Broadening the Spectrum: Strata Minerals eyes untapped riches at Penny South

Strata Minerals’ Penny South project sits just 550 meters from the successful Penny operation in WA’s gold-rich Youanmi belt
Limited historical drilling at Penny South (averaging 42 meters deep) suggests significant exploration upside
Nearby drilling results from Ramelius Resources at Penny also indicate strong potential
Strata plans to re-evaluate historical data and explore deeper contact zones for high-grade gold

Strata Minerals believes it is in the box seat to make WA’s next high grade gold discovery just 550m from one of Australia’s highest margin operations.

The Penny West open pit in WA’s gold rich Youanmi greenstone belt was mined for 85,000oz at a record-breaking grade of 21.8 grams per tonne between 1991-1992.

After that it was pretty much abandoned until early 2019, when a sub-$5m market cap, ‘bottom-of-the-drawer’ spec stock called Spectrum Metals bought the project, with a theory that old timers had barely scratched the surface.

Spectrum was correct. It immediately struck ‘bonanza’ grade gold about 150m north of the historic high-grade open pit and, within a year, had unveiled a +350,000oz resource (ore grade 13.8g/t) and a juicy +$200m takeover offer from mid-tier Ramelius Resources (ASX:RMS), which was accepted by shareholders.

A huge win for everyone concerned.

Penny is now a standout in the RMS portfolio, churning out $135m in free cash flow in FY24. The company is targeting an incredible all in sustaining cost of A$800/oz in FY25, saying the best parts of the orebody are yet to be accessed.

The miner also believes there is opportunity to grow the resource and make more discoveries at Penny, with underground and surface drilling programs now underway.

Welcome to the neighbourhood, Strata Minerals

550m away from this company maker is a project called Penny South:

Incredibly, it is about to be explored properly for the very first time by new owner, Strata Minerals, which says historical exploration was hampered a 5-35m layer of cover, making it tougher than ever to pinpoint the thin, ‘Penny-like’ seams of gold rich rock underneath.

Previous drilling was also less than comprehensive. While Spectrum made its discovery at ~80m depth, the average historical drill hole depth across Penny South is a mere ~42m, with only 18 holes deeper than 100m and seven holes extending down further than 200m.

It has not been tested at depth appropriately, says Strata Minerals (ASX:SMX) managing director Peter Woods.

These are small, high-grade lodes [we are hunting for],” he told Stockhead.

“Quite discrete, they will be undercover, and at depth. Spectrum only found [Penny North] starting at about 80m deep and the top of that orebody was only ~50m strike.

“They went deeper and it opened up.”

Woods also believes previous owners of Penny South were drilling into the wrong rocks.

“There are certain contact zones at Penny West where the high-grade stuff is. That contact zone has only been hit in one hole at Penny South, if at all.”

There is at least one more thing which makes this a project worth watching; RMS recently hit paydirt just ~450m from the Penny South tenement boundary:

“[The hole was] 390m deep, hitting 3.3m at almost 50g/t,” Woods says. “They will be going back out and drilling to extend their resources to the north and potentially to the south.

“It will be interesting to see what they come up with.”

Woods says Strata could be another Spectrum story.

“Right now we have a trusted geologist consultant looking at all the historical data and building us a master database,” he says.

“We will look at the data with fresh eyes and think about our next steps. It hasn’t been tested appropriately, especially at depth and that’s what we are doing to do.

“There are no guarantees, but don’t tell me there’s nothing there until it has been tested.”

At Stockhead, we tell it like it is. While Strata Minerals is a Stockhead advertiser at the time of writing, they did not sponsor this article.