Barry FitzGerald: Why investors are fired up about Marindi's Pilbara plot

Marindi’s new project hosts a known gold-bearing conglomerate which has been worked since the 1970s, writes Barry FitzGerald in his weekly Garimpeiro column.

A bunch of Canadian stockbrokers, analysts and institutional investors descended this week on the Purdy’s Reward conglomerate gold nugget sensation, swapping the 7-degree winter chill of Vancouver and Toronto for the 30-degree warmth of the Pilbara.

The visit follows a tour of Australian parties last week, which passed without an update on recent activity at Purdy’s — a joint venture between Canada’s Novo Resources and ASX-listed Artemis Resources (ASX:ARV).

Industry chatter is that even the hard-bitten and cynical types on the local tour came back enthusiastic about what they saw.

Whether that translates in to some news to keep the conglomerate nuggets story bubbling remains to be seen.

What is more certain is that Novo now has a market cap of more than $C1.15 billion ($1.2 billion) which needs feeding with a steady flow of promising news to be sustained.

Having said that, today’s interest is in the expansion of the nuggets story from the northern part of the Pilbara near Karratha, down some 300km to the southern margin of the basin to the area around the iron ore mining town of Paraburdoo.

Novo has tenements in the southern area, as does plucky ASX explorer Marindi Metals (ASX:MZN) after it picked up an option on an advanced gold conglomerate play some 4km north of Paraburdoo.

Marindi’s project area can be labelled advanced because it hosts a known gold-bearing conglomerate which has been worked since the 1970s for alluvial gold with extensive dry blowings, detector diggings, and pitting over an area of 600m by 100m.

It was also drilled in the early 1980s by an iron subsidiary of CRA (now Rio Tinto), Hamersley. It was part of the Hamersley’s then search for Witwatersrand-style deposits in the Pilbara.

It has been comparisons between Purdy’s and South Africa’s fabled Witwatersrand gold deposits which have fired up investor imaginations in the Pilbara nugget hut, even if the comparison itself is not new.

Hamersley’s work was cursory in nature. Drilling was confined to approximately 400m of strike of the gold-bearing conglomerate on the outskirts of Paraburdoo.

Marindi nevertheless believes the 1980s exploration effort confirmed the gold-in-conglomerate model and that it opens up 25km of Mt Roe Basalt/Bellary formation contact for a detailed exploration effort.

Marindi shares shot 54 per cent higher to 1.7c on Friday on news of its southern Pilbara acquisition, giving it a market value of $22 million. Marindi managing director Joe Treacy is a geologist of 40 years’ standing.

Not one to overstate things, he told Stockhead that he believed the excitement around the 2017 version of the Pilbara gold-in-conglomerates hunt was for real. “I know people I rate working on it (up north) and they are enthusiastic.’’

“But outlining a resource will be the real test,’’ Treacy said.

Marindi’s sharp price rise in response to its Pilbara deal — the option was secured for $100,000 and 10m shares with private interests associated with seasoned geologist Joshua Pitt — reflected the strength of investor enthusiasm for the Pilbara conglomerate gold hunt.

So much so that when Marindi announced at the start of the month that it had made a significant base metals discovery at its Newman project in the Pilbara, the market barely blinked.

The on-going drilling program along the Prairie Downs fault zone has returned thick lead and zinc hits, raising expectations for the rest of the program.

Marindi also has a lithium leg from a package of ground it has put together in the Forrestania area, 400km east of Perth.

The area is home to Kidman Resource’s world class Earl Grey lithium deposit and the theory is that the region will host more than one sizeable deposit.

Marindi earlier this year lost a battle with Kidman on whether Marindi had an agreement to acquire lithium rights from Kidman.

It was a blow for Marindi but the combination of its Pilbara gold conglomerate push, the promising results at Prairie Downs, and the establishment of its own lithium land package in the Forrestania area, shows it has moved on.