NSW’s Lachlan Fold Belt is the “place to be for copper and gold” on a global scale and has proven time again it can be a company maker. Just look at what recent success in the region has done for Alkane Resources and Magmatic Resources, and underpinning Newcrest being Australia’s largest gold miner. But not all explorers kicking goals in the LFB have enjoyed the same investor fervour, and that’s where the true hidden gems sit.

Bridge Street Capital has put $7m market cap Kincora Copper (ASX:KCC) in the spotlight after the junior reported a very nice high-grade surprise at its flagship Trundle gold-copper project in the LFB, delivered a maiden resource for “one of the largest copper-gold systems” in Mongolia and outlined a series of new high conviction targets following detailed expert technical reviews.

The LFB is a world-class exploration jurisdiction, hosting major mines like Newcrest Mining’s (ASX:NCM) Cadia/Ridgeway operation, which is one of the largest and lowest cost mines globally with an endowment of 50Moz of gold and 9.5Mt of copper. Its discovery and now ongoing production underpins Newcrest being Australia’s largest gold miner.

It is also home to CMOC’s Northparkes mine, which contains 5.5Moz gold and 4.5Mt copper, and Evolution Mining’s (ASX:EVN) 14Moz Cowal mine, its cornerstone asset. As globally recognised economic geologist Richard Schodde puts it “for copper and gold, it is the place to be” (on a global scale).

“The LFB has become a prized geological terrane for the explorers over the past few years with the exciting porphyry gold/copper discovery, Boda, by Alkane Resources (contained metal content is now 10.1Moz AuEq),” analyst Dr Chris Baker said in a newly released research report, where he analyses Kincora’s progress to date, benchmarks it to the most recent drill hole hit in the belt, and discusses the merits of its future targets.

“Recently, exploration junior Magmatic Resources (MAG:ASX) has shot to prominence with a promising drillhole into its Corvette prospect.”

That drill result propelled Magmatic’s market value to $51m from around $15-17m – which was already double Kincora’s market cap. Meanwhile, investors piled into Alkane after its discovery of Boda, driving the company’s market value up by roughly $100m.

Kincora, one of the most active explorers in the Lachlan Fold, has been busy drilling nearly 30,000m in avid pursuit of the next “Tier 1” copper-gold deposit.

“Since its entry into NSW, KCC has applied a significant budget to the exploration of several projects in the belt attempting to do just that,” Dr Baker said.

“Importantly over 80% of the spend has ‘gone into the ground’ with over two thirds directly into drilling.”

After over two years of drilling in NSW, Kincora has undertaken detailed external and internal reviews. Dr Baker states, “we believe this has significantly improved the understanding of mineral system controls and reaffirmed the geological concepts for the key projects. In short, it has increased KCC’s conviction”.

Dr Baker goes further, “KCC’s (strong) exploration team has designed a high impact next phase of drilling which will test more porphyry (not skarn) prospects and at shallower depths, effectively increasing the scale potential at more and larger scale targets/discoveries. We believe this pivot in exploration strategy and target profile makes sense.”

All the hallmarks for success

But the significant discoveries by both Alkane and Magmatic in the LFB have had little to no impact on Kincora’s share price, despite the company’s Trundle project having very similar geological hallmarks and results – which seems baffling to Dr Baker.

Dr Baker’s analysis of assay results from Trundle to Magnatic’s Corvette “does highlight that several of KCC’s intercepts are comparable to the holes that may be outlining a significant discovery,” and “it’s quite clear that KCC has received no recognition for these discoveries.”

“The company’s Trundle tenement lies just 50km to the southwest of the Corvette discovery (by Magmatic), and within what we judge to be at least as favourable geological setting within the Junee/Narromine Volcanic Belt and within the Northparkes Igneous Complex,” he explained.

At the Northparkes mine (Australia’s second largest porphyry mine) there are 22 discoveries to date, with a 40% conversion to an orebody, and the goal of Kincora’s upcoming program at Trundle is looking to test five adjacent porphyry systems targets across a 3.2km strike, including following up the most recent discovery at the Southern Extension Zone.

The company recently reported a top hit of 34m at 1.45 grams per tonne (g/t) gold and 0.25% copper, including a much higher-grade section of 2m at 19.9g/t and 2.43% copper driven by a porphyry vein.

To put the scale of this 3.2km mineralised system and target zone into perspective, it is the same size as at Boda at 3.2km (which hosts >10Moz AuEq) and compares favourably to the 4.5km strike at Northparkes, noting “the Trundle tenement includes an estimated quarter of the Northparkes Igneous Complex, host for the Tier 1 porphyry copper deposits at Northparkes”.

Dr Baker is confident the company is strongly leveraged to exploration success.

“With a $2.3m cash position (at the end of June) and attributing modest value to the company’s Mongolian assets, the market is paying under A$5m for its LFB exploration effort. This looks quite inexpensive to us,” he said.

“The leverage to exploration success is very high as evidenced by the impact of a single ‘hit’ by MAG into a porphyry target which added some $35m to the market value of the company.

“We remain of the view that KCC offers strong valuation leverage to exploration success in the LFB.”

Dr Baker said the exploration strategy had been broadly successful, and Kincora was sticking to it, but to maximise the effectiveness, the company would now target porphyry mineralisation closer to surface.

“As we know, exploration success is all about persistence,” he said. “To us there’s no question KCC has a strong exploration team, highly focused on a well-positioned tenement holding in the LFB.”

Kincora is currently undertaking permitting and land access preparations for priority shallow porphyry targets at Trundle.

 

 

 

This article was developed in collaboration with Kincora Copper, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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