WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Great Western Exploration (ASX: GTE)
Great Western Exploration recently executed a 50:50 Joint Venture agreement with Kazakhstan’s state owned mining company Tau-Ken Samruk (TKS).
This Joint Venture paves the way for a period of active exploration in a highly prospective, previously explored region.
The Joint Venture encompasses the 12,500 square kilometre Spasskaya project which hosts 120 historical copper prospects.
In the 1970’s, the Soviets conducted extensive, albeit incomplete, exploration on eight ‘high-priority’ sites.
Wide zones of ore grade and predominantly oxide mineralisation were intersected at all eight locations with widespread outcropping mineralisation evident at four locations.
Based on historical exploration results, just these eight projects have an exploration target of between 69 to 173 million tonnes grading approx. 1.10 per cent copper for approx. 750,000 tonnes and 2 million tonnes of contained copper.
Under the terms of the JV agreement, Great Western will earn its 50 per cent interest by sole funding the exploration phase and 50 per cent of the Bankable Feasibility Study.
Great Western has commenced a 2,500m maiden drill program aimed at testing the reliability of the historical Soviet exploration data.
Should the historical work be deemed reliable, resource definition drilling campaigns will then commence.
Great Western also has a quality portfolio of early stage, Australian based, exploration projects including the newly formed JV with Xstrata Glencore.
This JV incorporates the Cunyu project with Great Western’s existing Doolgunna project, creating a prospective tenement package of approx. 3,300sqkm.
Recommendation: Speculative BUY
Corazon Mining (ASX: CZN)
Top Up Rise – Copper Mineralisation Intersected
Corazon Mining Limited has intersected copper sulphide mineralisation (chalcopyrite) in the first diamond hole drilled into the Top Up Rise (TUR) gravity anomaly, Gibson Desert, Western Australia.
The copper exists in form of disseminated sulphide blebs over a drill interval from approx. 229m to 275m (approx. 46m).
The presence of copper mineralisation is potentially significant given the drill hole is located on the margin of the primary target (main part of the gravity anomaly).
However, the copper mineralisation intersected (to date) makes up less than 1 per cent of the overall rock mass (visual estimate), which implies generally low grade mineralisation.
The mineralisation is hosted in highly altered and deformed rocks (potentially mafic sediments) or volcanic origin.
The gravity anomaly (high) is still yet to be explained and more priority targets are now being drill-tested.
On current timing we would expect assays in late July 2013.
Large Gravity Anomaly Still Yet to be Explained
Corazon has an option to earn up to 75 per cent interest in the TUR project.
The project covers a large amplitude gravity anomaly (TUR anomaly) which has the characteristics of an iron oxide copper gold (IOCG) system, covering an area of 10 kilometres by 6 kilometres.
When comparing the TUR gravity anomaly to the gravity anomaly over Olympic Dam (IOCG deposit) it has similar size dimensions but TUR has a higher residual gravity response.
Due to the physical size of the TUR anomaly we are certainly encouraged by the reports of copper mineralisation so early into the exploration drilling program.
We remain hopeful that higher grade mineralisation will be encountered as higher priority targets within the gravity anomaly continue to be systematically tested.
Priority One Target now Being Drill-Tested
The drill information collected by Corazon will be used to reprioritise and adjust target ranking and drill hole positions as the program progresses.
The rocks intersected (to date) have not explained the gravity anomaly, but significant alteration and sulphide mineralisation (minor copper) within the bedrock is promising for more mineralisation to come.
Corazon is now drilling a diamond hole to test a ‘priority one’ target located some 3km to the southeast of the first completed diamond hole.
The target depth of the anomaly is interpreted to be closer to surface than the completed hole and RC drilling has now been completed to a depth of approx. 283m and a diamond tail is planned to be drilled to a depth of approx. 350m.
Cheap Option on Potentially Significant Upside
The TUR project is a highly speculative ‘greenfield’ play that could have massive upside.
The intersection of copper mineralisation, so early into the first-pass drilling program is a great result, though at this stage we would expect only low copper grades to be reported.
It is ‘proof of concept’ that mineralisation (copper) is present within the system.
The company is funded for the current drilling campaign.
With drilling ongoing to explain the gravity high, we continue to recommend Corazon as a Speculative Buy.
Disclaimer: The Roadhouse holds shares in Corazon Mining
Ascot Resources (ASX: AZQ)
Ascot Resources is an ASX-listed, Colombia-focused coking coal developer.
The company’s flagship asset is the Titiribi coal project in western Colombia.
Ascot Resources has completed a first phase drilling program at Titiribi; this returned some encouraging coal quality data that indicates coking coal at the project.
Preliminary results indicate that a semi-soft, high volatile coking coal could be mined at Titiribi.
The coal is likely to be relatively high in sulphur (although this is likely to be confined to certain seams), but exceptionally low in phosphorous; the latter quality is likely to be desirable to customers.
Drilling intersected some 25 coal seams with thicknesses varying from 0.3m to 13m.
Coal is reported to show good continuity across the project, with three seams (the thickest at 5m) likely to form the bulk of any future resources.
The seams are steeply dipping and likely to produce a profitable 250,000 to 750,000 tonnes per annum.
The project is located close to a sealed highway that is linked to both Atlantic and Pacific ports.
The coal is likely to be in demand in Brazil and/or Peru as well as domestically.
Management has done this before: MD Andrew Caruso and project director John Malysa have experience in mining steeply dipping coal seams.
Titiribi looks set to be a low capital project in a region with few barriers to entry in the junior coal space.
Ascot does not plan to wash the coal and this has resulted in relatively low capex.
Anticipated margins are expected to provide a healthy operating profit.
Titiribi is likely just a foothold in the country, with Ascot having plans to grow through future acquisitions in Colombia.
We see Colombia as a good mining investment environment.
The country is the fourth largest coal producer globally, and was recently ranked the seventh most attractive country in the world for mining investment.
Recommendation — SPECULATIVE BUY
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.