Barry FitzGerald

Rio has finally coughed up to a substantial copper discovery in the Pilbara. Predictably, its language was measured. But seasoned observers say it is a monster, with some suggesting it could exceed 20Moz of gold-equivalent. Plus, Chalice awaits first results from drilling near Victoria’s rich Fosterville gold mine.

It’s been worth the wait to finally hear from Rio Tinto (ASX:RIO) as to what it is on to at its Winu copper-gold-silver discovery in Western Australia’s Paterson province.

The thing is big, more than 1 billion tonnes containing 4mt of copper, 14m oz of gold and 80m oz of silver, according to the more-optimistic back-of-the-envelope assessments doing the rounds. And it is getting bigger too, with Rio stepping up its spending this year at the remote site.

The industry had been relying on the bush telegraph and satellite imagery since early last year to get a feel for the significance of the find, 130km north of its geological analogue, Newcrest’s (ASX:NCM) Telfer gold-copper mine.

But that all changed on Wednesday night when Rio’s clearly-delighted CEO, J-S Jacques, said that even at this early stage of the discovery, it is “absolutely clear there’s a lot of copper, a lot of gold, a lot of silver”.

He was talking after the release of first assay results from 14 diamond holes (and partial results from another two) in last year’s 20-hole diamond drilling program (drilling resumed in January with another four holes completed so far).

The results included very thick intersections of vein-style copper associated with gold and silver below relatively shallow cover (50 to 100m), with the mineralisation remaining open at depth and to the east, north and south.

The thickest intersection was a 741m hit from 68m grading 0.45% copper, 0.52g/t gold and 2.94g/t silver. The grade might not excite the average punter, but it is right up there with something like Newcrest’s Cadia gold/copper mine in NSW.

More to the point is that it also seems Winu has the big-tonnage potential that makes a big porphyry system like Cadia, with its low to moderate grade, such a fabulous operation, yet it is at much shallower depths.

In the ideal world of Rio, it would still be keeping silent on Winu. Another 12 months of intense drilling and it would have a better handle on whether Winu had Tier-1 potential (which looks to be the case), without having to share its intellectual property with the rest of us.

But rumours of the find since as early as April last year meant pressure was building from the rest of the mining industry to “do the right thing” and give the whole exploration scene a lift by confirming Winu as something special.

Rio has now relented, and good on it too. Winu is shaping up as a big reward for Rio maintaining its exploration effort when other big names let their efforts lapse after the 2012 industry shakedown.

There was not enough information in Rio’s Winu announcement to be definitive about just how big Winu is. Besides, drilling continues.

But as stated earlier, that has not stopped outsiders with knowledge on these sort of things from having a stab.

The behemoth scale mentioned earlier (i.e. 30m oz on a gold-equivalent basis) was countered by more conservative stabs, right down to 150mt of mineralisation at 0.8% copper equivalent (1.2mt of copper).

Hartleys was one the few prepared to go public with its speculative assessments - 1.3mt copper equivalent or 6.3m oz gold equivalent based on the two drill sections released by Rio, or 4.5mt of copper equivalent (22m oz of gold) if Winu is plotted as being 1km long, 400m wide, 700m deep and with a specific gravity of 2.5.

Goldman Sachs did not have a stab at Winu’s scale. But it did say Winu “appears to be a world-class discovery.”

“Early days, but Winu looks like a potential mine in our view,” GS said.

Whatever Winu’s eventual size, it is one of the most important discoveries in a long-time for the Australian industry. Its name is added to the minerals bounty for which the Paterson is already known, though it remains lightly explored.

That situation has given the junior explorers and miners such as Fortescue (ASX:FMG), Independence (ASX:IGO) and OZ Minerals (ASX:OZL),  which were in the Paterson ahead of the Winu whispers, and those which have recently arrived, the incentive to find the next “big”  one.

Paterson-Winu juniors

While there was lots of excitement in mining circles about Winu’s world-class potential, it did not rub off on to the juniors active in the region during trade on Thursday. But that will come.

Most of them had a bit of a share price spurt higher in early Thursday trade but then gave up the gains in the afternoon.

All that was to be expected (buy the rumour, sell the fact) as it will take time for the full significance of Winu for exploration in the broader Paterson region to sink in. Rio’s J-S did his best on Wednesday night, but promoting the upside from early exploration results is not Rio’s style, or J-S’s forte for that matter.

In coming weeks and months, the juniors will be firing up their 2019 programs and will be telling one and all about the leverage they have to making a discovery like Winu. The information from Rio is also going to help them in defining new targets and refining existing targets.

Those to watch are the very same that were worth watching ahead of Winu being confirmed as something special. An incomplete list is Antipa (ASX:AZY), Sipa (ASX:SRI), Encounter (ASX:ENR), Rumble (ASX:RTR), Red Metal (ASX:RDM), Marindi (ASX:MZN), Metalicity (ASX:MCT) and Carawine (CWX).

Victoria-Fosterville juniors

If there is any doubt as to whether there will be a rub-off on the Paterson juniors on the strength of Winu, just take a look at the Victorian juniors wanting to emulate the success of Canada’s Kirkland Lake (TSX:KL and ASX:KLA) at Fosterville near Bendigo.

As widely tipped, Kirkland has just upgraded the gold reserves at Fosterville by 60%, or 1.02m oz, to 2.7m oz grading a spectacular 31g/t, or close enough to one oz a tonne that it doesn’t matter.

Fosterville has been transformed into one of the world’s best gold mines since the 2016 discovery of the high-grade Swan zone (2.34m oz at 49.6g/t).

It has “fostered” increased investor interest in the idea that virgin Fostervilles remain to be discovered beneath cover to the north of Bendigo and at other old Victorian goldfields like Fosterville itself

Big companies are also moving in, with the mighty Newmont recently applying for a big land package near Rushworth.

All that is reflected in the bumper $130m market cap of the Gina Rinehart and St Barbara (ASX:SBM)-backed Catalyst Metals (ASX:CYL), which yesterday was in the market for a placement to fund a big exploration push (and hopefully a maiden resource) this year.

Navarre Minerals (ASX:NML) is a 49% joint venture partner with Catalyst at the promising Tandarra project and has been kicking goals at its Langi Logan and St Arnaud projects, albeit with none of the that yet reflected in its modest $30m market cap.

Then there is today’s interest, the cashed-up Chalice Gold Mines (ASX:CHN, TSX CXN). It is trading at 15c (it has cash and liquids of about 10c a share) for a market cap of $40m.

It recently copped a speeding ticket from the ASX because its share price had run to 18c. No prizes for guessing Chalice reckoned it had a lot to do with the resource upgrade at Fosterville.

But Chalice was also able to say that in the same region as Fosterville, it has a maiden drilling program underway at its Pyramid Hill project. The size of the program was doubled to 15,000m as a result of the definition of “high quality” drill targets beneath cover and would now be in its final stages.

The recent share price run to 18c was presumably in anticipation of some results being realised before long.

It is very early stage stuff and the results won’t need to shoot the lights out to generate interest. As long as Chalice demonstrates its targeting has successfully found virgin gold positions beneath cover, the market will get interested. The treasure trove at Fosterville has made sure of that.



Comments

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Paul Bourke

This is a great article Barry, thank you for the update and all of the details. What are your thought on MCT a junior explorer in the Paterson Province ? Thank you Paul