Bargain Barrel: These gems are hunting for riches in African mineral sands, NSW porphyry copper-gold
Link copied to
After scouring the ASX for more gems, the Bargain Barrel turns its attention to the often overlooked mineral sands space for its first featured company.
MRG Metals (ASX:MRQ) is focused on its wholly owned Koko Massava heavy mineral sands project in Mozambique where exploration to date has defined mineralisation over an area of more than 20sqkm.
And it is not just quantity that MRG has in spades, recent infill drilling has returned results of up to 51m at 5.66 per cent visually estimated total heavy minerals (THM) from surface with a higher grade intersection of 9m at 8.7 per cent THM from just 9m.
That has all the makings of a pretty big resource, with chairman Andrew Van Der Zwan telling Stockhead that a 20sqkm resource that is mineralised to a depth of 50m and grading an average 5 per cent THM, works out to about 1.8 billion tonnes of resources.
He noted that large mineral sands operations typically had production of about 20 million tonnes per annum.
“So even if just a third of the 1.8 billion tonnes is confirmed at economic grades, you have up to 30 years mine life, and that’s just one target and we have shown that it is open at depth and all directions,” Van Der Zwan explained.
That’s a pretty big resource of a product that is used in countless everyday products as noted in a our recent feature on mineral sands.
Van Der Zwan said that while most people focused on the zircon and rutile components of mineral sands project – little wonder given that both products are worth several times what ilmenite is worth – MRG’s Koko Massava project actually had high-grade ilmenite that could generate significant cashflow, with zircon and rutile adding substantial credits.
He added that should the company’s ongoing exploration further increase the size and grade of the project, it could become of interest to major companies that are looking for long-life projects.
“What’s exciting is, you overlay a multi-billion tonne resource and you get to cut-off grade, you add 1 per cent to that across a billion tonnes and you are adding multi-billion dollars of inground value to your resource, it is that leverage,” Van Der Zwan said.
He also noted that Koko Massava had one of the key ingredients for a successful mineral sands project -grade at surface.
“It’s hard to make money in mineral sands if you have got a strip. It is not like a gold mine where you can afford to strip the top 20-40m,” he explained.
“And the great thing we have proven with the work we have done now is we have grade at surface and we have higher grades in some zones that looks to be sub 10m to 30m across the tenement.
“So if we can get to the higher grade mineral sands through viable grades near surface down to 10m, that would be just sensational.”
MRG Metals drilling in Mozambique Pic: MRG Metals
So just what are some of the milestones that lie ahead for MRG?
First off the bat is the company’s current infill drilling program that is taking the 1km by 1km drill spacing down to 0.5km by 0.5km.
“What we did with 1km by 1km spacing originally was get to hopefully an inferred resource level and now we have decided to go to 0.5km by 0.5km spacing, and the advice that we got from our mineralogist suggests that this spacing will probably, with enough data, be able to get to a higher confidence indicated resource,” Van Der Zwan said.
An indicated resource will give the company sufficient information on geology and grade continuity to support feasibility planning.
Van Der Zwan also noted that the infill drilling will allow the company to see actual assays down to 50m, which could substantially improve the grade of the resource as the last assays from previous auger drilling indicated that the company could be underestimating its visual estimates.
Some of the estimates varied by up to 2 per cent.
Once the company has received the results from the infill program, which is expected by the end of January or mid-February, it will then feed that into a resource estimation for Koko Massava.
“We will probably do a desktop type scoping study then we will start looking for potential partners to come in with us to either joint venture the project or buy the project. There are numerous things we can look at doing,” Van Der Zwan explained.
“We will like to be in a position by end of April next year where we know in a desktop study whether this thing has legs or not.”
Our other featured company is Krakatoa Resources (ASX:KTA), which is focused on exploring for porphyry copper-gold at its landholdings in the Lachlan Fold Belt in New South Wales.
The company recently applied for the 120sqkm Turon project about 50km east of its existing Belgravia project.
This new project is located within a seriously hot region that has seen both Alkane Resources (ASX:ALK) and Freeport McMoran Exploration Australia peg large adjacent landholdings.
Grab samples by previous explorers returned bonanza grades of up to 1,530 grams per tonne (g/t) and 150g/t gold while drilling beneath old workings and anomalous grab samples returned a top result of 2m at 6.53g/t gold from 30m.
There’s no actual definition of ‘bonanza’ by the way – it’s just a way to describe speccy gold grades.
In fact, there’s no official definition for high-grade either, but it’s generally accepted an orebody above 5g/t meets that criteria.
The new project adds to Krakatoa’s existing 80sqkm Belgravia project in the central part of the Molong Volcanic Belt, which forms part of the East Lachlan province, the largest porphyry province in Australia.
Historical exploration appears to have failed to adequately consider the regolith and tertiary basalt, which can be up to 40m thick and obscures much of the prospective geology.
Despite this, Krakatoa has already identified an initial six targets that it considers to be highly prospective for porphyry copper-gold and is currently focused on exploring the Bell Valley target.
Bell Valley contains the eastern half of the Copper Hill Igneous Complex, which locally hosts the Copper Hill deposit that has a total resource of 78 million tonnes at 0.32g/t gold and 0.36 per cent copper.
The company has also identified a second porphyry target at Belgravia at the Larras Lake Igneous Complex, where limited historical drilling by Newcrest Mining (ASX:NCM) within 400m of the project boundary returned hits of 30m at 0.2g/t gold from 163m and 3m at 1.02g/t gold and 0.1 per cent copper from 56m.
Because of their easy-mining and very large volumes, porphyry orebodies can be economic from copper concentrations as low as 0.15 per cent.
Other notable activity within the region includes Alkane’s September announcement of a diamond drill hole at its Northern Molong porphyry project that returned an extremely thick intersection of 502m at 0.48g/t gold and 0.2 per cent copper from 211m.
Speaking to Stockhead, executive chairman Colin Locke described the Lachlan Fold Belt as a tier 1 mining jurisdiction with world class infrastructure and big porphyry targets that offer massive leverage for investors upon exploration success.
This could appeal to investors who are pulling away from Africa, where some areas are becoming increasingly unstable due to the expansion of jihadists.
(Rio Tinto only just yesterday announced it was suspending operations at its Richards Bay Minerals operation in South Africa because its workers were getting shot).
“The Lachlan Fold Belt is the primary focus now for Krakatoa, we are seeing really good opportunities there,” he said.
“It is porphyry country, in the Lachlan Fold and the Molong Volcanic Belt, it is highly prospective for porphyry targets, which can absolutely game change a micro-cap like Krakatoa.”
For some context, Krakatoa currently has a market cap of $6.4m which places it at the bottom end of explorers in the Lachlan Fold Belt.
These include Alice Queen (ASX:AQX) – $24m, Magmatic Resources (ASX:MAG) – $26m, Devex Resources (ASX:DEV) – $14.5m, Impact Minerals (ASX:IPT) – $7.9m and Ardea Resources’ (ASX:ARL) Godolphin spin-off, which is expected to have a market cap of more than $11m.
Locke said the company would initially complete an aeromagnetic survey using an unmanned aerial drone.
“That should be done by the end of this month and de-risk the drill targeting and from there we will look to carry out drilling,” he said.
Krakatoa will use the results from the drone survey to formulate a drilling plan.
“We will expect to drill at least one deep hole to well and truly penetrate the tertiary basalt cover, we are very keen to see what is underneath it,” Locke explained.