Tasman Resources (ASX: TAS) has kicked off a much anticipated drill program within the Vulcan prospect in South Australia under its Farm-in/JV agreement with a subsidiary of Rio Tinto (ASX:RIO).
The Vulcan Prospect is an Iron Oxide, Copper, Gold, Uranium (IOCGU) prospect first identified by Tasman in 2009.
It is located 30 kilometres north of Olympic Dam and is defined by a large gravity anomaly approximately 12km2 in area and is comparable in size to the area to BHP Billiton's (ASX:BHP) Olympic Dam deposit.
The 12,000 metre drilling program under the Agreement will focus on the previously undrilled, high priority, southern portion of the Vulcan Prospect.
Tasman previously received initial payments totalling $10 million from Rio Tinto under the First Milestone Payment.
Tasman has previously completed 8 drill holes within the northern portion of the Vulcan Prospect each having intersected IOCGU-style alteration and/or mineralization.
The drill program will fund the initial Exploration Program from the First Milestone Payment and will conduct, operate and complete the Initial Exploration Program in consultation with RTX.
The Initial Exploration Program is to be completed within 12 months.
Analysis
Fascinatingly, 8 holes have been drilled to date at Vulcan. All 8 holes encountered IOCGU mineralisation/alteration Cu, Au, Ag, U, Mo (+ REE).
Based on a Residual Gravity comparison with Olympic Dam, Vulcan is uncannily similar.
RTX may pay TAS $7m & spend $25m on exploration for 55%. If TAS dilutes, RTX may spend $50m for further 25% (ie 80%). TAS may then contribute or require RTX to buy TAS share (20%).
Tasman had cash of $10.5 million at June quarter end.
The drill program will be fascinating to watch as it unfolds. Although early days, Vulcan displays many, many similarities to Olympic Dam that investors should be looking closely at Tasman Resources given current valuation of $29 million includes $10 million in cash.
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