Quiet speculation that Rio has a huge copper find in WA has turned rampant, fuelled by the mining giant’s application to build an airstrip and images depicting a 40-man camp. Rio refuses to confirm or reject the talk, but sources suggest it could be Rio’s best find in 25 years.

Rio Tinto’s hush-hush copper discovery in WA’s remote North Paterson region is to get its own airstrip.

And the most recent satellite fly-over shows there has been lots of activity at the discovery, 120km north-north-west of the nearest point of civilisation, Newcrest’s once-great Telfer gold-copper mine.

There are new drill lines extending south by about 400m from our previous flyover, the 40-man camp is in, and the drill core lay-down area is expanding. Rio has also bulldozed a new access track to the north-west.

Despite all the activity at the late-2017 discovery, Rio has yet to confirm it is a major find. Whatever Rio is on to, it has triggered one of biggest land grabs by a single company in recent memory.

Last year Rio held 1000sqkm of the North Paterson in its own name and 1335sqkm in joint ventures.

Now it’s got more than 11000sqkm in its own name (all the way to the coast at Eighty Mile beach between Port Hedland and Broome) and 1760sqkm in joint venture. Oh, Fortescue has coat-tailed it in and has 5300sqkm under its belt.

To refresh the memory, the discovery was reported here in April on the strength of satellite imagery and industry chatter that Rio’s drilling was returning 140m intersections of visible copper mineralisation from a depth of 40m.

More recent chatter is that it is Rio’s best discovery in 25 years, that it could be as big as Mt Isa and that Rio is so annoyed by the satellite spying that it is cleaning up the drill collars and raking the surrounding sand dunes golf-style to throw us all off the trail.

Then there are the whispers from some other big-name miners - who ought to know if the broader Paterson is going to become hotter than hot on the strength of the Rio discovery - that it is the real deal.

It would be nice to know if any of that was true. But Rio is remaining shtum. The decision to put in an airstrip – revealed in a miscellaneous licence application – has only served to fire up the chatter again.

Rio could well argue that as the site is at least an 8-hour drive from Port Hedland, being able to fly the 400km with the crows is simply good occupational health and safety practice, which it no doubt is.

And it must be remembered that big mining companies don’t do things by halves when they think they are on to something of interest. They can just as quickly pack up and go home if the project fizzes.

But Rio’s airstrip for the discovery does go to an intention to be at the location for a long time, as well as increased people movement.

And judging by the effort and speed going into proving the hush-hush discovery as something special, the data build up can’t be too far off from Rio being able to make a judgement call on whether there is a need to let the WA government know, and the ASX.

Rio is of a size that means it needs to be making Tier-1 discoveries. In copper terms, that means 1 billion tonnes at 1% copper  (10mt of contained copper). But discoveries don’t need to be that big to move the needle.

The nearology plays

If Rio does eventually confirm it has found something special – and “if” is the operative word – it will unquestionably be great news for the juniors active in the area.

In terms of absolute proximity, we’re talking about Antipa (AZY, trading at 1.4c) and Sipa (SRI, trading at 0.9c).

The pair are affectionately known as the IPAs of the North Paterson by those who like ordering their Indian pale ale at the bar as quickly as possible.

Antipa has long had Rio as the funding joint venture partner on some of its North Paterson ground and coincidentally, way over in Africa, Sipa has Rio as the funding partner in a nickel exploration play worth watching.

(As an aside, Sipa has just added a belt-scale Mississippi Valley-type zinc-lead play to its portfolio to the south-west of the Lennard Shelf MVT province in WA.)

Other Paterson players include Encounter, Red Metals, Alloy and the AIM-listed Greatland.

Calidus Resources to join Bellevue, Breaker in 1Moz club

Announcing a gold resource of more than one million ounces has become something of a trend for the gold juniors.

It is important too as 1moz pretty much gives the juniors the critical mass needed to consider getting into production, as you would with gold in Aussie dollars at a stellar $1750/oz.

Throw in exploration upside from the newly established 1moz resource base, and the juniors can expect their days of penny dreadful treatment are behind them on a simple EV/Resource oz multiple and depending on their project location, their takeover appeal to one of the producers with a mill within easy trucking distance.

Bellevue (ASX:BGL) was the latest junior to crack the 1Moz threshold. It did it in spectacular fashion too, adding 550,000oz at 22g/t gold from its recent Viago lode discovery. What was a 20c stock now trades at 36c.

Breaker Resources (BRB) is another junior to have cracked the 1Moz in recent times at its greenfields Bombora discovery, 100km east of Kalgoorlie.

The 500,000oz increase took only five months to achieve and carried Bombora to 24.6Mt at 1.4g/t gold for 1.08Moz in the top 250m, including a higher grade core of 808,000oz at 2g/t.

Breaker immediately set an “exploration target” of 1.2m-1.4Moz from 250m-700m below the resource estimate where multiple high-grade lodes with underground mining potential are present.

Breaker was a 28c stock when it announced the 1.08Moz resource in early September. It has since moved to 35c.

Today’s interest is in who is next to join the club. Calidus (CAI), trading at 2.7c for a market cap of $35m, has the makings of club membership at its Warrawoona gold project near hotter-than-hot Marble Bar in the Pilbara.

It’s an historic gold field with first production recorded in 1897 but it has only been in recent times under Calidus that it has been the subject of a modern exploration effort across a consolidated tenement package.

An aggressive drilling program enabled Calidus to report a resource of 712,000oz at a relatively high grade of 2.11 grams in December last year. It was a 74% increase within six months, with the Klondyke deposit (654,000oz) the mainstay.

A new resource-drilling program kicked off in May this year and was due to wrap up about now. It will lead to a new resource update early in the new year, with Calidus clear in past statements that 1Moz-plus was its next target.

The new resource is likely to include an initial underground resource down dip from the open cut resource and given the old-timers mined high grades way back when at depth, there is potential for it to come with a sweet grade.

Calidus is already at the internal scoping study stage and will be looking to right-size a development proposal once the updated resource estimate is in. That will also trigger a preliminary feasibility study, rolling into a full feasibility about mid-2019.

Assuming strong growth in the resource update, Calidus would likely be shooting to become a 100,000ozpa producer. There are other mills in the Pilbara but they are either full or in need of refurbishment. So a standalone development would seem to be on the cards. Aussie gold at $1750/oz sort of says that.

 



Comments

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Paul Bourke

Hi Barry, Can you please send me the discovery that was reported here in April on the strength of satellite imagery and industry chatter that Rio’s drilling was returning 140m intersections of visible copper mineralisation from a depth of 40m. bourkefamilytrust@icloud.com Thank you Paul

Paul Bourke

Hi Barry, what do you think about Metalicity MCT and the new deal with Fortescue FMG in the Paterson Province. Also the Pilbara region and Admiral Bay ?