Rio spends $80m on Winu copper find, fuelling speculation of a new year maiden resource

More evidence that Rio is on to something special puts spotlight back on Winu nearology juniors Antipa and Sipa. Plus, Euroz barracks hard for Legend’s WA nickel-copper discovery.

Rio Tinto hasn’t been messing around at its remote Winu copper-gold discovery in Western Australia’s Paterson province.

Its latest exploration licence expenditure report, filed under the WA Mining Act, shows Rio spent a massive $79.6 million on the project in the 12 months to October 12, not including the cost of a gravel airstrip.

Rio only confirmed the discovery in February this year after satellite imagery in 2017 showed it was up to something among the region’s sand dunes, and after it had first locked up 10,000sqkm of new ground in one of the country’s biggest-ever pegging rushes.

Rio’s February confirmation of the discovery said that up until end of December 2018, it had drilled eight RC holes and 20 diamond holes.

Now it can be said that up until October 12 this year, Winu has been the subject of 276 RC and 106 diamond holes for 110,000 metres all up, or 110km if you prefer.

Clearly then, Rio thinks it is on to something that just might have the Tier 1 credentials it needs to justify its time and effort.

The last drill results from Winu were released by Rio in August and it said at the time that more results from the eight diamond rigs and three 3 RC drilling rigs whirring away at the property would be reported in the first quarter of 2020.

Given the scale and pace of Rio’s expenditure, the expectation is that Winu will indeed be shown to be something special.

The first quarter update could possibly include a maiden resource estimate for the supergene zone of secondary copper mineralisation that overlays the deeper primary sulphide mineralisation.

The supergene zone has been the subject of the intense RC drilling while the diamond holes have been testing the extent of the project, with the idea being the supergene could be a potential open pit “starter case” while the bigger picture unfolds.

The starter case scenario was outlined by Rio’s growth and innovation boss Steve McIntosh at Diggers & Dealers, not long after the last of the Winu drilling updates.

“Our Tier 1 assets of today didn’t all start life that way. It is important with Winu that we look for a case that is bankable, relatively low capital and low risk,” McIntosh said.

From all that it can be safely assumed that Winu and the broader prospectivity of the Paterson province (where Newcrest is also drilling feverishly at the Havieron gold-copper prospect) will again command the market’s attention in the opening months of 2020.

And that is good news for the growing band of junior explorers in the Paterson.

Antipa and Sipa

Despite the building anticipation around Rio’s coming update on Winu, the two juniors that have long had the Paterson as their focus, Antipa (AZY) in its own right and in joint venture with Rio, and Sipa (SRI), are set to end the year lower than where they started.

There is good news in that though as their leverage to exploration success remains extreme at a time when their own work and that of Rio has greatly increased their understanding of where to find what is hopefully the next Winu.

That came through in the recent news from Antipa – it is trading at 1c - that an airborne gravity survey would be flown over its Citadel joint venture with Rio Tinto, with the target-defining data to be available early in 2020.

More telling was that the survey was not included in Rio’s original $3.4m exploration budget for Citadel under its farm-in agreement, remembering that the project area is some 5km east of Winu.

Antipa has also been busy on its 100% owned ground in the Paterson, with drilling at the Serrano-Poblano-Reaper targets showing early potential for a major discovery.

Sipa is trading at 7.7c. Its western tenement boundary sits about 10km east of Winu. Drilling at its Obelisk prospect recently doubled the size of the mineralised bedrock “footprint” and identified several new zones of mineralisation which all points to the potential for a major deposit to present.

LEGEND

Talking about leverage to the upside from a discovery being made, Legend Mining (LEG) did nicely in response to its nickel-copper discovery in the Fraser Range in WA, flagged here last week.

Legend shares were 4.2c ahead of it going in to a trading halt ahead of Monday’s release of assay results from latest drilling at its Area D prospect.

It is now an 8.5c stock, with the $100m addition to its market cap in response to the 14.9m intersection grading 1.07% nickel and 0.75% copper also prompting a more worthy name for the prospect – Mawson.

A 2.1m high-grade intercept within the 14.9m sulphide zone returned 2.1m at 2.03% nickel and 1.34% copper. Both were within a 70m disseminated sulphide halo, which Legend reckons has all the hallmarks of a large mineralised system.

Euroz had an 8c target price on Legend ahead of the discovery and has since increased its target price to 11c, saying that while a lot of work is required before Legend has a mine on its hands, Mawson has the ingredients to “provide the framework for the next significant deposit in the Fraser Range”.

The great hope is that Mawson – owned 70% by Legend and 30% by Mark Creasy, a 27% Legend shareholder - shapes up into another Nova, the nickel-copper deposit discovered in 2012 by Sirius Resources.

Sirius was a 6c stock at the time and was later taken over by Independence Group (IGO) – a 14.2 per cent Legend shareholder – in 2015 for $1.8 billion or $4.38 a share.

But it is way too early to be making comparisons with Nova, where the discovery hole returned a narrower but higher-grade hit. And it is too early to say if Mawson could be a stand-alone operation or if it its ore will have to trucked 200km to Nova for treatment.

Euroz ran through some numbers.

It said that at current spot prices, a payable tonne of ore from the 15m of massive sulphides would yield $155/t at spot prices (and assumed IGO payability of 80% if treated at Nova).

Trucking costs of 10c/t would add $20/T to total processing costs of $125/t, after which (and assuming current spot prices for by-product metals) about $60/t would be deducted as by-product credits.

“This would represent an operating margin of $90/t for each tonne of ore mined. Therefore, even 1% nickel mine grades would be economically truckable, assuming similar consistency with the other metals assayed within the 15m massive zone,’’ Euroz said.

“Again, we acknowledge that this is early days. However, it is clear that the academic exercise above does at least serve to highlight the materiality of today’s result,” Euroz said.

A bunch of juniors active in the Fraser – and likely to get more active in response to Legend’s success at Mawson – will be cheering Legend on when it returns to the field next year for follow up drilling.

They include Galileo Mining (GAL), where Creasy is a 31 per cent shareholder, Boadicea (BOA), Constellation (CR1), Fraser Range Metals (FRN) and Orion Minerals (ORN).

Orion is in a joint venture with Independence on nearby ground that will be the subject of a drilling program in the March quarter, a handy sidelight to Orion’s work in advancing its Prieska zinc-copper project towards production.