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KGL Resources grows base metal potential in the Northern Territory

Last updated: 01:00 03 Nov 2015 GMT, First published: 00:00 03 Nov 2015 GMT

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KGL Resources (ASX:KGL) has rapidly expanded the potential of its Yambah project in the Northern Territory by finding two new prospects that demonstrate copper-lead-zinc occurrences for more than 500 metres.

The Dawn and Emily prospects were discovered during reconnaissance mapping on the project’s Bald Hill tenement and delivered rock chips grading up to 1.5% zinc, 0.89% lead and 0.58% copper.

Compilation of previous exploration has revealed that no previous exploration or drilling has been conducted to test these prospects.

Previous exploration companies have completed early-stage exploration on Yambah, but significant potential remains for the discovery of a large stratabound sulphide deposit.

Historical work has identified several base metal prospects that have been interpreted to be stratabound sediment hosted or volcanic associated massive sulphide at the site.

Rock chips at Yambah were found up to 19% copper before KGL acquired the project from Mithril Resources (ASX:MTH) earlier this year.

The most advanced prospect is Red Rock Bore, where drilling was previously conducted by Pasminco. Mineralisation in this area is hosted by magnetite-quartzite that has a strike length of more than 1 kilometre. The best intersection at this prospect was 13.35 metres at 3.3% zinc, 0.5% lead from 131 metres, including 1 metre at 13.6% zinc from 132.3 metres.

An intersection drilled under a shaft sunk on an ironstone ridge at the project’s Rankins prospect by Central Pacific Minerals in 1971 returned 1.9 metres at 2.5% lead and 1.2% zinc with up to 20% magnetite-pyrite.

Other prospects include Gecko and Turners, where grab samples have contained up to 11.85% copper, 34.4g/t gold and 36.8g/t gold.

Reconnaissance-level exploration by KGL is planned to progress the existing and new prospects to a drill-ready status. Fieldwork will include detailed mapping, rock chip sampling and geophysical surveys.

This work will be conducted with the aim of locating additional mineralised trends.


Promising acquisition

KGL is expected to reproduce some of its exploration success at the company’s Jervois multi-metal project (150 kilometres to the west) by using the similar exploration methods at Yambah.

The large drilling program conducted at Jervois, in combination with research by CSIRO and the NTGS has brought a much improved understanding of the mineralisation and alteration.

Application of this approach at Yambah is expected to deliver similar results, especially considering that the project was acquired by KGL partly due to its geological similarity to Jervois.

Indeed, Yambah was acquired because of a correlation made by the NTGS between the Bonya Metamorphics that host Jervois and the Strangways Metamorphic Complex (SMC) that also forms part of the NT’s Palaeoproterozoic eastern Arunta region.

Chlorite schists, calcsilicates and quartzmagnetite rocks of the SMC are also common in the Bonya Metamorphics in the Jervois Range.

Base metal occurrences at Yambah are interpreted to be syn-sedimentary and have affinity with the VMS style.


Jervois progress

The discovery at Yambah builds on substantial recent momentum at Jervois, where KGL has delivered a highly anticipated Prefeasibility Study (PFS) confirming the project as a robust, mid-level scale operation with an initial annual production of more than 20,000 tonnes of copper, 1 million ounces of silver, plus lead and zinc, with a mine life of more than 8 years.

Resources were defined at 26.7 million tonnes at 1.12% copper and 16.6g/t g silver, with 3.8 million tonnes at 0.72% copper, 3.7% lead, 1.2% zinc and 67.5g/t silver.

As tonnes and grade are added to this resource, C1 costs already among the lowest of the world’s probable new mines are expected to be further reduced.

Most recently, Jervois revealed more high grades at its Rockface prospect, where drilling returned 13 metres at 2.14% copper, 12.5g/t silver, 0.10g/t gold from 255 metres as well as 2 metres at 2.83% copper, 10.8g/t silver, 0.05g/t gold from 278 metres.

The Rockface trend does not currently feature in the PFS mine schedule but has the potential to add a new open pit and underground mine to the project.


Analysis

The discovery of two promising new prospects at Yambah adds significant potential to the project as KGL has already demonstrated that it can add value to this kind of geology through exploration.

KGL’s success in exposing the endowment of Jervois bodes well for exploration at Dawn and Emily, which host similar mineralised structures and have already delivered encouraging preliminary exploration information.

Shares in KGL have improved about 30% over the last three months as Jervois development milestones have justified the company’s approach, which will be applied at Yambah.

Further price catalysts may therefore results from upcoming fieldwork at Yambah, where reconnaissance exploration will aim to locate additional mineralised trends.

KGL held a cash balance at the end of September of A$3.2 million.


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