Lodestar unveils what could be a company-making gold discovery
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The location is remote, and gold grades encountered so far are modest, but what Lodestar Minerals appears to have discovered at its Ned’s Creek project in WA’s Murchison region could prove to be a company maker.
So it’s no surprise that the small explorer’s share price has more than doubled over the past month.
The rise from 0.8 of a cent to 1.8c has caught the eye of speculators, though even at its latest price Lodestar remains a minnow with a stock-market value of around $11 million.
More important than the share price or market value is the significance of Lodestar’s work in a region with a track record of producing significant deposits of gold and copper.
Sandfire’s rich DeGrussa copper mine is 50 kilometres to the west of Ned’s Creek and the big Plutonic and Marymia goldmines are even closer.
New blip on the radar
Until two days after Christmas Lodestar was not on any investor radar screens. But all this changed when the company said it had “confirmed” the presence of a major gold system 35 kilometres from a geological structure known as the Plutonic Belt.
Best drill results from the Contessa prospect, which lies within the broader Ned’s Creek project, include a near-surface 4 metres at 6.3 grams of gold per tonne though the significance of the latest drilling is that the gold-bearing structure has been encountered at depth.
“Drilling results from 75 aircore and two reverse circulation drill holes (low-cost drilling techniques) completed across the 100%-owned Ned’s Creek project and Yowereena farm-in confirm a major gold system,” Lodestar said in its December 27 statement.
More drilling is required to get a clearer picture of what might have been discovered with planning underway for a fresh round of work over the next few months.
All eyes on Contessa
Because it is a tiny company, with limited cash in the bank even after its chairman, Ross Taylor, chipped in $1.2 million of his own cash last year, Lodestar has a lot riding on the next round of drilling which will focus on the Contessa prospect.
The last round of drilling at Contessa confirmed that gold-bearing mineralisation was open at depth and along the contact zone to the southwest and northeast, which is typical of mineralisation in the region.
Best assays reported on December 27 included 1m at 4.4g/t contained within a broader section grading 1.4g/t over 10m, starting at a depth of 138m.
Gidgee Flat, another prospect within the Ned’s Creek project area, returned hits that included 2.3g/t over 12m from a depth of 80m, and 3.2g/t over 15m from 72m with a richer slice assaying 5g/t over 4m.
Encouraging as the assays are, the two more important aspects of Lodestar’s exploration are the location of Ned’s Creek within a proven mineral field that has a history dating back decades, and the fact that it has moved up a notch in the hunt for a mine.
A research note by a newly-formed investment advisory firm, MAC Equity Partners, summed up the situation this way: “Lodestar has progressed from exploring for a mineralised system to exploring a mineralised system”.
The difference sounds semantic but from a mineral exploration perspective it is deeply significant because it means Lodestar has found gold, the next trick is to prove that there’s enough of it to be mined profitably.
The place to be
The second point of importance, location, will add to interest in Lodestar because the major geological structure in which it is working (the Capricorn Orogen) is only just starting to be understood and is the focus of detailed analysis by a number of industry and academic organisations, including the CSIRO.
What interests the academics is the way the Capricorn Orogen has been crushed between the ultra-old Yilgarn Craton and the slightly less old Pilbara Craton, with resulting volcanic activity and hydrothermal ore deposits, such as Sandfire’s DeGrussa copper mine.
MAC Equity Partners in its November research note described the mineralisation at Contessa as “conforming to the geological models for lode-style gold mineralisation where the structural control is the main influence on gold distribution”.
“This style of gold mineralisation is well known and similar to other gold deposits that occur on faulted geological boundaries.”
What happens next is the key to Lodestar because the only way to answer the question about whether it has made a significant discovery, or simply added to the knowledge of the region for future explorers, is to drill – and keep on drilling.
With limited financial resources, and a potentially big prize begging, Lodestar will need more cash to fund its work at Ned’s Creek and that could mean either a fresh call on shareholders, or an invitation for a partner with deep pockets to join the search.
Either way, Lodestar should be a junior explorer worth watching for at least the first few months of 2018, and perhaps longer.