Recent announcements regarding the South Australian mineral and energy resources sectors
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This update covers the January 2018 period and is compiled from information publicly released by companies and Ministerial news releases.
Readers should refer to the latest information available on company websites, particularly in regard to making any forward investment decisions.
- Alliance Resources
- Beach Energy
- Gindalbie Metals – Torrens Mining
- Havilah Resources
- Investigator Resources
- Leigh Creek Energy
- OZ Minerals
- Renascor Resources
- SIMEC Mining
- Thor Mining
- WPG Resources
A new high-grade gold zone has been identified at Alliance Resources’ Weednanna gold prospect following final assay results from the third drilling program, which was completed in November 2017 (ASX release 17 January 2018). Best results include:
- 35 m at 3.65 grams per tonne (g/t) Au from 43 m, including 9 m at 8.91 g/t Au from 44 m (17WDRC051; Target 1)
- 6 m at 13.63 g/t Au from 59 m, including 3 m at 26.60 g/t Au from 62 m (17WDRC057; Target 2)
- 15 m at 18.21 g/t Au from 107 m, including 7 m at 35.94 g/t Au from 109 m (17WDRC067; Target 4)
- 3 m at 25.45 g/t Au from 81 m, including 1 m at 74.2 g/t Au from 81 m (17WDRC070; Target 4).
On the back of these and previous 2017 results (ASX releases 3 April 2017, 10 April 2017, 28 August 2017 and 30 November 2017), Alliance has identified Weednanna as a significant high-grade gold project and expects to commence progressing it towards the resource definition stage. Further RC drilling is planned for February 2018.
Preliminary metallurgical work on high-grade gold samples from Weednanna confirm positive gold recoveries, averaging 91% in a 24-hour period (ASX release 19 January 2018).
Weednanna is part of the Wilcherry project joint venture with Tyranna Resources. In an ASX release on 29 January 2018 Alliance announced it had increased its interest to 67.3% with the expectation that this will increase to 77.5% by the end of 2018 with the sole funding of further exploration.
Beach Energy’s Haselgrove 3 ST1 well has discovered a new gas field in the onshore Otway Basin (ASX release 11 January 2018). Flow test results from the primary target Sawpit Sandstone indicate a high-deliverability reservoir (greater than 25 million standard cubic feet per day) and provide encouragement to move towards commercialisation of a large gas resource. Preliminary gas sample analysis indicates low inert content, which should minimise gas-processing requirements.
The well is currently shut-in with preparations underway for commencement of an initial production test to confirm well deliverability and gas composition, and assist field development planning. The well is located on state forestry land in Petroleum Production Licence 62 (Beach 100%), approximately 8 km south of Penola.
Gindalbie Metals – Torrens Mining
Gindalbie Metals has updated mineral resource estimates for the Windabout and MG14 deposits (ASX release 19 January 2018). Indicated resources are:
- Windabout – 17.67 million tonnes (Mt) at 0.77% Cu, 492 parts per million (ppm) Co and 8 g/t Ag (cutoff grade 0.5% Cu equivalent)
- MG14 – 1.83 Mt at 1.24% Cu, 334 ppm Co and 14 g/t Ag (cutoff grade 0.5% Cu equivalent).
The deposits are part of the Mount Gunson Cu–Co joint venture project with Terrace Mining, a wholly owned subsidiary of public unlisted Australian company Torrens Mining.
Evaluation and exploration activities in progress include: the floatation test work and optimisation phase of a metallurgical program, with results expected in the second quarter of 2018; a mining study focusing on mine design, optimisation and planning for the MG14 and Windabout deposits; and a viability assessment of the Emmie Bluff Cu–Co–Ag prospect.
Havilah Resources announced RPM Global’s draft prefeasibility study (PFS) report for the Kalkaroo Cu–Au project is expected to be delivered shortly to Wanbao Mining (ASX release 8 January 2018). Havilah expects to be in a position to make a further announcement regarding the PFS outcomes before the end of the first quarter of 2018. The PFS will include a probable ore reserve, expected capital cost and a net present value. Under the non-binding memorandum of understanding, Wanbao has two months after delivery of the final PFS document to make an investment participation decision.
Havilah has raised $5.4 million through a shortfall share placement (ASX release 31 January 2018). The funds will be used to access potential funding opportunities for Mutooroo, work through the draft Kalkaroo PFS and continue ongoing work on North Portia to advance Havilah’s Copper Growth Strategy in 2018.
Investigator Resources has reported on fieldwork undertaken in November 2017 to verify the cobalt mineralisation and exploration potential at the historic Cartarpo Cu–Co mine near Burra (ASX release 22 January 2018). The mine comprises small, largely infilled workings scattered along about 400 m strike length. Grab samples taken from the remaining gossan exposures, 200 m apart, returned strong values of up to 1.78% Co and 1.1% combined rare earth elements (REE) including heavy REE, along with copper to 0.5%, nickel to 0.4% and lithium to 0.3%.
Latest drilling results from Investigator’s Paris silver project indicate continuity and potential resource extensions to the south (ASX release 29 January 2018). Best silver and lead intersections include:
- 24 m at 66 g/t Ag from 81 m below surface, including 135 m at 0.52% Pb from 9 m (PPRC457)
- 31 m at 1.34% Pb from 36 m (PPRC443).
Drilling will recommence in February 2018.
Leigh Creek Energy
The public consultation period for Leigh Creek Energy’s demonstration phase of the Leigh Creek Energy project has commenced and will conclude at the end of February 2018 (ASX release 16 January 2018).
A drilling program that commenced in December 2017 is expected to be completed before the end of January 2018. The scope and objectives of the three-drillhole program are to:
- Provide further geological data to support the environmental impact report and confirm design criteria for the pre-commercial demonstration gasifier
- Reaffirm that the geology in proximity to the intended gasifier location could not adversely affect the containment of in situ gasification reactions.
Assay results from Marmota’s November 2017 diamond drilling program at the Goshawk prospect at Aurora Tank have been released (ASX release 12 January 2018). Best results include:
- 5 m at 9 g/t Au from 43 m, including 1 m at 17g/t Au (17ATDD002)
- 2 m at 9 g/t Au from 31 m, including 1 m at 16.5 g/t Au (17ATDD004)
- 1 m at 4.5 g/t Au from 37 m (17ATDD005)
- 1.3 m at 4.1 g/t Au from 23.7 m (17ATDD006)
- 9 m at 2.4 g/t from 16 m (17ATDD001).
All holes intersected significant mineralisation greater than 1 g/t Au, demonstrating geological continuity of mineralisation and frequent high-grade intersections. The soft and friable nature of weathered rock at Goshawk inhibited some core recovery, including over some anticipated high-grade zones, but points to the opportunity for low-cost open-pit mining.
Geotechnical, petrological and further metallurgical data studies will be carried out on the drill core to assist in the evaluation of Goshawk as a mining proposition.
In 2017 OZ Minerals’ Prominent Hill mine achieved copper production guidance for the third consecutive year, and exceeded gold production guidance with 112,008 tonnes of copper and 126,713 ounces of gold produced (ASX release 17 January 2018).
Prominent Hill is now a reliable, long-life, low-cost producer with the announced 18% increase in underground ore reserves to 39 Mt at 1.7% Cu equivalent (ASX release 21 November 2017) enabling an expected underground production rate of 3.5–4.0 Mt from 2019 through to 2029.
Carrapateena construction is progressing on schedule and budget. OZ is also looking to exploit the wider Carrapateena province potential in 2018, refocusing on Khamsin and Fremantle Doctor, undertaking additional exploration at Punt Hill through its joint venture with Red Metal, and investigating future options for the remainder of the Carrapateena mineralised zone.
In the eastern Musgrave Province in the Far North, OZ has entered into a new earn-in agreement with Woomera Exploration. OZ will fund around 4,000 m of drilling on seven targets, after which it can elect to spend $2.5 million to earn 51% within 18 months. It can spend a further $5 million in the following two years to earn 75%. OZ will be targeting magmatic nickel and copper sulfides, similar to those at the West Musgrave joint venture project with Cassini, 500 km to the west (ASX release 29 January 2018).
Preliminary laboratory test work confirms that Renascor Resources’ Siviour concentrates can be processed into 99.98% spherical graphite suitable for use in lithium ion battery anodes (ASX release 25 January 2018). Renascor expects the current scoping study assessing the viability of manufacturing spherical graphite from Siviour concentrates to affirm that the production of spherical graphite will be practicable and financially attractive.
The South Australian Government has granted SIMEC Mining two new mining leases in the Middleback Range (ABC News release 23 January 2018). The Iron Sultan mine will provide feedstock for the company’s Whyalla Steelworks and the Iron Warrior mine produce up to 1.5 Mt of export iron ore annually. A hybrid pellet feed plant is also proposed for the Iron Sultan mine to significantly reduce the price of making steel at SIMEC’s Whyalla blast furnace.
Thor Mining has secured funding through placement and agreement with London-based Metal Tiger (ASX release 24 January 2018). Money raised will fund the advancement of key company projects including Kapunda copper.
More encouraging gold results have been returned from WPG Resources’ Phase 2 drilling program at Challenger Deeps (ASX release 10 January 2018). This third fan of drillholes was designed to target the M2 lodes at the 70 m relative level, 65 m below the lowest production level at Challenger. Some drillholes also intersected the M1 lode. Intercepts on the M1 and M2 lodes included:
- 0.83 m (true width) at 9.33 g/t Au from 74.9 m downhole on M2, 0.34 m (true width) at 22.52 g/t from 106.45 m downhole on M1 and 0.37 m (true width) at 8.78 g/t from 111.80 m downhole on M1 (17CUD2238)
- 0.78 m (true width) at 5.62 g/t Au from 40.0 m and 1.8 m (true width) at 19.33 g/t Au from 89.14 m downhole on M2 (17CUD2239)
- 0.75 m (true width) at 7.39 g/t Au from 90.08 m downhole and 0.93 m (true width) at 16.43 g/t Au from 130.76 m downhole on M1 (17CUD2241)
- 0.62 m (true width) at 24.13 g/t Au from 32.0 m downhole, 2.08 m (true width) at 6.74 g/t Au from 54.10 m downhole and 0.27 m (true width) at 15.23 g/t Au from 68.60 m downhole on M2 (17CUD2243).
These intersections are similar to previous Phase 2 results (ASX releases 26 October 2017 and 6 December 2017) and to levels above the shear where multiple folds have been successfully mined at grades in excess of 5 g/t Au. These additional folds, outside of those assumed in mine planning, also have the potential to increase the ounces per vertical metre above those used for initial planning purposes.
At Challenger Deeps work has commenced on the first ore drive on the 115 level (ASX release 15 January 2018). Waste development has been undertaken allowing development to target both the M1 and M2 stoping areas, with the M2 S2 R development drive now entering the high-grade ore zone. Both ore and waste development will continue with the first stoping of the M2 S2 limb scheduled in late February. The Jumbuck decline development is also progressing and is scheduled to reach the 95 level in late January.
Challenger Deeps is the down plunge continuation below the 215 shear of the heavily mineralised systems that have been mined successfully at Challenger over the last 15 years.
Ministerial news releases
South Australian Government partners with CSIRO on South East Gas Study
Tom Koutsantonis, Minister for Mineral Resources and Energy
7 February 2018
The South Australian Government is partnering with Australia’s foremost scientific research agency to conduct research into the social and environmental impact of the gas industry in the Otway Basin. CSIRO will conduct in-depth research into the social and environmental impacts of gas production in the South East. The partnership will enable CSIRO’s Gas Industry Social and Environmental Research Alliance (GISERA) to conduct studies on the impacts on key issues concerning communities within the onshore Otway Basin.
Beach Energy to consolidate Lattice workforce in Adelaide
Tom Koutsantonis, Minister for Mineral Resources and Energy
3 February 2018
Beach Energy has committed to consolidate its national operations and move up to 80 new jobs into South Australia following the $1.6 billion purchase of Lattice Energy under a deal sealed by the South Australian Government. The Lattice acquisition – the biggest private acquisition in 2017 and one of the largest in South Australia’s history – and the recent merger with Drillsearch has transformed Beach Energy into the second largest South Australian-based, ASX-listed company.
Headquartered in Melbourne, Lattice Energy also has a significant presence in Brisbane. The state government will provide a package of about $11 million in assistance to Beach Energy to help consolidate its interstate workforce into an expanded Adelaide head office.