Lefroy’s "unique" gold-copper find opens door to lucrative new world of exploration in WA
Little-known $10 million Traka is out to repeat Lefroy’s porphyry success and Kin wins support with 22m at 9gpt in first-up drilling.
A mix of copper and gold in an ore-body – or gold and copper depending on the grade of the respective metals – is a wonderful thing to have.
It’s why Australia’s lowest-cost gold production (with the help of copper credits) comes from Newcrest’s Cadia mine, and why the copper mines of Sandfire and Oz Minerals are low-cost producers of the red metal (with the help of gold credits).
And now that gold is back at $US1,900/oz, and copper is holding strong at $US4.50/lb, it stands to reason that having the magic mix in an orebody is a better thing than ever, particularly with the exchange rate at 77.4 US cents.
But there is not much of the magic mix on offer on the ASX, apart from the names above, and some other big miners.
So any exploration success on the copper-gold, gold-copper front is going to be warmly received, particularly when a new style of deposit has been uncovered.
That’s just what has happened in the Eastern goldfields of Western Australia where Lefroy Exploration (ASX: LEX) notched up its Burns gold-copper discovery in porphyry and basalt rocks some 50km south-east of Kalgoorlie.
The discovery hole (38m grading 7.63g/t gold and 0.56% copper from 134m) was announced on February 23 and what was a 20.5c stock is now being well-chased at $1.15 for a market cap of $138 million.
Burns was not in the original tenement package in Lefroy’s 2016 IPO. But when it became available in late 2019, Lefroy won the ballot over competing applications for the ground. Drilling got going in January, and success came with the second hole.
More to the point is that Burns seems to be a unique find for the Eastern goldfields, opening up a new regional exploration fairway, not unlike two big intrusive-related finds in recent times elsewhere in WA – De Grey’s Hemi gold discovery in the Pilbara, and Chalice’s Julimar PGE-nickel-copper discovery in the West Yilgarn.
Lefroy managing director Wade Johnson told an exploration focussed webinar put on by Arlington Group Asset Management during the week that Burns was a “very interesting system”.
“We get the mineralisation in both the porphyry and the basalt. I’ve been in the goldfields a long time, drilled a lot of things, seen a lot of things. I think it is truly unique to the Eastern goldfields,” Johnson said.
“It is a very exciting system and we are learning as we go. One key thing that it has got in it is a lot of magnetite alteration. It’s something I haven’t seen before but we can use (magnetics) to plan exploration to the north and south.”
He added that the porphyry seems to be getting bigger at depth and the alteration was consistent. Deeper holes are being drilled and it goes without saying that the results are keenly awaited by the market.
Lefroy’s success to date has naturally enough prompted a search by investors for other explorers targeting potentially large intrusive-related porphyry gold-copper systems in WA.
Traka (ASX: TKL) is a name that bobs up. It is not a Burns "nearology" play as its Mt Cattlin gold project – just to the north of Galaxy’s lithium operation - is down in the Ravensthorpe greenstone belt in WA’s southwest.
There is a long history of gold production at the project from small but high-grade mines. And that has pretty much been Traka’s focus in recent times, with drilling now completed at the historic Maori Queen and Sirdar workings to allow maiden resource estimates to be made.
But the excitement surrounding the stock is the geological rethink that shear-hosted high-grade gold positions are but small parts of a much larger porphyry intrusive complex.
That came through in an exploration update by the company to the ASX in April on the company’s “new” Revelation prospect at Mt Cattlin where two RC drill holes have been completed (assays pending).
Revelation is one of half a dozen magnetic targets with large-scale resource potential identified at Mt Cattlin, as distinct from the smaller but sweet non-magnetic shear-hosted gold deposits at the property.
One of the Revelation holes returned a thick intersection with copper sulphides and because of the known property-wide association between copper and gold, the result was said by Traka to be an “exciting outcome”.
Others seem to agree, with the stock edging up in recent days to 2.1 cents for a market cap of $10.6 million. There’s not too many $10 million mineral explorers around nowadays, certainly not one in the early stages of a promising WA porphyry gold-copper play.
As mentioned earlier, gold’s inflation-fear run up to $A2,450/oz should be seen as a major confidence boost for the sector.
The trouble is that when it comes to restoring share prices to the levels they were when gold in Aussie dollars was last at these levels in January, the market is taking its time, particularly when it comes to non-producing juniors.
The process is best sped up by the juniors releasing exploration results, ideally impressive ones. But that too is taking time because of the huge delays in the assay labs.
Still, there are examples where gold juniors are commanding attention – and a market re-rating – in response to impressive exploration results.
Kin Mining (ASX: KIN) is an example. Its shares put on 1 cent or 8.3% in Thursday’s market in response to hits of up to 22m at 8.96g/t gold from 24m in first pass air-core drilling at the Mt Flora prospect, 20km east of Kin’s 1.23Moz Cardinia gold project near Leonora.
Kin boss Andrew Munckton said Mt Flora was “clearly an area which demands rapid follow-up,” before finishing off the comment with an exclamation mark.
Outlining high-grade ore sources within easy trucking distance of Cardinia will make for a better development in the end. Mt Flora is part of that strategy, as was the high-grade hits recently reported for Eagle-Crow, 2km west of the proposed Cardinia processing plant.
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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.