Xtract Resources Bushranger - Racecourse Prospect

 

Bushranger – Racecourse Prospect.

   The aim of this very quick piece of research, is to understand the implications of both the Market update in the week commencing the 25^th of Jan 2021 – which is a geological interpretation of the visual core findings and the later assays, which should be available between the 8^th -19^th of February for part 1, if they are split in two. Or the 22^nd of February to the 5^th of March, for part 2, or the entire core length.

   This report is not, and could never be, exhaustive. Hundreds of pages and at least 30 scientific studies have been written concerning the geology involved and the individual prospects that have been Identified. Some of the science is still disputed. It would take many weeks and months to produce a concise report. I would encourage anybody interested to research in more detail any aspects which they think are too lightly touched. I’ve tried to stick to details which are relevant, in favour of comprehensive histories.

   From experience the market often doesn’t pick up on and or understand porphyry geology or results straight away. As an investor, being able to determine results and the geological indicators, gives you a heads up, before the market either heavily buys or sells the explorers share.

    I am not an expert in the Xtract Resources company. I don’t pretend to be. What I do have is 10-15 years investing in porphyry exploration companies. I am a new investor in Xtract Resources and I have invested based purely on the drilling of Bushranger. To further caveat this piece of work, Xtract Resources (XTR), have been very poor at giving out core information to date. We have very limited visuals and descriptions of the mineralisation. The stockwork has not been described, we don’t have visual estimates of percentages or even vein counts. We do thankfully have a few snipets such as the heavy feldspar presence, some of the existing older drill results and nearby similarities with extensive geological exploration. As you would expect we have been told about the extensive chalcopyrite findings, but little on mineralisation such as bornite, or primary and secondary source events. It has been, and continues to be my belief that XTR, are still coming to terms with the drill results. To my knowledge they have a single geologist overseeing operations who is not a porphyry expert. To remedy this XTR are in the process of hiring and appointing a local porphyry expert.

   All porphyry systems share similar characteristics, they are intrusions of magma, which undergo hydrothermal alterations. The mineral composition tends to be driven by how many alterations and often the speed of the alteration. For example, faster or slower cooling of the intrusion will provide more or less copper and inversely gold. So, porphyries tend to be either gold heavy or copper heavy. There is a sweet spot, with just the right speed of cooling, where both exist in moderate levels. To complicate matters, geology doesn’t just happen and then stop; so, you will often have two or more incursions of hydrothermal alteration. This provides a mixture of stockwork. For example, the older -primary- incursion with associated stockwork, tend to be gold heavy in this region, later incursions are normally more coppercentric, which is supported by local geology studies. Obviously, other factors will be in play and I am simplifying this greatly, not least that this region probably saw as many as 6, maybe 10 intrusions, in various stages of hydrothermal maturation. Alteration plays the key role in extracting, creating the mineralised halo. By far the highest mineralisation is based directly around the intrusion in the alteration layer. Some intrusions will exist that are completely barren of gold, copper and silver.

   Before we go much further, it’s important to identify similar localities within the geological system, that the Bushranger license lies. These are Boda, Northparkes and Ridgeway. Although, the much larger Cadia system of deposits is within the geological footprint, it’s characteristics are too different to the Bushranger prospect to be a much use currently, this might change with new drill results.

Boda: This is a predominantly gold primary; with copper secondary. Monzonite Porphyry pipes extend 1000m in length horizontally. Boda has an unusually large alteration zone, extending 400m across. The alteration zone is fed from several porphyry pipes of various but mainly early intrusions. Mineralisation has a similar spread to all of these porphyry types, being much stronger directly next to the intrusion, drill intercepts of 19m @0.82g/t Au. Compared to 152m @0.18g/t Au as you move 100-150m away from the intrusion, into the edge of the alteration.

Northparkes: Is a collection currently of five, Length of mine, (LOM); fingerstyle pipe porphyry systems. Mainly copper but some gold dependent on the pipe system. “Deposits are typical porphyry copper-gold systems, in that the mineralisation and alteration are zoned around multiphase porphyritic intrusions, which are of monzonitic composition. The monzonite porphyries form narrow (typically less than 50 m in diameter), but vertically extensive (greater than 1,000 m) pipes. As the copper grade increases (approximately > 1.2 per cent copper), the content of covellite, digenite and chalcocite associated with the bornite mineralisation also increases.

 * Taken from the Northparkes.com Nov 2020 disclosure report.

   Highest copper grades are generally associated with the margins of the syn mineral monzonite porphyries, in areas of intense stockwork veining.

   Gold normally occurs as fine inclusions within the bornite; due to the intimate relationship with bornite, visible gold tends to occur within the highest-grade zones of the central portion of the deposit.

   The magmatic-hydrothermal fluids responsible for mineralisation circulated in intricate fracture networks to produce K-feldspar-quartz-sulphate-sulphide veinlets and quartz sulphide stockwork veins, surrounded by K-feldspar–dominated alteration. Ore grade copper and gold mineralisation is exclusively located within the potassic alteration zones, with localised sericitic alteration overprinting.

   Importantly the percentage of vein coverage is 2-15%.

 

Ridgeway: The geology of Ridgeway is very similar to Northparkes; a collection of fingerstyle pipe systems. Ridgeway differs slightly as the vertical intrusions are dominated by earlier intrusion events, these provide a gold rich source. The gold rich mineralisation is mainly in Bornite, which is an abundant sulphide. The later intrusions are more biotite and magnetite, with chalcopyrite, hence being copper heavy.

   Gold mineralised quartz veins surround 50-100m pencil/finger porphyries, they extend 1000m and sit several hundred metres below the surface. Both copper and gold mineralisation is seen in heavy stockwork and sheet arrays. Like Boda and Northparkes, mineralisation is highest next to the monzonite intrusion core.

   Current Jorc 150M/t @ 0.52g/t =  2.4m oz gold and 0.33% copper = 0.48m/t

   The current JORC is lower than might be expected as open pit mining has already extracted a significant portion of the mineralisation. The copper and gold still it situ is thought to be underground mining only.

The above diagram shows the depth of Ridgeway, also the very high grades around the edge of the slanted porphyry.

   Importantly, It is also very uncertain whether any geophysical technique would have detected the deposit in the absence of the Miocene cover. It is debatable whether the 1994 IP survey really detected the deposit and further investigation into this is warranted. The deposit is not a conductor and was not detected by post-discovery downhole EM, even in a hole through the ore. The magnetic response at surface from the magnetite in the deposit veins is lost in the noise caused by stronger, nearer surface magnetic sources, which include the primary and alteration magnetite in the host volcanics and the monzodiorite. * Taken from John Holliday, Colin McMillan and Ian Tedder, at Newcrest Mining.

Bushranger; Racecourse Prospect In Detail:

   The Bushranger license area is located in the Lachlan Belt, just below the main Transverse Zone. It’s to the south in the Rockley Gulgong Volcanic sub zone. All the main sub zone’s are thought to be part of the same arc system, which experienced 3 distinct periods of activity. There is still some debate whether the Rockley zone has undergone all 3 (early, as well as the second and third which occurred near the same timeframe). There is growing evidence that it experienced the early activity, but probably to a lesser degree. Most of the mineralisation occurred in a 30-40m year period towards the end of the Arc activity.

 

   Racecourse has had several JORC updates. It’s a shame that not all of the data is available, the commonly used, PropectOre map above is very simplistic in nature and does not include drill data such as:

RCJ2 - 65m @ 0.60% copper · BRC013 - 52m @ 0.72% copper · BRC025 - 49m @ 0.70% copper · BRC014 - 2m @ 8.07g/t gold

   The prospect has been explored by various companies over the past 30 years. Anglo American being the most well known owner, where they increased the JORC estimate from 27.6 M/t @ 0.45 copper to a copper gold mineral resource of 71 M/t @ 0.44% copper and 0.064g/t gold.

   The Racecourse Prospect covers a significant copper (and minor gold) mineralised zone of 1000 metres strike length. The tabular mineralised zone varies from 30 to 130m in width.

   The descriptions, particularly of Northparkes and Ridgeway are very similar to the expected 3D mapping of the Racecourse prospect. We should add the caveat, that 3D mapping, is not the same as good quality geological data. The Racecourse drill information, has been sporadic and shallow to date. However, we can only go with the data we have at present.

   The depth of Racecourse has been increased to around 1000m. Known mineralisation has a width and pipe like nature, at Racecourse. The mineralisation and mineral composition is very similar to date to that of Northparkes and Ridgeway.

   This report has not been written to try and evaluate the Racecourse Prospect. The purpose of this report is to ask the questions that we hope will be answered by detailed geological core date and assays. The first drill - that Xtract Resources has undertaken – has been to run parallel within the mineralisation of the intrusion. Nearly 1000m of “mineralisation” has been recorded, according to the company. It will be impossible to draw any conclusions as to potential resource increases from this drill.

   A common component of both Northparkes and Ridgeway is the varied pipe intrusions, although it might be easier to represent the mineralisation as a single homogenous finger. The multiple intrusions are more like, twisted roots, rising up. Now imagine a different root, growing up the side of it, sometimes wrapping around, sometimes a little farther away. Now imagine, roots of different sizes, growing up again and again in the same place. Some of the roots will be  non mineralised  intrusions. Hopefully this explains how the mineralisation will be a patchy; the copper and gold varying.

   The finger/pencil/pipe intrusions themselves are sourced from deeper, often much deeper areas of rising mantle.

   We can - by looking at the mineralisation present- determine which of these intrusions are dominant. The Racecourse prospect, will contain barren and mineralised events. It seems obvious, but the smaller the barren or lower grade prospects, the smaller the effects of the barren intrusions. We can understand whether there is a single mineralisation event, by the stockwork. Ideally we want to see different stockwork present.

   It will be very difficult to see gold or estimate gold mineralisation. As per the already released statement, Chalcopyrite is seen in a fine grain dispersed form due to intense alteration. As per all the regional mines discussed here, if Bornite is seen in a moderate to strong percentage, then it’s a good indicator of reasonable gold grades 0.3-0.7 g/t. It is unusual to see the gold visually due to the fine mineralisation. If the visual reports of the drill indicate the presence of gold, then I would expect some very good gold grades.

   It would be good to get veining and Chalcopyrite percentages from the visuals. Evidence from Northparkes, is that a percentage of 2-15% would give Northparke type mineralisation.

What evidence is there, that the width of the intrusion is wider at depth? The position of the follow up drill will likely give an idea of the updated 3D modelling, the greater the dip the more likely the width.

It is unfortunate that we don’t and I assume Xtract don’t, have access to Anglo American’s data. They will obviously see the data points of the JORC. However just as important will be the unsuccessful drilling and the extent drilling that was not in the JORC. Anglo, will – I have no doubt- be following the drilling closely and plugging the numbers into their own private model.

I am now going to outline a few possibilities, none of which will be proven by drill 1. There are a couple of key aspects. The first is the mistake that Newcrest made with Ridgeway. They have been open that the IP survey didn’t, maybe couldn’t, pick up the anomaly at depth. Secondly, these intrusions are rarely singlular. Even the Northparke finger porphyries have multiple intrusion nodes.

Scenario 1: A Singular finger porphyry, a continuation of the current width and grade down to 1000m. This is unlikely given the evidence of the nearby geology. Even so, it would greatly increase the current copper and gold content.

Scenario 2: Slightly early intrusions could be evident down the underside of the main porphyry target. All, of the higher gold grades are on this side. A test for this could be to drill another longer hole that starts on the underside, crosses the main body and then goes out on the top side from 700m or so onwards. It would hopefully, be able to test the width at depth, and prove or disprove mineral continuation on the topside. It might also increase the gold mineralisation for any future JORC.

 

Scenario 3: It is still possible that this is not a uniformed width, finger type porphyry, but instead has far more, wider sheet mineralisation. The upper section of the porphyry is not as uniform as we would expect. This might be due to the action that has given it an almost 45 degree dip from source. However, it is then highly lucky and or unusual that they have managed to drill to 1000m and stay in the moderate to strong mineralisation. This provides significant evidence that the porphyry widens down hole. The intrusion core, is often thicker lower down, as numerous intrusion attempts will not reach the height of the highest one. For example, an intrusion episode might reach 700m below ground, the next 100m below ground, then a third 500m below ground. Thickness might then increase at 700m below surface, 500m below surface and 100m below surface, in steps.

   I’ve drawn a drill, on the diagram below, that would intersect the width at approximately 700m down dip. If you decrease the dip it will intersect closer to the surface, if you increase the dip it will intersect at 800-900m. The dip that the geologist choose, might well indicate how much they think it widens.

 

 

Scenario 4: The final possibility, at least that I will discuss here, is that - similar to Ridgeway, there is a deeper mineralised system underneath the average mineralisation we’ve seen to date. Many of the reasons for this, are the same as Scenario 3 and I will not repeat them here. It will be interesting to see how much the stockwork increases at depth, whether there is a suitable change in mineralisation. My expectation, is that this would dip at a similar angle to the already known porphyry mineralisation. I’ve tried to show in purple where additional core intrusions could push up, a much larger one to the right of the known body and a smaller one to the left. There is no way to currently know whether this is the case, or how big it would be. But the mineralisation to 1000m would indicate, a likely reasonable chance of this and its likely size.

 

   These are what I consider - for whatever it’s worth, to be the four most likely scenario’s. The key points to take are: The presence of bornite for gold; the presence of gold for strong gold mineralisation. The amount of stockwork (2-15%) and the amount of Chalcopyrite is also important (Chalcopyrite normally contains 20-30% copper). The mineralisation will vary, depending on how far away from the intrusion - how far into the alteration – the drill travels. It will be impossible to say how much mineralisation there is with a single drill, even with assay results. If you buy an uncommercial prospect – which is what it was- you are taking a big risk that you can commercialise it. Uncommercial, it’s worth virtually nothing. Xtract, have done very well, either by luck or skill, the big increase in depth will greatly change the tonnage, probably moving it into the commercial category. It will also, probably, increase the chance that it now matches many of the similar prospects that extend to depth, also that the wider Bushranger license area contains additional prospects. That is of course if the new mineralisation is as described. At a £30m market cap, I am not of the opinion, that any of the scenarios are priced in.