Giant copper-gold porphyrys in the Americas are fast-becoming the holy grail for Australian miners. Newcrest is now leading the march with this week’s $1.4b purchase while PolarX is preparing for an eagerly-awaited drilling season in Alaska and Sunstone has just got the tick to start drilling in Ecuador.
The value of low-grade but bulk-tonnage porphyry copper/gold deposits has come into sharp focus for the local market as a result of Newcrest’s (ASX:NCM) $1.14 billion acquisition of a 70% interest in the Red Chris mine in British Columbia.
Red Chris is currently a small copper and gold producer but the driving force behind Newcrest’s move was the 1 billion tonne porphyry resource at depth grading all of 0.35% copper and 0.35 g/t gold.
Newcrest knows how to make serious money from such deposits thanks to the block caving expertise it has honed over the last 12 years at its Cadia mine near Orange in NSW. It’s where margins are currently running at more than $US1,100 an oz (after copper credits), thank you very much.
Newcrest is out to introduce block caving at Red Chris, acquired from the financially-stressed Imperial Metals (TSX:III) which has never really recovered from the trauma of the 2014 tailings dam collapse at its Mount Polley mine, also in BC.
So it has to be assumed that Newcrest got something of a bargain for its $1.14 billion. But the bigger point here is that the Red Chris acquisition has served to highlight just how valuable copper/gold porphyries can be, notwithstanding their low grade.
They are after all, the biggest and growing source of the world’s copper. It’s just that Australia is not all that well endowed with them.
That’s why a bunch of hardy ASX-listed explorers (and Newcrest) have headed off to known copper-gold provinces elsewhere around the world to have a crack at finding the “big one.”
Today’s interest is in a little thing called PolarX (ASX:PXX). It has been trading at 5.9c for a market value of $18.8m ahead of what will be an exciting exploration field season – once the snow melts - at its Alaska Range project, a six-hour drive on good roads from Anchorage.
PolarX has kicked some goals since making Alaska Range its focus, with a stock exchange-compliant resource outlined at the (growing) Zackly skarn deposit (which form in association with porphyries) of 3.4mt grading a handy 1.2% copper and 2g/t gold.
It has the makings of a mine one day should further exploration of the higher-grade zones being encountered to the east of the current resource deliver the 10-15mt of mineralisation likely needed to push the button.
But the bigger potential prize is the two porphyry targets Mars and Saturn at either end of a 12km long mineralised corridor, with Zackly roughly in the middle.
Mars and Saturn have never been drilled and of the two, Mars is the most advanced in terms of establishing its credentials as a legitimate porphyry target some 6km west-north-west of the Zackly skarn.
Anomalous pathfinder elements (copper, gold, molybdenum and arsenic) were returned in broadly-spaced soild samples over an area of 2km by 1.5km, coincident with a magnetic anomaly. It was further refined as a target when an IP survey indicated the presence of sulphide mineralisation starting about 150m below the surface.
In short, Mars is drill-ready.
PolarX plans to get on the ground in May and then drill from June-September, increasing the scale of Zackly and hopefully snagging something big at Mars in an initial scout drilling program.
Saturn is a “blind” target under glacial till and has a magnetic signature consistent with it being a porphyry system. It is to be refined as a drill target in the 2019 field season with an IP survey.
PolarX is no different to other juniors in that it is not exactly flush with cash to fund its exploration program. But what is known is that every time it puts out the latest information on the project, its phone rings.
Managing director Frazer Tabeart said as much last month at the Resources Rising Stars’ “Summer Series” conference.
“Every time we put out new information on this we have had phone calls from major companies looking to have a look at our data under confidentially agreements with a view to potentially investing in this project,” Tabeart said.
“So the mining companies out there get this. They can see the information we are presenting is entirely consistent with more than one porphyry copper target.”
He didn’t say so, but from that, it could be suggested that one funding route would be for a mining company to come on to the register with a placement. That should be the preference anyway as there is too much potential upside to be had at this stage to be selling off stakes in the project.
Sunstone Metals (STM)
It has been said before that Sunstone (ASX:STM) could be the junior exploration success story of 2019 but for authorities in Ecuador issuing an environmental licence so drilling could start at its Bramaderos gold-copper project.
Well, after a frustrating delay, the new political guard in the country has delivered on a promise to clear the backlog of drilling applications in the country, with Sunstone to get its drilling permit in the next few days on an environmental bond being paid.
Sunstone shares popped 25% higher to 4c yesterday on the news, all of which was predictable if the new guard in Ecuador were to be taken at their word.
Sunstone (80%), and its joint venture partner, Canada’s Cornerstone Capital Resources (TSXV:CGP), have had a rig ready to go in anticipation of the drilling permit being received and reckon they can start punching in some holes within next 2-3 weeks, with first assay results likely in late May/early June.
Cornerstone is of course the junior partner in the Cascabel porphyry copper-gold discovery by the Brisbane-based and London-listed SolGold (LSE:SOLG). Cascabel currently stands at 8.4mt of copper and 19.4m oz of gold and SolGold has made a spurned takeover bid for Cornerstone.
More than that, SolGold is in the sights of Newcrest and BHP (ASX:BHP), with Newcrest now holding 14.5% of the company and BHP about 11%. The tip is that Newcrest’s block caving expertise makes it the obvious bidder for SolGold. But such is the scale of the project, it could bid jointly with BHP.
The state of play around the Cascabel owners is recounted as it goes to why Ecuador is now considered hotter than hot as an exploration destination.
Now it’s Sunstone’s chance to entry the fray at Bramaderos.
The initial drilling program will involve about 5,000m across two porphyry targets and an epithermal target.
The first to be drilled will be the Limond porphyry target. It has porphyry mineralisation at surface plus a lot of altered rock. It has never been drilled before but surface trenching returned 97.6m at 0.71g/t gold and 0.23% copper (Cascabel grades 0.29g/t gold and 0.41% copper).
The rig will then move to Bramaderos Main to follow up historical drilling that intersected 248m at 0.56g/t gold and 0.14% copper and recent surface trenching that returned 615m at 0.52g/t gold and 0.11% copper.
Then it will be the turn of the outcropping West Zone epithermal prospect, a potential high-grade early development gold opportunity compared with the bulk-tonnage porphyry targets. Trenching there returned 15.6m at 6.1g/t gold.
The program is one to watch. Sunstone’s $48m market value ahead of any success in Ecuador (it is well funded and has an indirect interest in the Viscaria copper project in Sweden and direct interests in gold and lithium projects elsewhere in Scandinavia) makes sure of that.