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Recent announcements regarding the South Australian mineral and energy resources sectors

This update covers the October 2018 period and is compiled from information publicly released by companies.

Readers should refer to the latest information available on company websites, particularly in regard to making any forward investment decisions.

Previous news items:

Company news

Alliance Resources

Drilling results from Alliance Resources’ Yeltana graphite prospect on the northern Eyre Peninsula include best total graphitic carbon (TGC) intersections of:

  • 17.2 m at 5.05% TGC from 234.1 m (18EMDH006)
  • 17.1 m at 8.54% TGC from 148 m (18EMDH007)
  • 21.05 m at 9.28% TGC from 171.75 m (18EMDH007).

A conceptual exploration target is estimated between 24.5 and 59 million tonnes (Mt) grading 5.5–10.2% TGC (ASX release 4 October 2018). It is uncertain if further exploration will result in the estimation of a mineral resource. Based on empirical drilling and geophysical data Alliance suggests Yeltana could be one of the largest graphite deposits in Australia (by mineral content). Further work is planned to advance the understanding of mineralisation, including graphite flake size distribution, to better assess the economic potential of the prospect before planning further drilling.

The Yeltana prospect is part of the Wilcherry joint venture project with Tyranna Resources.

Aircore drilling started at regional gold targets proximal to the Weednanna gold deposit (also part of the Wilcherry project). At the Weednanna East prospect 85 holes for 5,525 m are planned to define gold in regolith anomalism (ASX release 11 October 2018).

Having sole funded third quarter 2018 exploration expenditure, Alliance’s interest in the Wilcherry project increased to 79.01% at 30 September 2018. Tyranna Resources has diluted its interest to 20.99% (ASX release 16 October 2018).

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Andromeda Metals

A bulk sampling operation to recover about 200 tonnes (t) of halloysite–kaolin at Andromeda Metals’ Carey’s Well deposit started in early October (ASX release 9 October 2018). Part of the greater Poochera project, around 20 holes will be drilled to a maximum depth of 30 m using a large foundation drill rig. The bulk sample will be transported to Port Adelaide for shipment in November to Western Australia and China for commercial-scale processing trials. Results are expected later in the quarter, leading to anticipated offtake negotiations in early 2019.

Bulk sampling was completed on 22 October with over 200 t of halloysite–kaolin extracted (ASX release 22 October 2018).

Andromeda lodged an application to explore 227 km2 of land in the Mount Hope area on the Eyre Peninsula (ASX release 24 October 2018). In 1973 a kaolin resource was identified at Mount Hope of 12.26 Mt consisting of approximately 74% filler quality and 26% coating quality material (not Joint Ore Reserves Committee, JORC, compliant).

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Archer Exploration

The agreement for the sale of Archer Exploration’s non-graphite assets to Ballista Resources was terminated following Ballista’s failure to achieve an ASX listing by 30 September 2018 (ASX release 9 October 2018). Other alternatives to monetise non-graphite assets are being sought.

A drilling program will commence in November at the Blue Hills copper–gold project targeting large, district-scale gold- and copper-in-soil anomalies. First results are expected in early December 2018.

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Argonaut Resources

The High Court of Australia refused three applications for special leave to appeal against the dismissal of native title claims over Lake Torrens (ASX release 22 October 2018).

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Auroch Minerals

Auroch Minerals discovered a new base metals mineralised system at the Dewrang target during its maiden drilling program (ASX release 4 October 2018). DWDD-001 intersected 8.90 m at 2.12% Zn and 0.51% Pb from 180.6 m, including 1.00 m at 4.53% Zn and 0.97% Pb from 186.7 m. Dewrang is part of Auroch’s wholly owned Bonaventura Project on Kangaroo Island.

The drillhole targeted an induced polarisation anomaly identified during the June 2018 survey. It is at least 1.5 km long suggesting a significant mineralised base metal system and the mineralisation remains open in all directions. Further assay results from drilling at the Dewrang, Kohinoor and Grainger targets are pending.

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Ausmex Mining

The Ausmex Mining – University of Adelaide 7,010 km2 magnetotellurics survey at Burra was completed on schedule and on budget (ASX release 16 October 2018). Initial modelling by the university identified a 30 km long conductive drilling target to the northeast of Burra.

Further 3D modelling located a large conductive iron oxide – copper–gold (IOCG) target 200 m below surface that is suitable for cost-effective reverse circulation drilling (ASX release 30 October 2018). Ausmex remains confident that more shallow tier one IOCG drilling targets will be identified as the modelling progresses.

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Boss Resources

Boss Resources remains focused on advancing its Honeymoon uranium project following sale of its interest in the Golden Hill and Gourma projects in Burkina Faso, West Africa, to joint venture partner Teranga for $10 million (ASX release 3 October 2018).

Infill drilling was completed at the East Kalkaroo deposit with exciting results returned from the final tranche of 89 holes (ASX release 4 October 2018). Best intercepts include:

  • 5.00 m at 1,284 parts per million (ppm) pU3O8 grade x thickness (GT) 6,240 from 110.50 m (BIF0066r)
  • 3.00 m at 1,713 ppm pU3O8 GT 5,139 from 109.00 m (BIF0155)
  • 7.00 m at 637 ppm pU3O8 GT 4,459 from 78.00 m (BIF0142r)
  • 5.75 m at 712 ppm pU3O8 GT 4,094 from 77.75 m (BIF0145)
  • 4.25 m at 954 ppm pU3O8 GT 4,055 from 79.25 m (BIF0153)
  • 3.00 m at 1,100 ppm pU3O8 GT 3,300 from 99.75 m (BIF0152)
  • 3.50 m at 861 ppm pU3O8 GT 3,014 from 108.25 m (BIF0157r).

Results suggest mineralisation remains open to the east and northeast of the mining lease, indicating further growth potential to the existing mineral resource.

The three-phase Honeymoon uranium mine restart strategy continues to progress (ASX release 2 July 2018). Estimated dates for Phase 1 include:

  • infill drilling program – completed
  • optimisation test work (except leaching) programs – completed by end November 2018
  • trade-off studies – completed by mid-December 2018
  • preliminary solvent extraction restart assessment – delivered early January 2019
  • preliminary operational readiness plan – delivered by end January 2019.

Phase 2 will commence with the release of the updated mineral resource estimate, followed by the wellfield design activities which will be based on the geological and resource models (ASX release 9 October 2018). Infill and historical drilling results will be used for the mineral resource update which is targeting a measured and indicated resource for the Honeymoon, East Kalkaroo and Brooks Dam deposits.

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Havilah Resources

The unexplored eastern extensions of Havilah Resources’ 304 Mt Grants iron ore resource will be tested soon with a 3,500 m reverse circulation drilling program (ASX release 16 October 2018). The area is interpreted to be part of a potentially large iron ore basin covering approximately 17 km2.

The drilling is part of a comprehensive program of work being performed and funded by SIMEC as part of their due diligence investigation of the commercialisation potential of Havilah’s Maldorky and Grants iron ore projects.

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Hillgrove Resources

Hillgrove Resources reported record production for third quarter 2018 (ASX release 26 October 2018). Copper production was 6,454 t, the highest quarterly production on record, and gold production was 1,306 ounces (oz). With stockpiles expected to continue to increase until mining ends in mid 2019 the processing of ore is expected to be ongoing until third quarter 2020. 2018 gold guidance has been increased from 2,500–3,500 oz to 5,500–6,000 oz, while copper remains unchanged.

Hillgrove has identified a number of opportunities including:

  • pumped hydro
  • underground development – with all regulatory approvals in place a decision to commence the underground exploration drive is likely to be made in March 2019, pending outcome of the pumped hydro process
  • Kanappa exploration
  • Kanmantoo brownfields exploration prioritising copper–gold targets; drilling is likely in 2019.

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Iron Road

Iron Road’s entitlement offer to shareholders raised $1.21 million and will, in part, be used to maintain the Central Eyre Iron Project mining lease (ASX release 12 October 2018).

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Leigh Creek Energy

Leigh Creek Energy achieved a milestone at its Leigh Creek energy project with initiation and production of first syngas as it progresses to commercialisation (ASX release 11 October 2018). The next milestone proposed is to upgrade a portion of the existing SPE-PRMS 2,963.9 PJ 2C resource to a 2P reserve. (SPE-PRMS is the Society of Petroleum Engineers - Petroleum Resource Management System).

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Marmota’s September drilling program at Aurora Tank was completed with 31 reverse circulation holes for a total of 3,187 m (ASX release 2 October 2018). Drillholes range in depth from 50–180 m, sample recovery was excellent and assay results are expected in the next 6 weeks.

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OZ Minerals

OZ Minerals now holds 51% of the West Musgrave copper–nickel joint venture project following an investment of $22 million into conducting a prefeasibility study with joint venture partner Cassini Resources (ASX release 11 October 2018). The focus to date has been on further drilling and improving metallurgical recoveries.

Recent metallurgical test work surpasses the further scoping study results with a material improvement in copper and nickel recoveries as well as an increase in copper concentrate grade. These improvements, together with results from the regional exploration drilling program that intersected massive sulfides at Yappsu, further support the view that West Musgrave has the potential to be an exciting new mineral province with near mine and district opportunities.

The prefeasibility study for the project commenced in November 2017 and is scheduled for completion in second quarter 2019. OZ Minerals can earn 70% of the West Musgrave project by investing an additional $14 million towards project studies and regional exploration.

In their third quarter report 2018 OZ announced that Prominent Hill produced 28,915 t of copper and 34,143 oz of gold during the quarter with full year copper production now expected to reach the top end of the guidance range (ASX release 17 October 2018).

At Carrapateena construction is progressing to schedule and OZ remains on track to produce its first concentrate in fourth quarter 2019. The Tjati decline has reached the competent basal conglomerate and is approaching the basement granite. Development rates were lower than the prior quarter due to water management activities as development passed through a known aquifer in the basal sandstone.

At the Fremantle Doctor prospect four holes were drilled for approximately 8,500 m in a short delineation program. All drillholes intersected copper mineralisation hosting primarily chalcopyrite, with bornite observed for the first time. Best intersections include:

  • 184 m at 0.84% Cu and 0.58 grams per tonne (g/t) Au from 1,464 m, including 27.1 m at 1.89% Cu and 1.31 g/t Au and 54.6 m at 1.13% Cu and 0.91 g/t Au (DD18FDR021)
  • 55 m at 0.88% Cu and 0.2 g/t Au from 1,247 m, including 18 m at 1.54% Cu and 0.2 g/t Au (DD18FDR022)
  • 14.1 m at 0.89% Cu and 0.34 g/t Au from 1,225.6 m (DD18FDR023).

Exploration drilling commenced at the Saddle Zone (the structural corridor between Carrapateena and Fremantle Doctor) with visible bornite and chalcopyrite intersected; assays are pending. Follow up drilling is planned in the fourth quarter.

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Renascor Resources

The first phase of the definitive feasibility drilling program for Renascor Resources’ Siviour graphite project has been completed with assay results expected at the end of October (ASX release 16 October 2018). Preliminary review of the drilling suggests continuity with the existing resource model and potential extensions to the north of near-surface high-grade zones.

The second phase of drilling is underway with the 15 drillhole, 800 m program expected to be completed before the end of October.

High-grade graphite concentrates have been produced from Siviour ore in a pilot plant production program by an independent Chinese production facility (ASX release 31 October 2018). A prefeasibility study grade of 95% TGC was achieved with further improvements in recovery. The pilot plant production was undertaken to support the Siviour definitive feasibility drilling as well as to produce additional marketing samples and for downstream test programs. Prefeasibility study grade graphite has now been replicated from five independent laboratories in Australia, Germany, Canada and China.

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Senex Energy

Senex Energy released its financial year 2019 (FY19) production and capital expenditure guidance (ASX release 29 October 2018). The FY19 production guidance of 1.1–1.5 million barrels of oil equivalent (mmboe) is a more than 30% increase on the FY18 guidance of 0.8 mmboe. It is based on production growth resulting from full year contributions from the FY18 Marauder discovery and the Growler horizontal well, and two commercial oil discoveries from the first three wells of the FY19 drilling campaign expected to be brought online.

Gas production is forecast to increase materially as Roma North wells in the Western Surat gas project continue to ramp up and the Vanessa Field in the Cooper Basin contributes its first full year of production.

FY19 will see accelerated natural gas development programs in the Surat Basin and active oil exploration and development activity in the Cooper Basin (a 10-well exploration and development campaign is underway) with capital expenditure increased from $80 million in FY18 to $110–130 million.

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Terramin Australia

Stage1 of the managed aquifer recharge water bore drilling campaign at Terramin Australia’s Bird-in-Hand gold project has been completed (ASX release 16 October 2018). Requested by the government regulators, the drilling and pumping test results indicate that the aquifer is suitable for receiving water utilising managed aquifer recharge to meet operational requirements. Yields of over 20 litres per second during drilling were encountered in both reinjection investigation bores, which is reflective of expected hydrogeological conditions. Terramin expects to complete the Stage 2 reinjection trial later in the year prior to final submission of the mining lease proposal.

Two of the water bores intersected a quartz reef along strike of the historical Brind mine which was mined at 9.8 g/t Au in the 1890s. Results from the Brind water bores include:

  • 2 m at 1.9 g/t Au from 45 m (BHM001)
  • 1 m at 1.1 g/t Au from 46 m (BHRIB001).

Terramin cautioned that results are only indicative due to the nature of open hole drilling and sampling method.

Terramin’s Bird-in-Hand scoping study results indicate the base case project will generate a strong financial return (ASX release 30 October 2018). Key outcomes are:

  • Over the 5-year life of mine, scheduled production is 47,000 oz of gold and 22,000 oz of silver at 11 g/t Au and 5 g/t Ag by-product credits.
  • Total pre-production capital for the project is $34 million.
  • Total life of mine capital inclusive of pre-production capital and net sustaining capital is $66 million.
  • The C1 cash cost, including all operating costs and excluding royalties, rehabilitation and capital expenditure, is $629/oz payable gold with an all-in sustaining cost of $841/oz.
  • The Bird-in-Hand deposit has a global mineral resource estimate of 650 kilotonnes (kt) at a cutoff of 1.0 g/t, including an indicated resource of 432 kt.
  • Total material mined at a cutoff of 1.0 g/t is 595 kt at 11 g/t with an average mine production rate of 150 kt per annum for a mine life of 4 years.
  • The Angas processing plant at Strathalbyn will be re-opened to undertake similar activities to that during past operations of the Angas zinc mine.

A mining lease application for the Bird-in-Hand project and a miscellaneous purposes lease for processing at the Angas site are in the final stages of development and drafting.

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Tyranna Resources

The revised drilling program at Tyranna Resources’ Campfire Bore gold prospect has been completed with 35 holes for 1,989 m (ASX release 30 October 2018). The shallow supergene drilling has identified high-grade intersects below 12 m. Best intersects include:

  • 15 m at 3.02 g/t Au from 36 m, including 6 m at 5.13 g/t Au
  • 12 m at 1.58 g/t Au from 39 m
  • 7 m at 2.19 g/t Au from 12 m, including 1 m at 11.6 g/t Au
  • 2 m at 5.33 g/t Au from 39 m.

The Campfire Bore prospect is part of the larger Jumbuck gold project in the northern Gawler Craton.

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Woomera Mining

Exploration continues at Woomera Mining’s Alcurra–Tieyon joint venture project in the Far North (ASX release 5 October 2018). The moving loop electromagnetic survey that commenced in August has acquired both inloop and slingram data from 500 stations representing over 100 km of traverses over Cavanagh, Walsh, Healy, Gallagher and part of O’Mahony. Preliminary plate modelling has identified strong conductors at all sites that correlate with the magnetic susceptibility models previously identified. Further infill surveying (50 m spacing) is underway at Cavanagh, Healy and Gallagher with O’Mahony and McNamara expected to be undertaken with completion of the original survey.

The program for environment protection and rehabilitation (PEPR) has been approved by government, clearing the way for the reverse circulation drilling program of around 4,000 m which is expected to be completed in early December 2018.

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