Sultan Resources is on the hunt for multi-million ounce gold deposits
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Special Report: Goldman Sachs now predicts the gold price to break records, putting Australian explorers in the hunt.
Goldman Sachs expects gold prices could hit $US1,350 ($1,916) in three months, $US1,400 ($1,987) in 6 months, and $US1,450 ($2,058) in 12 months.
Couple this with a deteriorating supply outlook as long term mine output falls, and early stage Australian explorers with exciting projects look very attractive.
Especially those with a lot of upside, like Sultan Resources (ASX:SLZ).
Debuting on the ASX in August last year, the junior explorer holds promising, under-explored gold and base metal projects in the same neighbourhood as big existing mines and new discoveries.
Sultan managing director and experienced geologist Steve Groves says the benefit of investing in a quality, early stage explorers is the opportunity to get in on the ground floor.
“There’s all the blue-sky potential based on discovery, all that upside,” he told Stockhead.
“If you look at the share price trends of junior explorers, the value is in that discovery phase.
“The fact that most of our projects are gold-focussed is very timely, given all the bullish sentiment at the moment.”
Sultan’s Lake Grace project, 250km south of Perth, is in the same neighbourhood as Explaurum’s (ASX: EXU) 700,000 oz Tampia deposit and Ausgold’s (ASX:AUC) 1 million oz Katanning deposit.
It is also surrounded by tenements held by a joint venture between Cygnus Gold (ASX:CY5), and major miner and explorer Gold Road Resources (ASX:GOR).
Gold Road is a $700 million market cap company that spends over $20 million a year on exploration.
It’s a company with a proven track record of discovery.
Mr Groves says the fact that Gold Road had identified the region as the next place to be exploring in Western Australia was encouraging.
“Gold Road, by itself and in Joint Venture with Cygnus Gold, has picked up several thousand square kilometres of ground,” he says.
“They are seeing things that they like there. And they aren’t looking for 500,000 oz deposits; they are looking for multimillion oz deposits.”
Despite all this regional interest, much of Sultan’s Lake Grace Project hasn’t been touched for 25 years.
The priority target, the Challenger Prospect, was lightly explored in the 1990s, but after that company left, the landowner wasn’t open to having more explorers on the ground; until now.
“We have negotiated access so we will be the first people to go drilling on this particular prospect for 25 years,” Mr Groves says.
“The landowner said he appreciated our approach.”
Sultans plans to drill some exciting anomalies in about two weeks, with the results due next quarter.
“We are drilling a 1km long anomaly that’s consistently above 0.1 gram per tonne of gold – it’s quite significant,” Mr Groves says.
“It’s probably the best gold anomaly I’ve seen in the area, apart from Tampia and Katanning.”
Sultan also has Thaduna – a project right next door to Lodestar Minerals’(ASX:LSR) recent Neds Creek gold discovery, 190km north of Meekatharra.
Over the past year, Lodestar has uncovered what appears to a be a major gold system with similar characteristics to a number of 1-million-ounce-plus gold deposits elsewhere in the region.
Lodestar has uncovered gold grades of up to 74 grams per tonne (g/t) at the Neds Creek.
Sultan believes Lodestar’s discovery continues into its Thaduna landholding, and recent, very shallow – about 50m deep — aircore drilling by the explorer has only reinforced that conviction.
“In the northern half of that tenement we just got such strong anomalism,” Mr Groves says.
“It was quite widespread, about 1km long, and quite thick, with up to and over 20m zones down the hole. It tells me that we have the right rocks, and there is a large amount of gold floating around in that weathered stratigraphy and regolith.
“That’s exactly what you want to see in aircore drilling.”
And when you look at Lodestars drilling, most of the good stuff happens below that 40m to 50m mark, Mr Groves says.
“Our air core results at Thaduna were very good — any geologist I speak to gets excited by it.
“It’s early days, but the ground is very prospective.”