It is game on for Mark Bennett’s S2 Resources (ASX:S2R) in coming months thanks to two recent events securing its position at the top of the list of junior explorers to watch across not one but two potential game-changing exploration programs.

In a condensed form, S2 is getting ready to start drilling for the next ultra-high-grade Fosterville gold deposit near Bendigo, as well as drilling for the next Nova nickel-copper deposit, not in Western Australia’s Fraser range, but in a new frontier to the north of Broken Hill in NSW.

S2 was trading mid-week at 14c for a market cap of $57 million. Needless to say success in either the “new” Fosterville hunt, or the frontier nickel-copper (and PGEs) program, will see things light up for the explorer.

The enabling events mentioned above are the company signing a landmark agreement with the Taungurung traditional owners for exploration at the Fosterville project, and the issue of exploration licences covering the Koonenberry nickel-copper-PGE in outback Broken Hill.

The Taungurung agreement follows on from an earlier agreement with another traditional owners’ group.

It has been a long process securing the agreements, not because of a lack of goodwill on both sides. The agreements were a key requirement under the government’s original 2019-2021 tender of four exploration blocks at Fosterville, and the process was new to everyone.

Against the odds, little S2 secured the coveted Block 4 which surrounds the Fosterville gold mine, now owned by Canada’s Agnico Eagle after its takeover of fellow Canadian Kirkland Lake last year.

The 2015/16 discovery of high-grade and ultra high-grade gold at Fosterville by Kirkland turned what was a scrappy mine into one of the world’s best. Producing more than 500,000oz annually at its peak, Fosterville remains fabulously profitable.

Production in 2023 is forecast to weigh in at 305,000oz at a total cash cost of just $US457 an ounce. More than three million ounces of low cost gold has been produced at the operation in the last eight years and it remains the lowest cost operation within $C32 billion Agnico’s global portfolio.

In an ideal world, Agnico would be pushing out exploration into the surrounding Block 4 to add to Fosterville’s mine life which is currently estimated to 2031. But it is ground controlled by SR2 with its Block 4 award.

Bennett told Garimpeiro that while the wait to get on to the ground had been frustrating, the value of the ground has only being going up as Agnico increasingly becomes hamstrung in terms of their operating/exploration space.

“The more they deplete the Swan Zone (the ultra-high grade zone at Fosterville) and mine their Curie Zone, the shorter their reserves/resources runway gets. It puts the pressure on them to find more but the obvious place to find more is on our block,’’ Bennett said.

“We entirely surround their mine lease, so we are west, east, north and south. We cover about 50km north to south and about 10km across, and a number of areas that Agnico are mining are actually trending towards our boundary at depth.’’

“What’s more, as part of winning the tender (Kirkland received Blocks 1, 2 and 3 but wanted Block 4) we received all of the data that Kirkland had been accumulating before having to relinquish the ground.’’

“So we inherited $25-$30m worth of data – airborne and ground geophysics, geochemistry, and some drilling data.’’
 

Drilling within weeks

“It’s like all the hard yards have been done for us. We are already at first base and we have a smorgasbord of things ranging from geochemical anomalies right through to drill intercepts like 20m at 6g/t gold that we have to follow up,’’ Bennett said.

“We are hoping that now we have done everything we need to do, we will have the licence granted by the department in a month of two. On that basis, we are already talking to drilling contractors. So when the licence comes though, we will be drilling within a week or two.’’

Meanwhile, initial reconnaissance work at the Koonenberry nickel-copper-PGE project will get going in coming weeks. It straddles the Silver City Highway about a two-hour drive from Broken Hill. It is early stage stuff but it is right in Bennett’s wheelhouse.

He is best known for the Nova nickel-copper discovery in WA’s Fraser Range in 2012 by then junior explorer Sirius Resources, a company that he founded. Sirius was later taken over by IGO for $1.8 billion, hence Bennett dubbing his new explorer S2 Resources.

Bennett reckons that Koonenberry is a belt-scale opportunity similar to Nova in an number of ways.

“Like the Fraser Range and Raglan and Thompson nickel belts in Canada, it’s a craton margin mobile belt.’’

And like Fraser and Russia’s Pechenga nickel belts, it contains ultramafic intrusions that are known to be the key hosts to nickel-sulphide mineralisation. Another one to watch as S2 gets around to drilling some targets.

Cheering the company on at Fosterville and outback Broken Hill is Australia’s most successful private explorer Mark Creasy, a 19% shareholder. It was Creasy who vended the Nova ground into Sirius in return for a share of the project and equity in the company.

This time around, he has just the share position.

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