Kristie Batten: Fortescue-backed Magmatic making moves in two major gold fields

One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Magmatic Resources (ASX:MAG) has a foothold in two highly prospective Australian regions and is increasingly confident of making a tier one discovery.

Until recently, the company was focused on New South Wales, but in August, completed the low-cost acquisition of the Weebo gold project, 30km south of Leinster in Western Australia’s Goldfields.

The project sits in the middle of five operating gold mines, Vault Minerals’ Darlot, Gold Fields’ Agnew-Lawlers, Bellevue Gold’s Bellevue and Northern Star Resources’ Bronzewing and Thunderbox.

“Each of those are over 2 million ounces in past production or resource. They total around 24 million ounces of gold,” Magmatic managing director David Richardson told IMARC in Sydney last week. 

“So we’re 20-30 kilometres from all of those mines on the greenstone belt. 

“How we got it was they were owned by three prospectors … and they owned the tenements for 12 years. We were fortunate enough to be at the right place at the right time.”

Aside from some recent exploration for nickel and lithium, Richardson said there had been little drilling on the project since Homestake in 2000.

Magmatic completed its first drilling program in September and reported the results earlier this month.

Aircore drilling at the Ockerburry prospect returned a best result of 12m at 5.13 grams per tonne gold from 66m, including 8m at 7.6g/t, and confirmed extensive shallow gold mineralisation associated with a 5km-long mineralised structure.

“Really, really happy with those results,” Richardson said. 

“It’s open to the east, and so we’ve got both an RC and aircore rig turning up on the 3rd and 5th of November. We’ll be drilling the whole of November.”

At the Scone Stone prospect, a single line of slim-line RC drilling confirmed high-grade mineralised structures hosted in an intrusive quartz-feldspar porphyry unit with results of 10m at 2.55g/t Au from 57m, including 5m at 5.24g/t and 18m at 0.75g/t, including 6m at 1.21g/t.

Elephant hunt

“The East Lachlan is a world-class copper gold region: 85 million ounces of gold endowment, 14 million tonnes of copper, that largely comes from the giant Cadia mine,” Richardson said.

“The other large mine near us is the Northparkes mine that’s owned by Evolution Mining (ASX:EVN) . 

“So the region has elephants – large, tier one potential.”

It was that potential that attracted iron ore major Fortescue (ASX:FMG)  as a partner at the Myall project last year via a $14 million farm-in searching for a Northparkes lookalike.

The project has an inferred resource of 110 million tonnes at 0.33% copper equivalent for 293,000t of contained copper, 237,000 ounces of gold and 2.8Moz of silver.

The first program by Fortescue this year returned 10.8m at 0.39% Cu and 0.07g/t Au within 42.8m at 0.19% Cu and 0.03g/t Au.

“We’re about to go into a $3.5 million drill program that will start in December,” Richardson said.

“We are now able to balance the hot period of Western Australia. You don’t really drill in December, January, February, but that’s our peak time in New South Wales, so our teams are going to be busy all throughout the year.”

Alkane’s neighbour

Magmatic also holds the Wellington North project, surrounding Alkane Resources’ (ASX:ALK) major Boda discovery, and the Parkes project near Alkane’s Tomingley gold mine.

The Boda Southwest prospect represents the continuation of the magnetic signature associated with the 14.6Moz AuEq Boda/Kaiser resource.

Rock chips collected by Alkane within 300m of the tenement boundary returned grades of up to 1.2% Cu and 12g/t Ag.

“This has true pit tier one potential,” Richardson said.

“We think we’ve advanced it significantly to attract another partner, like an FMG.”

Richardson described Parkes as a good-sized project for a junior explorer.

Results have included 16m at 1.22g/t Au from 13m and 18m at 0.72g/t Aufrom 33m, which the company said was comparable to early Tomingley results.

“We’re in the same rocks, which is the Parkes thrust,” Richardson said. 

“We have a large tenement package, and you can see we have some nice smoke in terms of the historical drilling intercepts that we have.”

Fortescue backs raising

Last week, Magmatic raised $3 million via a placement at 6.1c per share.

The stock is already trading above the capital raising price, closing at 6.4c on Friday.

Fortescue participated in the placement, subscribing for $1.1 million of the total to take its stake in Magmatic from 17.8% to 19.9%.

“We’ve got $7 million in the bank. Our FMG joint venture is fully funded,” Richardson said.

“Everyone thinks they’re undervalued, but in today’s gold market, I think the sum of the parts of our four projects are not reflected in our current market cap.

“We are hopefully looking forward to a very busy drill period over the next six months to deliver more value to our shareholders.”

At Stockhead, we tell it like it is. While Magmatic is a Stockhead advertiser, it did not sponsor this article.