As their bigger brethren cream it, junior porphyry hunters still wait for tickets to gold-copper party
The twin forces of $US1,950/0z gold and $US4/lb-plus copper means that the already highly profitable big gold-copper porphyry mines like Newcrest’s Cadia operation in NSW are creaming it at the moment.
But today’s interest is further down the food chain from Newcrest to the ASX explorers looking to crack the big-time by finding their own low-grade but large-scale porphyry style of deposit which, collectively, provide most of the world’s copper.
The funny thing is that the ASX junior porphyry hunters have not been run up in response to copper’s price surge on China’s reopening and gold’s charge this week to more than $US1,950/oz on easing interest rate pressures.
Sunstone (STM) is an example. It has pretty much been left alone at around the 3.6c mark despite its key commodities of interest taking off, and despite being deeply into a drilling campaign that could be a game-changer for its Bramaderos gold-copper project in southern Ecuador.
Sunstone released a maiden resource estimate last year for its Brama-Alba porphyry discovery within the broader Bramaderos project - 156Mt grading 0.53g/t gold equivalent for 2.7Moz of gold equivalent.
It was also able to set an “exploration target” for another 3.3Moz to 8.6Moz at Brama-Alba and the broader Bramaderos area.
So Bramaderos is now a 5-10Moz gold equivalent-type (potential) story, which is interesting in itself for a company with its $95m market cap.
But then there is the developing story at the Limon gold-copper porphyry less than 3km from Brama-Alba.
Limon has been generating high grade porphyry hits recently (79m at 0.9g/t gold equivalent from 90m), and accounts for about 35% of the overall Bramaderos porphyry exploration target, and seems to be holding its end up, adding possible starter pit potential to boot.
Not included in the exploration target is Limon’s epithermal mineralisation potential which sits to the north-east of the porphyry system. Sunstone has recently drilled three holes into the target area and plans to punch in another three.
Assay results could be available in 3-4 weeks, hopefully with grades higher than the underlying porphyry, not that there is anything wrong with Limon’s porphyry grades to date, which are at the upper end of what is the case globally.
It is just that higher grade epithermal material would firm up a starter pit scenario. It would only take 60Mt or so to get rolling, with the potential for capital to repaid ahead of a long-tail of porphyry gold-copper to come.
Porphyry deposits often come with an associated epithermal deposit. A good example is Merdeka’s Tujuh Bukit project in East Java (it was once owned by the ASX-listed Intrepid Mines, but that is a long story).
The Tujuh Bukit porphyry is now measured in billions of tonnes for 8.2 Mt of copper and 29Moz of gold.
But ahead of its full-blown development, Merdeka has had the benefit of being able to mine an overlying cap of epithermal mineralisation grading 1-1.5g/t gold which was amenable to heap leaching. It has helped to defray costs of the main event, the porphyry project.
As a not inconsequential aside, the original discovery at Tujuh Bukit involved one Malcolm Norris, Sunstone’s managing director. He and another geologist were the first to stand on the virgin ground for Intrepid back in 2006.
Battery Age Minerals (BM8):
The explosion in junior lithium companies on the ASX does not mean there has been a commensurate increase in lithium experience.
For so long, Australian expertise in lithium was limited to the Greenbushes operation, and even then the outside consultants to it were prevented from consulting to others under non-disclosure agreements.
But things are changing. A growing diaspora of experienced lithium people have been moving on from the now enlarged base of established lithium producers for new career challenges, including bringing their experience to select juniors.
One junior to benefit is Battery Age Minerals (BM8).
Formerly the cobalt-gold explorer Pathfinder Resources, which went nowhere because of permitting issues at its King Tut project in Argentina, BM8 is about to be relisted on the ASX after undergoing a recapitalisation, board and management rejuvenation, and a redirection into battery materials.
Its flagship project is the advanced Falcon Lake lithium project in north-western Ontario’s Thunder Bay mining district in Canada.
The project caught the eye of Gerard O’Donovan, now BM8’s chief executive officer. A civil and structural engineer originally from Blarney just outside of Cork in Ireland where all of the nicest Irish come from, O’Donovan landed in Perth when Atlas Iron was developing iron ore operations hand over fist.
Later on he ended up in a tin shed in Freo with 15 others, including former Atlas boss Ken Brinsden, when the development of Pilbara Minerals’ Pilgangoora lithium project was underway.
“I really think that was the formative period for Pilbara as a business because it allowed a core group of us (under Brinsden as MD) to really delve into lithium processing and understand how it actually works,” O’Donovan said this week ahead of BM8’s relisting.
“At the time, most of the people expertise was locked up under NDA’s down at Greenbushes and they weren’t able to share the information. So it was a bit of black box really for us, for want of a better description.
“During the period when the price was as low as $US400/t (now $US8,000/t spot), we ran the plant on and off but each time we did run, it was done with a specific purpose in mind.
“We had goals we wanted to achieve, and nine times out of ten we did. We learnt so much about lithium processing and lithium mineralogy.
“You need to understand what is in the ground and you need to cater to that because that’s how you maximise your recoveries.
“Pilbara did that and got up the recovery curve quite quickly. The market was not there at the time but they survived (and have since gone to be a $15 billion company).”
Needless to say, O’Donovan’s Pilbara experience – plus Atlas in its build phase and Rio Tinto at Winu, among other gigs - is just what a junior like BM8 could hope for as it goes about advancing its Falcon Lake project.
The project lies 10km along strike from Green Technology’s (GT1, $170m market cap) Seymour Lake project (9.9Mt grading 1.04% lithia).
Falcon Lake comes with spodumene bearing pegmatites mapped over 2.5km within a prospective 5km corridor and there are historic intercepts, including 24.4m at 1.42% lithia from 10m. O’Donovan is itching to start a drill program in the northern winter.
Leverage to success is good with only 70m shares on issue.
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One of Australia’s leading business journalists, Barry FitzGerald, highlights the issues, opportunities and challenges for small and mid-cap resources stocks, and most recently penned his column for The Australian newspaper.
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