Barry FitzGerald: Creasy’s cashed-up CZR is hunting WA gold and copper elephants

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

Cashed-backed explorer CZR Resources (ASX:CZR) is on a mission to find the next big gold discovery in the Pilbara and/or the next big copper-zinc-gold discovery in WA’s Mid-West.

Lofty ambitions for sure, but remember the company is 52% owned by Australia’s most successful private explorer Mark Creasy.

Creasy is also a joint venture partner with CZR in the Pilbara and Mid-West projects which are about to be put to the test with the drill bit.

CZR is coming at the exploration programs at its Croydon gold project in the Pilbara and the Edamurta copper-zinc-gold project in the Mid-West from a position of strength. It’s sporting $76 million in cash following the recent sale of its stake in the Robe Mesa iron ore project to Rio Tinto.

The cash backing is just shy of CZR’s mid-week market cap of $80 million at 33.5c a share, meaning the company’s on-going exploration interests – including more iron ore in the west Pilbara – are being valued at about $4m.

That’s clearly underdone given the embedded leverage CZR has to exploration success at either project, or both.

Creasy’s legacy

Both Croydon and Edamurta are products of ground pegging by Creasy over the years to have a shot at finding the next Hemi/Toweranna gold discovery (Northern Star Resources (ASX:NST)) in the Pilbara, or the next Golden Grove copper-zinc-gold (29Metals (ASX:29M)) deposits in the Mid-West.

Northern Star recently paid $5 billion-odd to acquire De Grey Mining which discovered the Pilbara gold riches (11.2Moz at Hemi alone) while Golden Grove has been in production from its cluster of VMS discoveries under various owners since 1990.

From that it can be taken that CZR and Creasy are super keen to find the “next big one.”  And had it not been for CZR’s near sole focus in recent years in creating the take-out value at Robe Mesa, both Croydon and Edamurta would have already been hit hard.

The Croydon project is split over two blocks of ground (Western and Eastern) which cover about 40km of the prospective Mallina Basin that is home to the Hemi discovery, about 50km to the north-east.

The Top Camp prospect in the Western block ranks as an advanced project given epithermal-style gold mineralisation was intersected there in a 2019-20 drilling campaign.

Best results from that campaign included 27m at 3.2g/t from 135m and 2m at 22g/t from 7m. CZR’s drilling program is expected to start this side of Christmas and will test for north and south extensions.

The drilling will also have the excitement factor of it being the first time CZR will test for the intrusion related-style of gold that De Grey first put on the map as a new exploration frontier in the broader Mallina Basin with its late-2019 Hemi discovery.

CZR will also be drilling the Bottom Camp prospect, about 6km from Top Camp in the Western block. Drilling in the less advanced Eastern block is also being planned, with drill targets being worked up following surface sampling and an aircore drilling program.

The next Golden Grove?

Drilling is also being planned for the Edamurta project in the Mid-West, about 45km from 29Metal’s Golden Grove mining operations.

A recent electromagnetic survey identified conductor plates which can indicate the presence of massive sulphide mineralisation.

CZR said in its September quarterly that the results were “very encouraging and provide strong evidence of the potential for a repeat of the nearby world-class Golden Grove VMS copper-gold-zinc-silver deposits.”

Historic drilling at the prospect confirmed Edamurta as a mineralised VMS system but a review indicates that the drilling did not hit the main conductor targets. An eleven-hole drill program is planned with the new information on targeting to hand.

All in all it can be said that thanks to its cash kitty, there is next to nothing in CZR’s market price for its leverage to potential exploration success at either Croydon and Edamurta, or both.

Just what success is achieved over the six next months or so will determine the size of any capital return to shareholders and/or other capital management strategies.

Garimpeiro remembers De Grey was spending $5m a quarter when it became clear that it was on to a major discovery at Hemi.

So who knows, CZR might well need all of its cash kitty if Croydon and/or Edamurta prove to be the “next big one.”

The views, information, or opinions expressed in this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.