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2003

Oct 2003 - Red Metal Limited

Red Metal Limited (RDM) – Applying a Fresh Approach to Finding Significant Copper – Gold Orebodies in Australia

  • The IPO Offer : Red Metal Limited (RDM) offered a subscription of 60m shares at 20c to raise $12m (minimum subscription $12m, underwritten by Grange Securities Ltd) to drill up to 40 (24 in the first 12 months) delineated copper-gold targets in 13 individual projects in Australia. There are also a number of other projects in joint venture discussion, with their own further drill targets.
  • RDM has secured an interest in a highly prospective portfolio of copper and copper-gold exploration properties in Australia through a Strategic Alliance and Sale Agreement with Phelps Dodge Australasia Inc, a subsidiary of Phelps Dodge Corporation, the world’s second largest producer (at about 1mtpa) of copper.
  • RDM are focusing their exploration on major, relatively high-grade copper, and copper-gold deposits located within the under-explored portions of the fertile Middle Proterozoic terrains (about 1.5bn to 1.8bn years ago), primarily in South Australia, Queensland, the Northern Territory and NSW. Deposit styles include Iron Oxide Copper Gold (IOCG) types similar to Olympic Dam and Sediment- Hosted types similar to the Mt Isa copper mine.
  • RDM use a fresh approach to finding major copper-gold orebodies through their application of sophisticated algorithms on geophysical data to map deep seated magmatic centres and the major faults which focus and control mineralisation. This approach has been applied to advance most of RDM’s more than 13 projects to drill-ready status over the past two years or so, and defined up to 40 targets. Any one of the targets could become a company-maker for RDM.
  • Such is the nature of RDM’s “Alliance” with Phelps Dodge (PD) that the first 3 projects to be drilled in DQ03 are joint ventures (Hawks Nest, Moonta and Browns) in which RDM is free carried by PD (to a decision to mine, provided PD elects to advance them), for 30% of PD’s 70% interest, or about 21% of each project.

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Oct 2003 - Goldstar Resources

Goldstar Resources NL (GDR) – Reopening Victoria’s Walhalla Goldfield

  • The IPO Offer : Goldstar Resources (GDR) offered a subscription of 24m shares at 25c to raise $6m (minimum subscription $5m, sponsored by Southern Cross Equities) primarily to re-open the old Walhalla Goldfield in Eastern Victoria. GDR aims to establish an ~1moz resource at Walhalla, an up to 0.5moz resource at its Peak Hill prospect and evaluate at least three other prospects in Australia which have been previously explored but could be re-interpreted.
  • The main focus at Walhalla are the Cohen’s and Empress Reefs which lie along a 1.5km strike length of the delineated 4km long Cohen’s Line of Reef at Walhalla. The Cohen’s reef is not like the more common Victorian styles of gold mineralisation west of Melbourne, and instead is located east of Melbourne and is contained within an almost vertical shear zone.
  • Historic grades in the Cohen’s Reef were exceptionally high being up to 6oz/t or 190g/t over an average width of 45cm and strike lengths of 18m ahead of the mine closure in 1913 due to pumping and ventilation at depths >1km. Almost 1.5moz was extracted at an average grade of 1oz/t or 33g/t over the 1.5km strike length of workings.
  • Recoveries of up to 95% have been attained from gravity concentration testwork of the stockwork ore undertaken in the early 1990’s, which is in contrast to the market’s perception that Walhalla’s ore is refractory. The main Cohen reef historically attained recoveries of 85% to 90% (using stamp batteries). The misperception arose due to a pre-feasibility study of the stockwork resource in 1987 that attained low recoveries because it only considered direct cyanidation.
  • The exploration focus at Walhalla is on three styles of mineralisation, being the stockwork resource over the old Cohen’s reef workings, three possible extensions to the Empress lode system, and extensions to the Cohen’s reef that are greater than 5g/t. Extensions appear to be very possible, given that cut-off grades of up to 18g/t together with perhaps 3 to 8 g/t losses in tailings, infers that somehistorically classified “unpay” areas could be >10g/t.

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Nov 2003 - EXCO Resources

EXCO Resources NL (EXS) – Using White Dam to Attain Early Cashflow

  • EXCO is an exploration company that has recently acquired a 40% interest in the Drew Joint Venture (with Polymetals, and is farming in to increase its interest to 60%). The Drew Joint Venture contains the prospective White Dam gold mine and surrounding properties (in South Australia), enabling EXS to attain early cashflow.
  • White Dam has a non-JORC resource of about 5mt at 1g/t (or 160,000oz), so EXCO are infilling to generate an accepted reserve and resource by about February 2004. After which a trial 30,000t to 50,000t heap-leach is expected to be commissioned as part of a scale up to full 1mtpa to 2mtpa production.
  • EXCO expects to use the early cashflow from the Drew Joint Venture to advance its expected copper operation at Mt Margaret, since the acquisition of White Dam provides EXS with two relatively advanced projects (Drew and Mt Margaret) that are both on the cusp of making the transition from exploration into production.
  • Mt Margaret lies immediately east of Ernest Henry in the Mt Isa district of Queensland. The recent discovery of higher grade near surface mineralisation (such as 29m @ 3.64%Cu & 1.28g/tAu, and 65m @ 2.55%Cu & 0.56g/tAu [including 9m @ 4.28%Cu and 25m @ 3.78%Cu]) has resulted in a review of the pre-feasibility study with a decision on the next stage of advancement expected in March 2004.
  • Should a small 0.5mtpa operation be established at Mt Margaret, then EXS’ other nearby regional prospects such as at Hazel Creek and Boomara could come into the viability equation, especially with Turpentine Creek’s (in Hazel Creek) 16m @ 2.94%Cu & 0.59g/t Au from 24m including 8m @ 4.28%Cu.
  • EXCO has established a select drill-ready portfolio of potentially promising Middle Proterozoic primarily copper – gold exploration projects, although the range does extend to include the other base metals such as nickel-PGM and leadzinc- silver. The projects are mainly in the form of a series of joint ventures in which EXS is largely the minor contributor with a major company providing the bulk of the exploration finance.

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Nov 2003 - Terramin Australia

Terramin Australia Limited (TZN) – A New High Grade Zinc Stock

  • The IPO Offer : Terramin Australia Ltd (TZN) is offering a subscription of 25m shares at 20c to raise $5m (minimum subscription $5m, underwritten by Taylor Collison Limited) to complete feasibility studies on the relatively high grade Angas Zinc Project, re-interpret and advance the Menninnie Dam Zinc Project, and explore by JVs its pipeline of gold-copper projects, all in South Australia.
  • Some $1.1m of the raising enables TZN to complete its 1997 farm-in agreement to acquire a 60% interest in the Angas Zinc Project from the original JV partner Aberfoyle (since taken over by Western Metals, which is now in receivership). The agreement was extended for 2m TZN options in June 2003 to include Menninnie Dam (South Australia’s potentially largest lead-zinc deposit), and TZN has a call option over the remaining 40% in both projects.
  • It is possible to identify some continuity of a high grade mineralised zinc zone over 80m of strike at Angas (in diamond drillhole nos 29, 36 and 37, with 14m @ 21%Zn from 192m in DD29, 6m @ 16%Zn from 95m in DD36, and 12m @14.6%Zn from 45m downhole from surface in DD37). Copper mineralisation is minor at less than 1%, although lead and silver values can be material. In TZN’s opinion, the Sedex total (Fe+Pb+Zn) percentage content should be used to delineate the lode.
  • TZN think that the Menninnie Dam Zinc orebody has been misinterpreted and does not strike north-south, but is instead fault controlled east-west, and verification using the MIMDAS system is planned. If it is based east-west then most of the drilling of ~10 years ago was targeting an orebody in the wrong direction.
  • Although Terramin’s main focus is on high grade zinc projects and bringing them into production, it does also have a number of copper-gold projects of which the most advanced is the Gina Block part of the Ingomar Project (about 100km west of MNR’s Prominent Hill) where gold anomalies apparently coincide with folds and fault structures, and a major regional anticlinal fold has been interpreted.

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