Xtract Bushranger Hole 8 184m@.51CuEq

 

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.