mining, processing and logistics plant in 2019 followed by a progressive ramp-up to full production.

Another factor in the attractiveness of the project is its proximity to the key Asian markets and the availability of port facilities.

It is proposed to truck mine products the 140km to Derby and Broome, 110km of it on a sealed highway.

The company has an access agreement in place for port storage, wharf and bulk handling at Derby with an option for packaged products through Broome.

The Thunderbird project is big by any standard and is the first major mineral sands deposit to be discovered in the Canning Basin and one of the largest mineral sands deposits to be discovered in the last 30 years.

The project feasibility study (BFS), delivered in March 2017, highlighted zircon as the key value driver of the project with the remainder of revenue generated from substantial amounts of high-grade sulphate ilmenite and lesser amounts of leucoxene.

Thunderbird has a mineral resource of 3.23 billion tonnes at 6.9 percent heavy minerals (measured, indicated and inferred at 3 percent heavy minerals cut-off), including 18.6 million tonnes of zircon, 5.9 million tonnes of high-titanium leucoxene, 6.5 million tonnes of leucoxene and 61.7 million tonnes of ilmenite.

The resource includes a coherent and mineable high grade zone (at 7.5 percent heavy minerals cut-off) of 1,050 million tonnes at 12.2 percent heavy minerals (measured, indicated and inferred) containing 9.7 million tonnes of zircon, 3 million tonnes of high-titanium leucoxene, 2.7 million tonnes of leucoxene and 35 million tonnes of ilmenite.

The high in-situ valuable heavy mineral (VHM) grades for this zone of 0.93 percent zircon, 0.28 percent high-titanium leucoxene, 0.26 percent leucoxene and 3.3 percent ilmenite place Thunderbird within the top tier of mineral sands deposits globally.

McFadzean emphasised that Thunderbird is a seriously large project.

“Thunderbird is a huge project,” he exclaimed.

“I joined Rio Tinto from BHP in 1985 to work on the Argyle diamond project.

“We were in production with first diamonds in 1986 and that project is forecast to shut down in 2020 making it a 34-year mine life.

“At Thunderbird, we have an estimated mine life of 42 years – and we could be bigger than 42 years, it’s still open at down dip and on the project economics we’ve actually cut it off to conclude the studies because you’ve got to stop somewhere.”

Sheffield Resources Limited (ASX: SFX)
…The Short Story

HEAD OFFICE
Level 2
41-47 Colin Street
West Perth WA 6005

Ph: + 61 8 6424 8440

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

DIRECTORS 
Will Burbury, Bruce McFadzean, Bruce McQuitty, David Archer

 

Gold Road Resources Readies for Big Exploration Advance

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THE INSIDE STORY: Seasoned market watchers would be aware of the 50:50 Gruyere Joint Venture (GJV) deal, Gold Road Resources (ASX: GOR) struck in 2016 with international gold producer Gold Fields Ltd.

They would also know Gruyere as a 3.5 million ounce project forecast for average annualised production of 270,000 ounces of gold for 13 years.

Gold Fields recently gave Gruyere a highly-public endorsement by acquiring, through subsidiaries, approximately 75 million Gold Road shares, consolidating a ten percent holding in the company.

The major company’s interest in the emerging producer is understandable, given it has paid $350 million, plus a royalty, to participate in developing the Gruyere Gold Project, which accounts for 114 square kilometres of Gold Road’s substantial 6,000 square kilometre Yamarna Belt tenement holding in Western Australia.

With such a relatively small segment of its large landholding being financed through to becoming a significant gold production facility, Gold Road has signalled its next objective is to find another big gold deposit, using cash flow from Gruyere to develop its next project.

“Our strategy is to build Gold Road to being a 500,000-ounce producer and to become a gold producer in our own right,” Gold Road managing director Ian Murray told The Resources Roadhouse.

“To do that, two further sizeable discoveries need to be made, and we aim to make the first of those discoveries while Gruyere is under construction.

“By the end of 2018, we aim having another project ready for studies, drill out and expansion, paid for by cash flow from Gruyere.

“While that project gets built, we aim for the third discovery to be made, which will be developed using cash flowing from the first two.

“We don’t need to do Joint Ventures going forward, as our first has funded, and de-risked the company and the project.

“Going forward we want to build any further projects ourselves.”

The size and potential of Gold Road’s Yamarna Belt package is clearly defined in this map.

The company owns the 2,300sqkm area in blue outright – 100 per cent – which encapsulates the Gruyere Joint Venture.

Gold Road will spend $15 million in this area on exploration in 2017 on top of money earmarked for GJV exploration, where it will be spending around $11 million.

The pink area defined in the south is a joint venture with Sumitomo Metal Mining where the exploration spend will be $3 million.

Gold Road believes the prospectivity of this area to be worthy of a much higher exploration spend, however its budget had already been set prior to striking the Gruyere Joint Venture.

“We thought we were going to be raising project finance and were anticipating the banks limiting our exploration spend,” Murray explained.

“This year we will push Sumitomo harder – we think a fair exploration spend in the south is $10 million.”

For those without calculators, that adds up to around $30 million Gold Road, with its joint venture partners, will be spending on, what will be, the largest greenfields exploration budget in Australia – and potentially the largest globally.

“We’ve looked around and we haven’t found anyone else conducting that level of greenfields exploration,” Murray said.

“There is plenty of brownfields exploration by companies seeking to keep hungry processing mills fed, but none carrying out this level of greenfields exploration.”

Greenfield exploration by other companies is most likely restricted by funding issues, a problem Gold Road resolved through the GJV cash injection.

A recent $70 million tax payment made a reasonable dint in the company coffers of $337 million, but not enough to defer its anticipated exploration spend.

The company will also be able to pay its $30 million share of the Gruyere project build in the fourth quarter of this year, after Gold Fields spends $100 million on its behalf.

This will bring the bank balance down to around $220 million by the end of the calendar year, enabling it to fund a $20 million exploration spend and a further $130 million share of the project build costs next year.

After all that, Gold Road will be sitting on around $60 million, which it considers to be a fair working capital balance when embarking on first production.

“Some people have asked about the possibility of us paying a special dividend, however we feel it makes much better sense to reinvest the cash into assets to benefit shareholders,” Murray explained.

“At the end of two years we will have enough of a working capital buffer, and going into production we should be generating around $100 million of EBITDA.

“If we don’t make another discovery that we want to develop, we will be able to start returning some money to shareholders through a dividend, and as we have paid our tax bill, that will be a fully-franked dividend.”

Construction at Gruyere is well underway with the establishment of offices and accommodation consisting of two former rail construction camps acquired from Roy Hill.

The further acquisition of two partially completed cancelled orders, in the shape of an 8.5 million tonnes per annum ball mill from Gold Fields West African project, and matching sag mill from Outotec, will shorten the time-frame determined by the original feasibility study and lower capital expenditure.

“The project team are building a 7.5 million tonne per annum project,” Murray explained.

“The operational team has now been tasked with de-bottlenecking the project, so should the JV partners want to increase throughput once we have started production we can easily ramp up.

“Construction is scheduled for completion at the end of 2018 with first gold coming in the first quarter of 2019.”

Gold Road has the added benefit of a Memorandum of Understanding within the GJV, whereby it is allowed access to the project’s gas pipeline, water and toll treating of all satellite deposits discovered beyond the JV area.

Immediately south of Gruyere, is YAM14, at which Gold Road encountered extraordinary drill intercepts.

Results from YAM14 include:

17DHRC0060
64mat 3.73 g/t gold, including 18m at 9.78 g/t gold, and 8m at 19.16 g/t gold;

17DHRC0061
39m at 1.52 g/t gold, including 13m at 2.24 g/t gold, and 7m at 3.55g/t gold; and

17DHRC0059
22m at 1.81 g/t gold, including 14m at 2.63 g/t gold.

“YAM14 was discovered when Gruyere was discovered, but obviously Gruyere was the big prize,” Murray said.

“These drilling results returned some nice good widths and good grades that are located just eight kilometres from the Gruyere process plant.”

South-west of Gruyere, at the Attila prospect, a 107,000-ounce Resource upgrade was recently announced taking it to 327,000 ounces, while just to the north of Attila sits the Alaric prospect with 50,000 ounces, which is currently being reviewed.

Gold Road intends putting these through a pre-feasibility study with the aim of declaring a maiden Reserve for those two deposits in the second half of 2017.

“These prospects are located within, what we call, the Golden Highway, running from Alaric in the north down to Attila in the south,” Murray said.

“It runs for 14 kilometres, covering an area where we previously had Resources declared, which were not JORC 2012-compliant and were removed.

“These are currently being re-assessed with the aim of establishing Resources that could be economic to be run through the Gruyere processing plant.”

Gold Road Resources (ASX: GOR)
…The Short Story

HEAD OFFICE
Level 2
26 Colin Street
West Perth WA 6005

Ph: +61 8 9200 1600

Email: perth@goldroad.com.au
Website: www.goldroad.com.au

DIRECTORS
Tim Netscher, Ian Murray, Justin Osborne, Sharon Warburton

Northern Hemisphere Shines on S2 Resources

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THE INSIDE STORY: S2 Resources (ASX: S2R) celebrates its second anniversary this October – just as the Northern Lights, aurora borealis, reappear over Swedish Lapland to rejoice in their own electrically charged skyward festival. By Margie Livingston

In just two short years, S2 Resources has established a strategic land holding in Scandinavia, achieved exploration success across its projects and has remained well positioned to fund further exploration and expansion in its quest to discover the next ‘Nova’.

With a shareholder base and management team established on the back of Sirius Resources’ Nova success, S2 feels the weight of expectation, and believes Scandinavia may well be the region that contains terrific opportunity and the next noteworthy result for investors.

The company’s current priority is its Scandinavian projects where it expects better outcomes per drilling dollar spent.

“We believe, that at the current time, our drilling dollars will be more intelligently spent on the projects in Sweden and Finland, rather than Western Australia, because there are numerous targets with surface or near surface clues” S2 Resources managing director and CEO Dr Mark BennetThe Resources Roadhouse.

S2’s exploration has advanced with positive drilling and geophysical results at the Bjurtraskgruvan and Skaggtraskberget VMS prospects within its 100 per cent-owned Skellefte project in Sweden.

The last prospect drilled at Bjurtraskgruvan during the northern hemisphere winter returned the best intersection yet and an electromagnetic survey suggests it might continue for another 450 metres down plunge.

“A single hole drilled 135 metres down plunge from previous S2 drilling at Bjurtraskgruvan intersected the thickest zone of copper mineralisation seen so far,” Bennett said.

The hole intersected a 24.4m thick zone grading 1.1 per cent copper from 220.7m, comprising remobilised veinlets of chalcopyrite, with several intervals of higher grade copper mineralisation, including:

1.05m at 4.11 per cent copper, 0.65 per cent zinc and 19 grams per tonne silver from 221.5m and

3.6m at 2.44 per cent copper and 11.5g/t silver from 224.3m.

The new intersection is considered close to true width, and demonstrates the Bjurtraskgruvan VMS system extends for at least 450m down plunge from its outcrop, remaining open down plunge.

A downhole electromagnetic survey identified a conductor centred approximately 30m to the east of the hole, suggesting the intercept may be adjacent to more massive sulphides.

In addition, the results of a new fixed loop electromagnetic (FLEM) survey defined a large plunging conductor extending a further 470m down plunge from this hole, for a total plunge extent of 900m – so far.

The VTEM anomaly highlights the up-plunge near surface projection of the VMS system, but FLEM better indicates the potential size, extent and position of it at depth.

S2’s drilling and geophysics confirms the Bjurtraskgruvan prospect comprises an elongated shoot which represents a substantial volume of mineralised material.

“The focus of future drilling at Bjurtraskgruvan will be to define its limits and identify any higher grade sweet spots within the overall system,” Bennett said.

Meanwhile, at Skaggtraskberget, a prospect located 4.5 kilometres west of Bjurtraskgruvan, deeper drilling represents an opportunity where S2 has confirmed the presence of a 350m long mineralised zone containing elevated levels of silver and will continue to assess and explore in this world-class VMS belt.

Drilling will recommence in Sweden once the spring thaw is completed with Skaggtraskberget likely to be the first drilled in the summer drilling campaign.

With ground being exposed by melting snow, various targets and prospects in Sweden and Finland will be explored using surface prospecting.

Two large new exploration licences surrounding granted licences at Nasvattnet and Tjalmtrask have been applied for and surface prospecting will include searching for the source of the clusters of mineralised boulders at these two prospects.

In addition to applying for exploration licences in Sweden, S2 has been increasing its tenure in the Central Lapland Greenstone Belt (CLGB) in Finland following the recent discovery of outcropping high-grade gold mineralisation at the nearby Aurora zone of the Risti gold prospect, owned by TSXV-listed Aurion Resources.

This discovery reaffirms S2’s view of the CLGB being a potentially highly endowed but under-explored gold province.

S2’s summer drilling campaign will also involve first pass field assessment of this extensive land package, approximately 1,030 square metres.

The company believes its focus on the Scandinavian region deserves a strong human resources presence to ensure effective management of exploration programs.

“S2 is fully committed to its Scandinavian projects and as such three Perth based geologists have relocated to northern Sweden,” Bennett explained.

“This is a direct reflection of our commitment to exploration in the region and managing programs meticulously and expeditiously.”

With the northern hemisphere being a focus for S2 it seems the name of its Western Australian asset may have taken inspiration from the north as well.

‘Polar Bear’ is a large unexplored holding in the heart of the WA goldfields, on trend from major gold mines.

The Baloo-Nanook trend is a 10km long prospective corridor with three gold hotspots in wide spaced shallow aircore drilling.

To date, 348,000 ounces of gold resources have been delineated at Baloo and Nanook.
 
However great the potential of Polar Bear it is not, at this stage, a priority.

“While we focus on projects in Finland and Sweden the company could entertain ways of divesting Polar Bear” Bennett said.

“As a junior resource company, we are always looking at ways to grow and add value for shareholders.

“Our focus is on mainstream commodities such as gold and base metals in politically stable jurisdictions such as Australia and Europe.

“We constantly look at opportunities with low sovereign risk and well developed infrastructure, which both regions have.

The Fraser Institute’s 2016 annual survey of mining and exploration companies (published February 2017) determined the top jurisdictions in the world for investment based on the Investment Attractiveness Index, which takes into consideration both mineral and policy perception, are Saskatchewan, Manitoba, WA, Nevada, Finland, Quebec, Arizona, Sweden, the Republic of Ireland and Queensland.

“We like North America as a jurisdiction and Nevada in particular, as it is a prolific gold district,”Bennett enthused.

“There is huge production and resources in the area with 10, 20, 30 million ounce deposits and more big deposits still being found.

“Our shareholders would obviously like S2 to discover another Nova, something big, and as a Board we aim to find an elephant rather than a tiddler.

“To do that, our search for assets to complement and increase our portfolio, which hopefully leads to a large discovery, is an ongoing process and one that is global.”

S2 is well positioned to achieve this objective with a highly successful team of explorers, a breadth of corporate experience, a portfolio of highly prospective and strategic ground and a strong balance sheet.

“Our Scandinavian prospects are exciting and we are fortunate to be in a position of having the cash to be able to seriously consider acquisition or joint venture opportunities,” Bennett said.

“Our objective is to find the next big prospect – it might be next month or it might be a few years, but we are focusing on that.”

As the mysterious phenomena of the Northern Lights dances in the skies over the northern magnetic pole, perhaps it will shine some magic over S2’s current and future prospects, leading to that next phenomenal discovery.

S2 Resources (ASX; S2R)
…The Short Story

HEAD OFFICE
North Wing, Level 2
1 Manning Street
Scarborough WA 6019

Ph: +61 8 6166 0240

Email: admin@s2resources.com.au
Web: www.s2resources.com.au

DIRECTORS
Jeff Dowling, Mark Bennett, Anna Neuling, Grey Egerton Warburton.

St George upbeat about Mt Alexander Dragon

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THE INSIDE STORY: There are three items that exploration companies like to tick off when they announce a new resource-grade discovery, infrastructure and sound economics. By Ron Berryman.

These three factors have provided the impetus for St George Mining (ASX: SGQ) following the acquisition of two key tenements from BHP Nickel West in 2016.

The Mt Alexander project stands out as it is showing all the signs of being a major nickel–copper discovery with the three prospects – Cathedrals, Strickland and Investigators -within the landholding showing exciting potential.

Early drilling suggests they could be looking at an excellent investment – a project with plenty of upside that could develop into a low-cost operation able to deliver separate high quality nickel and copper concentrates.

Mt Alexander is located 120 kilometres south southwest of the Agnew-Wiluna greenstone belt in the Yilgarn Craton of Western Australia, which hosts two of the world’s largest komatiite-hosted nickel sulphide deposits, the Mt Keith and Perseverance deposits.

Strategically placed 120km south of Leinster and 100km west of Leonora it is in close proximity to existing infrastructure.

St George executive chairman John Prineas told The Resources Roadhouse that initial exploration had confirmed recurrent nickel-copper sulphides in the Cathedrals Belt over a strike of 3.5 kilometres.

Historic drilling at the Cathedrals prospect intercepted 4 metres at 4.9 percent nickel, 1.7 percent copper and 3.9g/t Platinum Group Elements (PGE’s) from 91.4m and 3m at 3.8 percent nickel, 1.6 percent copper and 2.7 percent PGE’s from 56.3m.

“In our current drill program, there was 19 planned drill holes but we have expanded it to 25 and further extended the zones of mineralisation,” Prineas said.

“Preliminary metallurgical testwork of the massive sulphides at Mt Alexander produced concentrate with 18 per cent nickel and 32 per cent copper as well as high values for cobalt and PGE’s, cobalt is very popular at the moment.”

Downhole Electromagnetic (DHEM) surveys are being carried out in all completed drill holes to detect conductors associated with massive sulphide mineralisation and to assist in planning follow-up drilling. A major Moving Loop Electromagnetic (MLEM) survey is also in progress over the structural corridor one kilometre south of the Cathedrals prospect, which was revealed by a high resolution airborne magnetic survey completed in late 2016.

“It’s a very exciting project and we have been looking forward to the results of our current drill and DHEM program and once we’ve analysed the information we’ll plan the next round of drilling, which will be the drill-out phase,” Prineas said.

As the diamond drilling has progressed the company has been able to announce significant intersections from the Investigators prospect including a 20.6 metre thick mineralised ultramafic which included 4.88m of massive and matrix sulphides from 157.8m downhole.

Two intervals of massive sulphides were intersected, which were 3m and 0.3m thick, with average values of 6.3 percent nickel and 4.3 percent copper.

At the Cathedrals prospect a 3.25m thick intersection of nickel sulphide mineralisation returned average values for the 1.35m thick massive sulphide of 9 percent nickel and 2 percent copper.

Commenting on the Investigators intersection Prineas said it was the thickest mineralisation encountered at the prospect to that point and represented an important milestone in the ongoing drilling campaign.

“The drill results at Cathedrals continue to extend the shallow high-grade mineralisation with further massive sulphides intersected only 60m below the surface,” he continued.

“These results are amongst our best ever intersections at Mt Alexander and illustrate the potential at this under-explored project.

“The nickel and copper values we are seeing continue to be impressive and give confidence that the high-grade mineralisation will support robust economics for a potential mining operation.

“The beauty of this project is that it is not just high-grade nickel, we’ve also got high-grade copper, cobalt and PGE’s and a choice of processing at nearby plants, which will save something like $100 million if we don’t build our own concentrator.”

The economics of the Mt Alexander project is an important factor in its future as an operating mine and John Prineas has the background to provide a clinical evaluation of the venture and its potential to deliver a successful mine in the most efficient and cost-effective manner.

He has more than 25 years’ experience in the banking and legal sectors, including responsibility for project and acquisition finance for resources and infrastructure projects with a major international bank.

“The shallow mineralisation is a major economic benefit,” Prineas added.

“These kinds of grades are usually obtained by drilling down to 500 or 800 metres, we’ve only been down to about 160 metres and we haven’t really tested it beyond that.

“We have high-grades of nickel and copper with strong credits for cobalt and PGE’s; excellent metallurgy; high quality smelter-friendly concentrate; proximity to existing processing plants; and we’re located near existing infrastructure with access to roads and power.

“We’re very lucky.”

The number of established nickel concentrators in the region is a valuable bonus for the project.

The Sinclair project is 75km northeast, the Cosmos concentrator 135km north and BHP’s nickel headquarters at Leinster 110km northeast.

Prineas said the company would be looking at a pre-feasibility study within six to 12 months.

“Because of the shallow mineralisation at this stage we’re considering an open cut or box cut, but whatever we do it’ll be a low cost operation which will be a big advantage,” he explained.

St George also acquired another project from BHP Nickel West which is 60 kilometres north of Mt Alexander along the Ida Fault, a significant craton-scale structure.

Reconnaissance aircore drilling conducted by BHP at the Hawaii project revealed more than five kilometres of moderate to high magnesium oxide (MgO) ultramafics.

The drill holes confirmed the discovery of a new greenstone sequence in an area previously considered to be barren granitoids.

These greenstone sequences have never been explored for nickel sulphide or gold mineralisation, and indicate that the Hawaii project provides an attractive exploration opportunity for St George.

A first pass RC drilling program has been initiated at the company’s third project at East Laverton over several new gold targets.

In addition, diamond drilling is underway to test a powerful electromagnetic conductor (EM) at the Windsor prospect at East Laverton.

With conductivity of 210,000 Seimens, this is the most powerful conductor identified by St George to date and is highly prospective for massive sulphide mineralisation.

As The Resources Roadhouse was going to the printers, St George Mining received assay results from drilling at the Cathedrals prospect, which include the best intersections of nickel-copper-cobalt-PGE mineralisation to date at the Mt Alexander project.

Seven diamond drill holes were completed and all intersected mineralised ultramafic with laboratory assays confirming multiple, good-sized intersections of high-grade nickel-copper-cobalt-PGE mineralisation, including results from one hole of:

11.36m of mineralised ultramafic, including 4.2m at 0.39 percent nickel, 0.18 percent copper, 0.02 percent cobalt and 0.52g/t total PGEs from 53.6m; and

7.5m at 3.9 percent nickel, 1.74 percent copper, 0.12 percent cobalt and 3.32g/.

St George Mining Ltd. (ASX: SGQ)
… The Short Story

HEAD OFFICE
Level 1
115 Cambridge Street
West Leederville WA 6901

Ph: + 61 8 9322 6600

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

DIRECTORS
John Prineas, Tim Hronsky, Sarah Shipway

Aruma Resources Rebuilds on Slate Dam Potential

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THE INSIDE STORY: The Invincible gold deposit, being mined by Goldfields at its St Ives operation, set a new discovery benchmark for gold explorers in the Western Australia goldfields.

The possible discovery of such a deposit has reinvigorated industry stalwart Peter Schwann, managing director of Western Australia-focused gold explorer Aruma Resources (ASX: AAJ).

The Invincible deposit is considered by market watchers as one of the most important gold discoveries in recent decades for many reasons.

One being that it highlighted potential for new substantial gold systems within an existing gold district, hosted by an alternate geological setting.

Invincible readjusted the way geologists regard lithological units within the region, which were previously thought to never contain gold.

Now, with fresh eyes and open minds, these lithological units are considered to possibly host gold systems with economic grades.

The Invincible ore body was almost overlooked due to its unconventional geological setting and exploration hindered by surficial cover.

Invincible broke all the rules by being a hydrothermal gold deposit formed near the geological contact between the Black Flag Group and Merougil Sediments. 

With a lode thickness varying from one metre to over 20m, the ore body was defined over a strike length of two kilometres with both open cut and underground operations set to produce over two million ounces.

“We recognised that the major gold deposits around the world, and in Western Australia, are in sediments,” Schwann told The Resources Roadhouse.

“One thing about them is that they usually have large endowments and good grades.”

Schwann revisited Aruma’s land package paying close attention to the potential of sediment-hosted gold deposits.

“I had looked at Goldfield’s Invincible deposit at Kambalda and at the stratigraphy there,” Schwann continued.

“I realised we are also looking at gold in the Black Flag Group sediments and that they have been sitting right under our nose all along. Other companies to look at this included Sirius and S2.

“I have been a long-time believer in the Majestic Imperial area, but the Invincible discovery became very important and I recognised parallels with the Invincible discovery at both Norseman and up in the Paddington-Bardoc region.”

Schwann’s recalibrated view led to Aruma Resources carrying out a re-evaluation of the company’s Glandore project, located within the Kalgoorlie District.

From this, Aruma has identified that the geological sequence at Glandore bears similarities to that of the geology surrounding the two-million-ounce Invincible deposit. 

Aruma’s major project is Slate Dam, located 40 kilometres from Kalgoorlie where it recently extended its reach with the acquisition of the Juglah leases (EL25/534 and ELA25/558, 22 graticular blocks) over the southern extension of the project.

The tenements cover prospective gold ground within the geology that hosts the Majestic and Imperial gold deposits.

“The most recent land acquisition took our landholding in the region to over 260 square kilometres, located in a desirable address east of Kalgoorlie that is highly prospective for gold,” Schwann said.

Evaluation carried out by Aruma of the geology surrounding the Glandore project, identified the Slate Dam prospect as a potential site for an invincible-style gold deposit.

“Our activity in the area is progressing well as we prepare to drill covering the large high-tenor gold anomaly at Slate Dam,” Schwann said.

Slate Dam had previously been mapped as a felsic volcanic package and consequently explored for its potential to host a large intrusive porphyry-style gold system.

At first, the initial exploration looked extremely promising – identifying a large (7sqkm) bottom of hole gold anomaly (>200ppb gold).

Follow-up deep diamond drilling tested the porphyry intrusive model, returning thick low-grade intersections of mineralisation, including:

GWD013
19 metres at 1.09 grams per tonne gold.

Although the drilling results were encouraging, no gold-bearing intrusive porphyry units were intersected, resulting in little to no further groundwork being carried out on the prospect since 2002.

Fast-forward to 2012 and the discovery of the Invincible deposit opened the area for further potential discoveries for this style of mineralisation.

Aruma is confident the similarity of the sedimentary sequence of Slate Dam to that of the Invincible stratigraphic sequence, consisting of interbedded volcanic sediments, could results in the prospect being one of those discoveries.

The company has been busy conducting further investigation into Slate Dam geophysics, which has identified a large ring-structure, the company believes likely to represent a granite intrusive, a necessary potential driver for the mobilisation of gold bearing fluids.

The major geological structures of Slate Dam are covered by shallow lake sediments which could potentially be masking a Tier 1 gold deposit.

Aruma Resources aims to test its Invincible gold model theory at the Slate Dam project over coming months, and with initial ground reconnaissance and mapping confirming the similarities to the Invincible-style gold system, spirits are high.

Aruma’s decision to move on Mulga Dam followed a presentation by the company to Melbourne-based PAC Partners who suggested the ring structure in the magnetics.

“It was then that I realised we needed the other lease so I pegged Mulga Dam, which was also available,” Schwann explained.

The company was encouraged by results from a data search that identified an anomaly around 3.5 kilometres by two kilometres, which is bigger than the Golden Mile-Super Pit footprint.

“The anomaly was not a low-level anomaly and was basically greater than 0.25 grams and stood out as something too big for us to walk away from,” Schwann continued.

“The other thing is that it had large intersections – they weren’t high-tenor – but they were big and at 19 metres at 1.09 grams per tonne – they were deep, but they were thick.

Drilling to be undertaken at Slate Dam over the coming months will be targeting results greater than five metres and greater than two grams per tonne gold.

“It doesn’t sound very much, but it is a model we have called the Black Flag model,” Schwann said.

“Remember that Invincible was eight metres at six gram per tonne gold!”

“The targets are based on Kalgoorlie ore bodies that includes the likes of Golden Mile, Paddington, Bardoc and Invincible.

“It is the Invincible model we are working off for our upcoming drilling programs.

“I believe Invincible is probably one of the most important discoveries in, at least, the last 50 years in Australia.

“It was discovered with around one million ounces at four grams per tonne.”

Once statutory requirements for the approved program of work and Heritage Surveys are arranged and existing exploration databases and geology have been validated, Aruma will be on the ground at Slate Dam fervently drilling.

Aruma has scheduled 5,000m of first pass Reverse Circulation drilling over the high-tenor, drill defined gold anomaly at Slate Dam.

This will be done by drilling 200m spaced lines of 100m deep angled drill holes at 50m intervals into the steeply dipping stratigraphy.

Schwann can hardly contain his excitement when speaking about the Slate Dam project and the possibilities it holds for Aruma Resources.

“It has given me, and the company, a pulse,” he declared.

“We are sitting up, out of the recovery position and we are getting a renewed interest in the company from people who believe in the story we now have to tell.”

“I’m prepared to say that this is the best gold project I have had in my entire career.”

Aruma Resources Limited (ASX: AAJ)
…The Short Story

HEAD OFFICE
Level
6 Thelma St 
West Perth WA 6005

Ph: +61 3 9321 0177

Email: info@arumaresources.com
Web: www.arumaresources.com

DIRECTORS
Paul Boyatzis, Peter Schwann, Ki Keong Chong

Alliance Resources Fervently Exploring Zealous

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THE INSIDE STORY: Alliance Resources (ASX: AGS) is manager of the Wilcherry project Joint Venture, located in the mineral rich Gawler Craton of South Australia with Tyranna Resources (ASX: TYX).

Alliance (51%) and Tyranna (49%) struck the Wilcherry JV in 2016, when the latter wanted to concentrate on its Jumbuck project, but did not want to divest totally from the quality 1,200 square kilometres of tenements, which are considered prospective for gold and base metals.

The Wilcherry project Joint Venture comprises three priority areas, including the Zealous tin-base metals, Telephone Dam zinc-lead-sliver, and Weednanna gold prospects.

Alliance as operator of the Joint Venture recently commenced a program of reverse circulation (RC) drilling at the Zealous tin-base metals prospect, which it identified as a first-order conductive target via a helicopter-borne electromagnetic (HEM) survey during December 2016.

This was confirmed by a follow-up high-powered moving loop electromagnetic (MLEM) survey completed in March 2017.

“When we first came into the Joint Venture we recognised the project was under a significant amount, covering about 80 per cent of the tenement, of mostly shallow transported cover,” Alliance Resources managing director Steve Johnston told The Resources Roadhouse.

“From that we saw an opportunity to use airborne electromagnetics to search for buried massive sulphide deposits.

“There were two really good data bases of magnetics and gravity, but the next step was to fly a regional airborne EM survey. 

“We did that and identified many late-time conductors, including the two big ones – the first at Zealous and the second at Telephone Dam.”

Alliance completed a moving-loop survey on both Zealous and Telephone Dam in March that confirmed the prospects to be conductor systems, being that there is more than one conductor at each prospect.

A program consisting five RC holes, totalling 1,500 metres, is being drilled to initially test the two conductors that comprise the Zealous target.

Three holes are planned to test the Zealous Main Conductor and two holes at the Zealous northwest conductor.

“The moving-loop survey conducted at Zealous confirmed a large southern conductor of 1500 metres by 1250 metres, dipping to the southwest at a depth around 100 to 200 metres and a northern conductor – more flat lying – 1500m by 750m and the interpreted depth to the top of that one was around 50 metres maximum,” Johnston said.

“There has been no previous drilling carried out into either of these conductors, however, there is some historic drilling 300m to the southeast of the southern conductor by Ironclad in 2012 as part of its search for iron ore deposits.”

The previous drilling at Zealous between 2012 and 2014 intersected sizeable tin grades, including:

12ZLRC007
20 metres at 1.29 per cent tin from 42m;

13ZLDH001
12.3m at 1.1 per cent tin from 119m; and

13ZLRC001
10m at 1.23 per cent tin from 128m.

“Because the initial analyses were for iron ore and base metals were not the focus, the lab reported missing mass in the iron suite XRF analyses,” Johnston explained.

“Introducing another analytical method showed up the presence of base metals, including an elevated level of tin.

“That resulted in Ironclad going back and looking at the project as a new tin target and they drilled around 25 holes that intersected shallow, but significant, tin intercepts.

“A couple of further holes in 2016 intersected lower grades whilst targeting a magnetic anomaly.

“However, our recent moving-loop survey showed the presence of the conductor system to the north and below the historic drilling.

“The Joint Venture has commenced drilling on the Zealous target and we are really looking forward to receiving the results of those holes.”

The MLEM survey data from Telephone Dam clearly confirmed the presence of weak bedrock conductors consistent with the HEM anomalism.

Two bedrock conductors have been defined with the northern conductor being strongest.

“Again, at Telephone Dam, there are two main bedrock conductors – a northern conductor that is around 1000 metres by 1000 metres in size interpreted to be around 150 metres to the top, and a slightly larger southern conductor 1500 metres by 1000 metres and a depth to the top of around 25 to 50 metres.”

Alliance has interpreted the conductors to potentially have some width/thickness to them and more complex geometry than simply a thin plate model approximation with constant dip.

Should this be the case, then Alliance expects the conductive unit could be intersected above the current modelled position.

“At Telephone Dam, there has been a lot of historic drilling carried out by a raft of owners since the 1980s for silver-lead-zinc,” Johnston said.

The historic drilling at Telephone Dam produced some impressive results, such as: 92m at 2.28 per cent combined lead and zinc with some silver credits, associated with the northeast corner of the Southern Conductor.

Upon completion of the drilling at Zealous, Alliance will commence a small program consisting three RC holes for 850m to test the MLEM conductors at the Telephone Dam zinc-lead-silver prospect.

The third target of the Alliance trinity is the Weendnanna gold prospect, which was another pre-existing project to evolve from the Ironclad legacy.

Ironclad viewed Weednanna as a magnetite prospect, and Trafford was keen on the gold potential of the prospect.

However, Ironclad was the operator and its view prevailed until 2015 when the two companies merged, resulting in Tyranna Resources.

“Whilst we were planning and flying the geophysics over the regional targets, we were keen to commence work at an advanced prospect and Weednanna fitted the bill,” Johnston explained.

“We couldn’t ignore that it had produced great gold results over a strike length of around 1.3 kilometres. 

“We identified three target areas we considered to have potential to have high-grade, but which required further drilling.”

Alliance drilled those targets in March and produced outstanding gold intersections including:

17WDRC003
49m at 6.3g/t gold from 45m, including 21m at 10.7g/t gold from 48m;

17WDRC012
2m at 61.1g/t gold from 167m;

17WDRC011
10m at 6.8g/t gold from 79m, including 3m at 15.5g/t gold from 81m; and

17WDRC013
7m at 11g/t gold from 82m, including 4m at 17.6g/t gold from 84m.

Weednanna is the most advanced gold prospect in the Wilcherry project area, having originally been identified in 1997 as a strong gold-in-calcrete anomaly coincident with a prominent north-north-west-trending magnetic anomaly.

Successive drilling campaigns identified gold mineralisation associated with skarn alteration and brecciation in the contact aureole of the adjacent granite, however, these failed to fully unravel the structural and lithological controls on the distribution of gold.

Alliance is now systematically re-logging all available RC chips and diamond core from Weednanna with the objectives of identifying structural and lithological controls on the distribution of gold, constructing a 3D geological model of the prospect, and planning further exploration with a view towards defining a mineral resource.

A further program of RC drilling is planned to test for extensions to, and infill, high-grade gold intersections at Weednanna Targets 1, 2 and 3 returned from the recent RC drilling program.

This drilling will follow the drilling to test electromagnetic conductors at the Zealous and Telephone Dam prospects.

Alliance Resources Limited (ASX: AGS)
…The Short Story

HEAD OFFICE
Suite 3
51 – 55 City Road
Southbank, VIC, 3006

Ph: +61 3 9697 9090

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

DIRECTORS
Ian Gandel, Tony Lethlean, Steve Johnston

Musgrave Minerals Lines-up New Cue Resource

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THE INSIDE STORY: Methodology may not be recognised as a science, however, Musgrave Minerals (ASX: MGV) is putting it to effective use at the Cue project, located in the Murchison Province of Western Australia.

Musgrave Minerals is working towards an 80 per cent interest in the Cue project, from its current sixty per cent, as part of a Farm-In and Joint Venture Agreement with Silver Lake Resources (ASX: SLR).

The company’s major focus at the Cue project is on the Moyagee area, where it recently announced a sizeable upgrade to the total Mineral Resources at the Break of Day and Lena gold deposits.

The updated JORC 2012-compliant Mineral Resources include:

Break of Day (Indicated and Inferred) 868,000 tonnes at 7.15 grams per tonne gold for 199,000 ounces of gold; and

Lena (Indicated and Inferred) 2.682 million tonnes at 1.77g/t gold for 153,000 ounces of gold.

The numbers take the total Break of Day and Lena (Indicated and Inferred) Resource to 3.55 million tonnes at 3.09g/t gold for 352,000 ounces of gold.

“This is a significant milestone that will enable Musgrave to assess multiple processing options going forward to maximise shareholder value,” Musgrave Minerals managing director Robert Waugh told The Resources Roadhouse.

“We have now drilled more than 22,000 metres on the project.

“The Mineral Resource estimate strengthens the open-cut potential of Lena and the underground potential of Break of Day and together with the proximity to existing road and processing infrastructure, significantly increases the future development potential of the project.

“Break of Day is still open in all directions and we are yet to define the limits to the high-grade gold mineralisation.

“Further drilling planned for early August will aim to continue to grow the resource base.”

Drilling results from Break of Day confirmed the high-grade mineralisation with intersections including:

21 metres at 21.5 grams per tonne gold from 157m;

15m at 16.6g/t gold from 170m;

14m at 14.4 g/t gold from 111m;

11m at 6.8g/t gold from 23m;

6m at 46.5g/t gold from 99m; and

5m at 53.5g/t gold from 138m.

Break of Day consists of two parallel gold lodes with a combined strike extent of over 500m, an average lode width of approximately 1.7m and an average grade of approximately 16g/t gold.

“The drilling campaign we have completed at Break of Day so far this year has been extremely positive,” Waugh said.

“Not only does it leave the mineralisation on both lodes at Break of Day open to the south, we are consistently seeing higher-grade gold mineralisation at Break of Day below the 80 to 100 metres depth level where it is wide open with no current drilling in this area.

“This creates a significant opportunity for the company to grow the Resource further with further drilling.”

The Break of Day drilling campaign received great support from the Lena deposit, in the form of excellent gold drilling results supporting the potential for an open cut operation, including:

13m at 9.7g/t gold from 61m;

8m at 6.4g/t gold from 13m;

4m at 8g/t gold from 35m;

3m at 48.6g/t gold from 80m;

5m at 7.8g/t gold from 118m; and

2m at 12.4g/t gold from 3m;

The drilling confirmed the mineralisation at Lena to occur in vertical to steeply dipping, semi-parallel quartz lodes hosting gold within a mafic-ultramafic stratigraphic sequence and remains open along strike and down plunge.

The Lena mineralisation is currently defined along a 1.6 kilometre strike length and hosts a generous portion of the overall Moyagee total Mineral Resource.

“The results from the RC gold drilling program were always encouraging and enabled us to complete a significant upgrade to the Resources,” Waugh explained.

“The continued strong near surface gold results from Lena provide a good case for the establishment of an open cut mine.”

Musgrave is confident the Resource upgrade will enable the company to progress to a Scoping Study in the second half of 2017.

The Cue project is in what Real Estate Agents would describe as, ‘a desired location’.

The project is proximal to many established gold operations, meaning there is good infrastructure and multiple operating processing plants in the district (Ramelius 40km south, Westgold 130km North).

This potentially provides the company the ability to consider numerous development options.

“Although we have updated the Resource we still consider there to be potential to extend that mineralisation significantly, as it is still open,” Waugh explained.

“The amount of existing infrastructure within the Cue Region will definitely be a benefit for us to be able to get either a standalone or toll treatment operation into production.”

The potential of Break of Day has been highlighted by the completion of an initial metallurgical test work program that returned exceptional gold recoveries.

Positive results came from test work carried out on three composite fresh rock samples that were collected from nine representative drill holes across the strike of the gold lodes at Break of Day.

The samples were representative of the various gold lodes, ore types and feed grades for potential future mining and processing activities utilising conventional gravity and cyanide techniques.

The test work demonstrated very rapid leaching kinetics for all three samples and overall recovery of between 95.7 per cent and 96.3 per cent (average 96%), producing a maximum leaching of gold after the first eight hours.

Exceptionally high gravity recoveries of between 80.8 per cent and 86.1 per cent (average 84.2%) were also achieved from a single pass through a Knelson concentrator.

“The gravity recoveries are very high in comparison to typical Yilgarn gold ores,” Waugh said.

“The metallurgy results will enable us to assess multiple processing options going forward, while the high gravity recovery will enable flexible processing and potentially reduce capital and operating costs.”

Gold is not the only commodity on Musgrave’s Cue project hitlist.

An EM survey completed over the northern portion of the project area to identify basement conductors that may reflect copper-gold massive sulphide mineralisation delivered 13 separate targets for drill testing.

The targets all returned strong ground electromagnetic responses within the Hollandaire volcanic massive sulphide (VMS) field.

Musgrave believes a combination of strong geological, soil geochemical or rock chip sampling will provide the necessary support for the potential discovery of massive base metal sulphides.

That potential was supported with the company receiving WA government EIS co-funded support for the base metal drilling.

Drill testing of these high priority base metal targets has now been completed with assays awaited.

“We like the base metal potential of the Hollandaire project area,” Waugh said.

“Silver Lake demonstrated in 2011 with the Hollandaire discovery that there is potential for VMS deposits in the area.

“We hope to be able to emulate that and make significant discoveries on the base metals side to complement our gold discoveries.

“Our focus on the Cue project is a continuous process – we’ll be spending a significant drilling budget throughout the second half of 2017, focussed on extending and growing the gold Resource while we are carrying out the Scoping Study.”

Musgrave Minerals Ltd (ASX: MGV)
…The Short Story

HEAD OFFICE
28 Richardson Street
West Perth WA 6005

Ph: +61 8 9324 1061

Email: info@musgraveminerals.com.au
Website: www.mugraveminerals.com.au

DIRECTORS
Graham Ascough, Rob Waugh, Kelly Ross, John Percival

Australian Potash Making Rapid Advancement at Lake Wells

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THE INSIDE STORY: Australian Potash (ASX: APC) completed a Scoping Study on the company’s Lake Wells potash project, located approximately 500 kilometres northeast of Kalgoorlie, in Western Australia’s Eastern Goldfields earlier this year.

The Lake Wells potash project consists of a 2000 square kilometre tenement package made up of 100 per cent-owned granted exploration licences, and licenses over which Australian Potash holds rights to all potash minerals.

The Lake Wells potash project tenement package covers palaeovalley and salt lake terrain in the northeast part of the Yilgarn Craton, which Geoscience Australia has recognised as a high-potential potash salt lake system with interpreted palaeovalley trends.

Australian Potash has verified this prospectivity through extensive drill hole brine sampling.

The recent Scoping Study confirmed both technical and economic aspects of the Lake Wells project to be strong and viable.

The Study determined the project has potential to take Australian Potash from its current explorer moniker through to being a long-life, low capital and high margin sulphate of potash (SOP) producer.

In conjunction with the Scoping Study, APC upgraded the Lake Wells JORC 2012-compliant Mineral Resource Estimate to 14.7 million tonnes of SOP, including 12.7 million tonnes sitting in the Indicated category.

Australian Potash believes potential exists for substantial upside in the resource model, encouraged by the Scoping Study mine plan based on the extraction of just 34 per cent of the project’s Indicated Resource in the Western High Grade Zone and 33 per cent of the Inferred Resource in the Southern Zone.

The Study also outlined life of mine extension opportunities with inclusion of the Eastern Zone (4.6 million tonnes SOP Indicated).

After completing the Scoping Study, APC received WA State Government approvals to proceed with developing pilot evaporation ponds for the project.

An on-site, pilot evaporation pond program has commenced to produce the first sample of SOP from the project.

Construction of the evaporation pond was finished in June 2017 with the program to operate for a minimum of six months.

The test-work from the bulk samples of potash salts from the pilot evaporation pond program will be used to further optimise process design.

“The Scoping Study provided areas we can improve and de-risk the project,” Australian Potash process engineer Shaun Triner told The Resources Roadhouse.

“We are finalising those while we carry out some optimisation work.

“Resource-wise, we identified the palaeovalley, which is effectively an old river system that has filled up with sediments over time.

“The hyper-saline environment of the Goldfields has effectively formed – what could be described as – a tank full of brine containing potassium.

“That palaeo-valley under our deposit goes to around 175 metres deep with substantial upper and basal sand layers, from where we will be able to extract brine.”

The optimisation work underway includes recently-conducted laboratory based test-work that confirmed the validity of the conversion process of Muriate of Potash (MOP) to SOP that APC proposes to implement at Lake Wells.

Unlike the Mannheim process, this natural, low-energy process can increase output from the project by up to 50 per cent.

The test-work also confirmed the Lake wells project can increase SOP output by 50,000 tonnes per annum to 150,000 tonnes per annum in stage 1, and by 100,000 tonnes per annum to 300,000 tonnes per annum in stage 2 by converting MOP to SOP.

To achieve this APC will use a non-Mannheim conversion process, similar to that used at the Compass Minerals brine SOP operation in the United States, the largest brine SOP operation outside of China.

The main differences between the conversion process APC intends using compared to the Mannheim process are it happens at low temperature and will not create additional reagent expense associated with purchasing sulphuric acid, as sulphate is already present.

The company considers the economic case for developing this conversion facility to be compelling considering the low marginal operating costs associated with producing an additional 50,000 to 100,000 tonnes of SOP from essentially the same plant.

APC is working to de-risk the three essential components of a brine SOP operation, being brine extraction, brine evaporation and salt processing and is about to commence a Stage 2 test-pumping program that will add to the plus-20 million litres of test-pumping already conducted.

This test-pumping program will feed into the brine flow model for brine extraction, building on decades of understanding and operation of brine bore fields in WA.

“We are now aiming to kick into a Feasibility Study, for financing purposes, during the second half of this year that should be ready for reporting in the first half of next year,” Triner said.

“As we move into a Feasibility Study – obviously there is the technical side of the project to consider, but we also need to have a market for our material, which is where the recent MoUs regarding offtakes come into play.”

A valuable lesson junior Resource companies learnt in recent times is that financiers can be reluctant to fund an operation that doesn’t have customers for its product.

To that end, APC placed a healthy chunk of its corporate puzzle in place by demonstrating to the right people the company does have potential customers interested in its product.

Australian Potash signed of a non-binding Memorandum of Understanding (MoU) for the supply of SOP to one of China’s largest fertiliser companies after striking a deal with Sino-Agri Holding Company Limited, a subsidiary of CNAMPGC Holding Limited Corporation.

The MoU portends potential high-level commercial terms for sales volumes of up to 30 per cent of estimated production – up to 100,000 tonnes per annum of SOP – from Stage 2 of the Lake Wells project.

“In the Scoping Study, we talked about a two-stage project, the first stage being 150,000 tonnes per annum and the second stage being another 150,000 tonnes per annum,” Triner said.

“That was based on getting funding for the first half, and then funding the second half through cash flow.

“Although it is still non-binding at this stage, the signing of a 100,000 tonnes per annum offtake MoU is an extremely important component of the project’s first 150,000 tonnes of production.

“We have been developing our relationships within the Chinese potash and fertiliser industries for some time and it is encouraging that we are now seeing the results in the form of a formal pathway to securing customers in the world’s largest fertiliser market.”

Australian Potash has a great deal of activity planned for Lake wells, including the commissioning of pilot evaporation ponds, completion of the Stage 2 test-pumping program, installation of Stage 2 test-production bores, continuing Resource upgrade and expansion program, and commencement of the Feasibility Study.

“We have made some rapid advancements with the release of the Scoping Study and we are now very confident the project is viable and should go ahead, which we have demonstrated to the market with the imminent commencement of our Feasibility Study,” Triner said.

“Although we haven’t quite kicked-off the FS at this stage, we are very busy finalising that work-optimisation phase on the back of the Scoping Study.

“The Scoping Study presented a few options we need to look at and we are just assessing those to finalise the fixed-scope of the Feasibility Study, which we anticipate will be underway by Q3 this year.”

Australian potash Limited (ASX: APC)
…The Short Story

HEAD OFFICE
31 Ord Street
West perth WA 6005

Ph: +61 8 9322 1003

Email: m.shackleton@australianpotash.com.au
Web: www.australianpotash.com.au

DIRECTORS
Matt Shackelton, Rhett Brans, Brett Lambert

Middle Island Resources Annexes Strategic Gold Project

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THE INSIDE STORY: Middle Island Resources (ASX: MDI) clearly signalled its intentions with a recent land acquisition and an outstanding gold intercept.

Middle Island Resources consolidated its grip on the 100 per cent-owned Sandstone gold operation, located between Mt Magnet and Leinster in the East Murchison Mineral Field of Western Australia with the strategic pick-up of the adjacent Wirraminna gold project.

Through its 100 per cent-owned subsidiary, Sandstone Operations, Middle Island executed an Option Deed to acquire a 100 per cent interest in the Wirraminna gold project from two prospectors, Kym McClaren and Karl Mansen.

The deal came with a price tag of $300,000 payable at any time within the next four years, during which Middle Island will have access to explore for sub-surface gold.

The vendors will retain the surface gold rights to a depth of two metres prior to option exercise.

The 40.64 hectare Wirraminna gold project adjoins the western boundary of Middle Island’s existing Sandstone gold project but, more importantly, lies only one kilometre west of the company’s 600,000 tonnes per annum Sandstone gold processing plant.

“There are several aspects of significance with the Wirraminna project that we feel should spark market interest,” Middle Island Resources managing director Rick Yeates told The Resources Roadhouse.

“We identified Wirraminna early on as being of real strategic significance for our Sandstone operation.

“There are three principal attractions to the project, apart from the proximity to the Sandstone processing plant.

“There is already a JORC 2004-compliant Resource identified on the block.”

The Wirraminna project hosts an Inferred Resource (JORC 2004) of 106,300 tonnes at 2.07 grams per tonne for 10,674 ounces of gold.

Mineralisation is associated with a steeply dipping, northwest-trending, high grade quartz lode (Wirraminna line) that remains open at depth and, to a lesser extent, along strike to the northwest and southeast.

Although JORC 2004-compliant, the Wirraminna Resource obviously indicates the presence of gold mineralisation, which Middle Island hopes to upgrade to a standard consistent with the 2012 JORC Code guidelines in 2017-18 by completing a rigorous program of infill RC and diamond core drilling.

The Wirraminna project also hosts two identified, yet unquantified, mineralised laterite occurrences at surface.

These, in turn, are associated with the intersection of three distinct mineralised trends, being the Wirraminna, Goat Farm and Twin Shafts lines.

To date there has not been a great deal of meaningful exploration undertaken beneath or between these laterite occurrences, particularly along the Goat Farm line.

“The mineralisation we see at Wirraminna is a somewhat unique style of mineralisation compared to what we see elsewhere within the Sandstone project,” Yeates explained.

“It is very much an oblique, quartz, lode system, and certainly in the Sandstone district we know these types of deposits can be quite persistent at depth.

“We think there is a lot more potential – not just for an open pit, but also for a subsequent underground operation.

“The Wirraminna Trend has been subjected to a generous amount of near-surface drilling with not a lot completed at depth.

“We think this trend has plenty of legs and the opportunity to expand on the current 10,674 ounces is significant.”

The Wirraminna transaction makes infinite sense when taken in context with the findings of a recent study on the adjacent Sandstone project, providing a potential catalyst for the early re-commissioning of the Sandstone operation.

“Our overall strategy is to extend and enhance the production profile for the re-commissioning of the Sandstone operation,” Yeates said.

“To do that, we basically need 10,000 to 20,000 ounces of higher grade gold mineralisation up the front end of the schedule to improve the project’s initial capital payback.

“The Wirraminna acquisition is a big step forward in providing that and, while it may not be the entire answer, it is at least part of the answer to an early re-commissioning of the Sandstone mill.

“As such, in the second half of the calendar year we are planning some RC and pre-collared diamond drilling to verify, and hopefully extend, the existing Wirraminna Resource.”

Wirraminna also appears to incorporate the western margin of a substantially larger, intrusive-related target at depth, inferred from gravity data.

The majority of this target lies within Middle Island’s 100 per cent-owned tenure.

The recent Wirraminna purchase hasn’t distracted Middle Island from exploration on its existing Sandstone project, where it recently announced remarkable gold assay results from three diamond drill holes completed at the Two Mile Hill prospect.

The diamond coring program, co-funded under Round 14 of the Western Australa Government’s Exploration Incentive Scheme (EIS), was testing the down-plunge extent of gold mineralisation within the Two Mile Hill intrusive to a greater depth than any previous drilling.

The deepest hole to be drilled to date at the Two Mile Hill prospect, MSDD156, returned a gold intersection of 415.2m at 1.34g/t gold, ending in mineralisation.

The cored portion of MSDD156 is mineralised from start to finish and remains open at depth, with the final interval comprising 66.9m at 3.27g/t gold (from 432m to end of hole at 498.9m).

“This is a fabulous intercept that, while not necessarily contributing to the immediate recommissioning of the Sandstone project, does achieve two very clear objectives,” Yeates said.

“One: It demonstrates the potential longevity of the Sandstone project.

“And two: It brings Sandstone back into the spotlight – it’s not a new discovery, however, the intercept does re-introduce Two Mile Hill to the market as a deposit that could potentially be of far greater significance than the currently envisaged Sandstone production scenario.”

The drilling confirms the presence of a substantial gold-mineralised tonalite plug or stock measuring 250m in strike and up to 80m in width that is persistently mineralised to at least 500m depth.

The results increase the possibility of bulk underground mining beneath the proposed open-pit cutback at Two Mile Hill.

“The intercept demonstrates potential well beyond the realms of the proposed open pit cutback and the high-grade BIF-hosted mineralisation adjacent to the tonalite we are considering for underground mining,” Yeates said.

Middle Island Resources Limited (ASX: MDI)
…The Short Story

HEAD OFFICE
Suite 1
2 Richardson Street
West Perth WA 6005

Ph: +61 8 9322 1430

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

DIRECTORS
Peter Thomas, Rick Yeates, Beau Nicholls