Well, we have our first assays from Xtract’s second drill
phase at Bushranger. The first phase was a frantic five drills (1-6 with one
partially abandoned). This second phase has built upon that, with Xtract now on
holes 20 and 21.
The first phase at Xtract was all about discovering the
existence of Bushranger. Yes, I know we already knew it was there as Anglo
already had a smallish JORC, however the extent of the intrusion and the
porphyry was uncertain, both down dip and in width. Phase 1 was a finger in the
air estimate of the size of the container.
With this in mind, phase 2 is about the content of the
container. Phase 1 showed that the container was potentially considerably
bigger than Anglo had drilled. Grades from phase 1 were on the lower side, but
still economical. The Market was a little disappointed with phase 1,
incorrectly IMO. Phase 1 needed Xtract to drill into the unknown to find the
limits of the system, by this definition the grades will be on the low side.
As a starting point Xtract developed an open pit using the
existing JORC figures from Anglo, which showed that an open pit of the resource
was pretty much breakeven at current copper prices. Xtract also commissioned some
Geo work, to examine the anomaly, using deep targeted anomaly maps with drill
results from holes 1-6, Xtract was able to develop a new model. A model that
would add considerable tonnage to the open pit, swinging it into a positive NPV
of $1bn+ at lower copper prices.
Xtract therefore has two aims from the second phase of
drilling, the first is to try and meet the 2m tonnes of copper target to
trigger the Anglo American buy back (which looks almost certain), the second to
produce the concept of a viable, commercial mine therefore also trigger the Anglo
American buy back. If Anglo didn’t want to buy the project back on commercial
turns, then the economics of the project in such a low-risk country as
Australia would make it a near certainty as to be brought by somebody else.
Phase 2 drilling is all about achieving these aims by targeted
drilling using the new geo model.
To achieve its objective, the assay results from phase 2,
must be above the cut-off of 0.15% Cu.
Now let’s turn to Hole 8. Hole 8 was the shortest hole
drilled in phase 2. It was drilled across the intrusion (its western side), at
a shallow angle. The company described hole 8, when it was drilled, as having
120m of moderate to strong mineralisation. The expectation of the hole in terms
of phase 2 was to expand the shallower grades near the intrusion centre, that
the new model said should exist. Validation of the phase 2 model could be
achieved. My personal expectation is that copper grades of .3 to .4 Cu over 120m
would be considered a success, gold would be minimal with maybe .1 or .2 in
small intersections of 1 to 3 metres.
The assays of Hole 8 have now been received and made public
by Xtract they were…
BRDD-21-008 184m
@ 0.51% CuEq from 204m including 46m @ 0.72% CuEq from 252m, including
8m @ 1.41% CuEq from 290m
An intercept of 12m @ 0.6 g/t Au.
These results are more than 50% above expectation.
Importantly it shows that the model is probably a little bit conservative, the
model will show expansion areas, which will add more copper and gold than originally
thought at the start of phase 2. The use of the new model has produced the best
hole results that any company has ever produced from Bushranger, this includes
Anglo American. Xtract has also drilled more metres than any other company at
Bushranger – this means that Xtract has a better understanding of the project,
its nature and its worth.
The model is not static, every hole and every assay will be
fed into the model, helping the geologists to maximise their understanding.
So, does Hole 8 change anything? Yes.
As I mentioned it will change the model. With higher copper
grades, it will have a massive advantage for the open pit. Importantly in my opinion,
it allows for the possibility of a multi-stage open pit. Xtract is starting to
develop a higher-grade core within a 400mx400mx250m depth pit.
Xtract has yet to produce a JORC for any of the holes it has
drilled, considering it has drilled more than any other company (All of it high
quality diamond drilling measuring 22 holes currently) a JORC when it is
produced will be considerable. Every hole will add value whether its new and so
will add tonnage, or partially existing material, in which case it will convert
from inferred to indicated. The better the grades the more the JORC will
contain. The creation of a JORC is NOT expensive, or even particularly time consuming
as long as a detailed model is kept and upgraded with each drill result.
The final reason that Hole 8 has changed anything is the
existence of gold. For the first time, Xtract has found commercially attractive
levels of gold (12m 0.6g). Drilling by Anglo American found small intercepts,
but phase 1 drilling by Xtract didn’t. In his interview yesterday, Colin Bird Xtract
Chairman said that the gold was an imprint of a previous event, I think he said
that the gold came later. I disagree with this and would hesitate to say maybe
he mis-heard his geologist. Back in a blog in January I wrote. “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, tends to be gold heavy in
this region, later incursions are normally more copper-centric, which is
supported by local geology studies.”
This is important. Phase 1 drilling concentrated entirely on
extensions to the north and west of the intrusion. This is closer to the main
fault. Geology would dictate that the closer to the fault you are the later the
event. A lack of gold to the north and west and increased gold to the south and
east would support an earlier hydrothermal event (gold centric), then a much
larger later event which removed the gold where it occurred and was predominantly
copper. Such geological event timing happened at both Boda and Northparkes,
where the gold came first and then the copper later. The increased copper at
Bushranger is then explained because the sub-ductive arc it’s on is a later arc
(see previous blog).
Finally, the unexplored new deposits to the SE:
Drill 8 assays also help here. If we take the hypothesis,
that the further away from the fault to the SE you go the better the grades
(both copper and gold). Then this bodes well for the newly discovered potential
intrusions which have only been lightly touched by a single drill so far.
In the map above I’ve marked off the intrusions in yellow.
The two intrusions in the pit area are the known intrusions, with strong west
alteration and weaker eastern alteration. The three yellow areas are the three major intrusions that I’ve estimated make up the newly discovered resources in
the IP mapping. All of the intrusions will face SE to NW and commonly occur in
a swarm and to the side of the strongest IP anomaly (remember the alteration is
to the side of the intrusion and commonly has the greatest IP signature). I
hope, I really hope that Xtract put drills across these areas for test
purposes. Because they are further away and earlier, they should have better
grades particularly gold grades.
So, to conclude the hole 8 assays are important. They have reinforced
much of what we want from Bushranger and the open pit. They have hinted at what
might lie to the SE and proved the concepts of the current geological model. For
those of us that have invested in Xtract since Bushranger’s first drill, this
is immensely encouraging. The Market still might not understand yet, but sooner
or later it will.
