Australian Mines (ASX:AUZ) is expanding its search for the next DeGrussa deposit in Western Australia’s Doolgunna-Marymia region with its entry into a farm-in and joint venture agreement with Lodestar Minerals (ASX:LSR).
Significantly, this adds an additional 15 kilometres strike continuity of the priority Jenkin Fault structure, being the key controlling structure of the mineralisation at Sandfire Resources’ (ASX:SFR) DeGrussa Copper Mine.
The agreement covers the Ned’s Creek and Marymia tenements, which immediately surround the company’s existing 51%-owned Marymia Project.
This more than triples its footprint in the prospective Doolgunna-Marymia region.
Through this agreement, which includes all minerals except gold, Australian Mines has also acquired a number of advanced copper targets including the Little Well and Area 7 copper prospects.
“The signing of this joint venture agreement with Lodestar more than triples Australian Mines’ footprint in this emerging copper district of Western Australia and offers the Company access to a number of additional high priority copper targets across this promising region,” managing director Benjamin Bell said.
“The presence of outcropping copper mineralisation within 3 kilometres of an existing copper deposit at Little Well, for example, demonstrates the significant base metal potential of this newly acquired ground and we look forward to updating shareholders on the progress of our exploration across the greater Marymia project area over the coming months.”
Australian Mines intends to commence on-ground exploration of the newly-acquired Ned’s Creek and Marymia tenements in the coming weeks.
The proposed timing of this exploration is expected to coincide with the receipt of the final assay results from company’s 12 hole reverse circulation drilling program that tested six discrete geophysical and/or geochemical anomalies on the Marymia joint venture ground with Riedel Resources (ASX:RIE).
Key Terms of the Agreement
Australian Mines has paid $100,000 to Lodestar on signing of the farm-in and joint venture agreement, which has the following key terms:
- Australian Mines has the right to withdraw subject to spending a minimum of $150,000 in exploration on the Ned’s Creek and Marymia Tenements within six months from the signing of the Agreement;
- If Australian Mines exercises its option to continue following the $150,000 Minimum Expenditure, the company must make a cash payment to Lodestar of $250,000;
- Australian Mines may acquire a 51% interest in all minerals excluding gold within the Ned’s Creek and Marymia Tenements by spending $1 million (including the Minimum Expenditure) on exploration within an initial two-year period from the signing of the agreement. (Lodestar’s Contessa and Brumby gold discoveries are excluded from this agreement);
- Following the acquisition of the initial 51%, Australian Mines may elect to acquire an additional 29% interest (taking the total to 80%) in the Tenements by spending a further $2 million on exploration within a further 24-month period; and
- Once Australian Mines has satisfied its earn-in obligations, with a resulting joint venture interest of either 51% of 80%, Lodestar may elect to contribute on a pro-rata basis or dilute their interest according to the standard industry formula.
Copper Prospects
The Ned’s Creek and Marymia tenements includes the Little Well and Area 7 copper prospects as well as the K42 and Breccia Hill base metal anomalies.
Surface mapping in 2012 had discovered outcropping copper mineralisation at Little Well that subsequently assayed 3.3% copper.
The Area 7 prospect similarly appears prospective for DeGrussa-style copper mineralisation.
Located near the intersection of a secondary northwest-trending fault structure and the regionally significant Jenkin Fault, a surface soil-sampling program completed in 2013 over the Area 7 target area successfully defined a 2-kilometre copper-in-soil anomaly that appears to be constrained by the northwest structures.
A first-pass shallow rotary air blast drill program previously completed over the eastern margin of this copper-in-soil anomaly returned an encouraging copper intersection of 4 metres at 0.23% copper from 18 metres down hole.
The bedrock potential for primary copper mineralisation at this location remains untested by drilling.
Similarly, no electromagnetic surveys have previously been undertaken across the Area 7 copper anomaly.
Recent Activity
Australian Mines recently earned a 51% interest in the highly prospective Marymia Project after meeting the terms under the Heads of Agreement with Riedel to spend $1 million on exploration before April 2016.
It is also 40 kilometres east of Northern Star Resources' (ASX:NST) Plutonic Gold Mine, which has produced five million ounces of gold to date.
Marymia covers more than 20 kilometres of the prospective Jenkin Fault, which is considered the key controlling structure of the copper-gold mineralisation at DeGrussa.
Drilling at Marymia has previously delineated a zone of extensive base metal anomalism along the Jenkin Fault structure.
Results to date have led the company to notify Riedel of its intention to raise its majority stake in this project to 80% by spending a further $2 million on exploration over the next three years.
Analysis
The farm-in agreement with Lodestar Resources adds an additional 15 kilometres strike continuity of the priority Jenkin Fault structure, the key controlling structure of the mineralisation at DeGrussa.
Highlighting the value of the structure, Sandfire recently entered into joint ventures on the ground between DeGrussa and the Marymia Project.
With surface mapping defining outcropping copper mineralisation, which subsequently assayed 3.3% copper this is highly prospective ground for AUZ.
Combining this with the Little Well prospect’s location just 3 kilometres from Thaduna copper mine provides more blue sky exploration upside.
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