Xtract Bushranger Copper Exploration Update

 

Another quick update. I’ve been suffering from Covid for about 10 days, although thankfully I am on the mend. There has been some important news on XTR this Friday, so it’s pushed me to write this. As usual the Market is continuing to fail to understand quite what Xtract has with Bushranger.

There are two stories with Xtract’s exploration in Australia, as I am sure those that have read these blogs before know!

The first is the exploration of the preliminary pit, which is centred around the existing JORC.

The second is the expansion exploration.

I would like to draw attention to Northparkes. In my first blog on XTR I gave a brief overview of Northparkes and its similarities to Bushranger. In it’s 2020 presentational overview it described itself as having a primary commodity of copper, in a porphyry deposit type. 80% of it’s revenue comes from copper. It’s 2019 Cash cost is $1.15lb Cu. It’s a mixture of block and open pit.

The porphyry tends to sit upright and extends 200-300m (about 100m from the main intrusion in each direction).

Northparkes was brought by CMOC from Rio Tinto for $820m back in 2013 when copper was about $3.3lb (currently $4.4lb), I believe. This would be about $1090m adjusting for today’s copper price.

Northparkes has 483mt at an average of .55%Cu, the Majority of this in two intrusions (310mt).

Back to Bushranger and the first purpose; the exploration of the open pit.

Length:

We know that our porphyry it not upright and it’s lying on its side at a dip of between 40-60 with Hole 1 delivering a length of 920m @ 0.3% Cu. Hole 1 was drilled approx. 300m to the NW of Hole 13, which was reported today and adds a certain 300m onto the length of the mineralisation, giving 1220m. Hole 1 mineralisation also didn’t start straight away from the hole (it was 100m in). We also know that the end of Hole 1 went under and to the west of the main mineralisation, as Holes 8, 9 and 10 hit most of their mineralisation to the east of the Hole 1 intersect.

So, to conclude Hole 13 has added approx. 300m to the length of the deposit, Holes 14,16 and 24 could extend this further.

Width:

We know that Hole 9 has intersected 448m of Cu. Other drills would support 200m to the SE end. Middle 450m (i.e hole 9) 300-400m approx. NW end.

Holes 17 and 18 could increase the width to approximately 500-600m in places.

The final thing to consider when looked at the size of Bushranger is that Hole 10 is approximately 500m SE of Hole 23. Hole 14 is approximately 1000m SE from Hole 10. To extend this further hole 25 is approximately 700m SE of Hole 14. Hole 25 is firmly in the new unexplored Target zone.

Simply put, Bushranger now makes even the largest Northparkes porphyry look small, currently without any further expansion we are probably bigger than the Northparkes two largest porphyry systems added together, so around 400-500Mt, with the extensions from 17, 18, 23, 16 all looking like they will extend this even more, we are looking to be in the 600-750Mt at around a .35% so between 2.1mt and 2.6mt of Copper. This is of course a very preliminary figure and there is much I don’t know.

 

Holes 14 and 25 bring us to the second story; expansion exploration. This is exploration outside of the open pit and existing JORC.

As I’ve said before anomaly maps only really tell us where geology changes. It can pin-point intrusions, simply because of the unique type of geology that intrusions are generally made up from, quartz-feldspar-pyrite etc often iron rich and so conduct well. What they can’t tell is whether the intrusion contains copper and gold as this is determined by the speed, pressure, temperature of the internal creation of the intrusion along with the type and make-up of the fluid.

We know that geophysics indicates that intrusion like expansions might exist to the SE in two distinct zones.

Thankfully we have Holes 14 and 25 to help us determine whether they are your basic none mineralised intrusions or something more akin to Bushranger with copper and or gold.

As you can see Hole 25 is approximately 700m SE of Hole 14, or 1.7km SE from Hole 10.

Hole 14 was drilled to 822m, is should have entered the edge of the new porphyry. I am doubtful it will have really got into any of the mineralisation or good alteration though, my guess would be that the better mineralisation is on the east side of the anomaly. That said XTR have described Hole 14 as hitting sulphides, which is most likely chalcopyrite, which would probably mean low grade copper .1 to .2%. This might not sound very exciting, however it would indicate a ‘loaded intrusion’ with the right material and conditions for mineralisation.

Hole 25, which is currently being drilled, should cut across the crown of the porphyry. It will give XTR an incredible amount of geological information, not least whether the intrusion is on it’s side like Bushranger, where and what the make up of the quartz shell is, alteration banding and hopefully where any mineralisation is likely to be.

This SE intrusion WILL be different to Bushranger, it will be older and probably have been affected by different waves of fluid migration. If we refer back to Northparkes, in a similar sized area, some of their intrusions are gold heavy, some copper heavy, some a real mixture. The similarity ends with size, as the SE intrusion is similar in size to ALL of Northparkes put together.

Hole 25 still isn’t the be all and end all of the SE porphyry, my best guess is that high grade massive alteration is probably 500-1000m south of Hole 25. Mineralisation in Holes 14 or 25 would indicate another massive system.

Conclusions.

Hole 13 was very much, wrongly ignored by the Market, it extended the above cut off mineralisation by about 300m to the SE, still all shallow, still in the open pit. It is exactly what Xtract needs to ensure it produces a JORC above 2MT of Copper.

Holes 17, 18, 20, 22 and 23 are all massive holes trying to expand the footprint of the JORC.

Holes 16 is important as it extends the mineralisation further SE by another 100-150m and should show good continuity to Hole 13.

The visuals and description of Hole 25 will be my favourite of the next 10 days, I love the first hole in a porphyry crown.

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.

 

Xtract Resources Phase 2 at Bushranger Copper Project

 The drilling phase of the first section of Phase 2 is almost over. Xtract have today released, (finally) a map of the drill locations giving us the chance to assess the initial success of the visuals and what we can expect from the assays.

I've included a table, which I keep, as I think it helps to give a more rounded view of the holes and what to expect from the assays.

As you can see some holes, such as Hole 7, include huge sections of Massive Sulphides (700-800m). Many of the holes have materially expanded the resource in all directions.

A completely new section to the east has been intersected on several occasions.

Hole 14 is a real unknown as it hit over 600m of mineralisation in a completely new porphyry target, possibly a sheared twin zone.

There will be many AIM companies bragging about hitting 500m or more of VMS (massive sulphides), It looks like we got there first with far more to spare.

Over the coming 6-8 weeks, Xtract will get regular assay results which we can directly feed into expansions of the current JORC. All of which will add considerable copper and tonnage to the open pit model, increasing the NPV and lower costs considerably.

Key aspects to look out for from the assays will be the copper grades outside the good-strong zones, the open pit requires 0.15 CUEQ. The shallowness of the copper grades. The grading in the newly discovered zones. Any copper-gold in hole 14 will be exceptional for Xtract as this only touched the very outside of the entirely new, potentially larger, porphyry zone.

#XTR – Xtract's Bushranger’s - First Class Exploration and Model

 #XTR – Xtract's Bushranger’s - First Class Exploration and Model

Xtract have released their initial findings from the open pit study, this has been backed up by a 30 min presentation from Vox Markets.

The study published today has used the existing JORC which was created before XTR took ownership of the licenses. It’s impossible to over-estimate the importance of the information given in the presentation. But it does require an understanding and an ability to see just how profitable the project might be.

At first glance the report gives a number of loss-making scenario’s given various variables of NPV, Cut Off, Copper Price and Mill capacity.

There is a single positive scenario with the following variables. NPV8, Cut Off .15%, Copper Price $5 lb and Mill capacity of 20M pounds a year. This gives an NPV8 figure of A$267m, with a LOM (length of mine) of 9 years.

At first glance the figures look bad. We have a breakeven copper price, at an NPV8 (8% discount rate)  of around $4.65 lb. Wow, there is no way I would invest in such a company, might well be the initial response.

However as with most AIM companies, if its shiny and cheap; it’s often fools gold. If it’s presented professionally, warts and all; it’s probably worth looking at in more depth.

So lets have a quick initial look at the variables.

NPV 8 is this reasonable? Yes is the simple answer. It represents the cost of capital. In a higher interest rate world pre 2010 NPV’s of 10% or even 12% were used. Nowadays NPV’s as low as 5% are routinely used by mining companies, although this is a little low in my opinion. An NPV of 8% is probably about right and has been used by the world’s major mining companies in the past 12 months.

Mill Rate: The Mill rate or process rate, is simply dictated by how much processing power the project will have. The higher the mill rate, the higher the initial capex, and the shorter it takes to process the material. It’s a simple economic balancing act.

Cut Off: People might think that a .15% copper cut off is bad because its so low. It’s certainly true that a low grade mine is rarer as it requires much higher tonnage. However, a low grade mine is a massive benefit. With a low economic cut off, it would indicate that any future exploration only needs to be above .15% to add to the profitability of the project. If additional exploration finds grades of .3%, then the extra tonnage would contain a huge amount of extra profit.

Copper Price: The current copper price is $4.6 lb (taken at 27/07/21). The copper price has risen considerably over the last 12 months, rising from $3 lb in just the last 12 months. So for bushranger to remain profitable we need the copper price to stay at this price for the next 9 years. To generate a positive net return we need the price to be above this level. Again, on the face of it, this seems like a tall order.

IRR: Connected to all the variables above is the IRR (internal rate of rate). The report doesn’t mention what the IRR is, however, it can be estimated given the figures quotes. Given a price of $5 lb the IRR is around 20% (it would take 5 years to get the money back you put in to build it). Personal I would never invest in a project with an IRR as low as 20%. I don’t think it would ever get built. If the breakeven copper price can be dropped to $3.6 lb and the copper price stays at $5, then the IRR jumps massively to 50% with an increased NPV to around A$1.3bn.

 

If the above figures were used in a fully explored PFS, I can honestly say I would run a marathon to escape investing in such a company. But and it’s a big BUT, this isn’t a finished project. It’s a starting point. It is very, very, rare for a company to produce preliminary figures like this before exploration. Companies don’t do it because the figures will certainly be bad. There is also not normally enough information to allow any meaningful study to take place. If you dig deeper into the figures, we can see that if you raise the tonnage in the mined area, increase the LOM, find mineralisation as far above .15% as possible you end up with, a lower break even copper price, increased NPV and higher IRR. You end up with a project which is incredibly desirable and highly profitable. It is for this reason that XTR brought the project and have already performed its initial phase 1 drill campaign at the start of the year, none of this has been included in the study.

So, let’s examine the proposed pit.

(Image taken from the VoxMarkets presentation)

The Pit design is approx. 600m deep, it encompasses nearly all of the existing JORC. It covers two small grazing areas and a few square km’s of planted, commercial woodland. The mineralisation is modelled, dipping from the SE to the NW from surface to pit depth at 600m.

(image taken from the VOXMarkets presentation)

The picture above shows the existing holes in blue, which have been used to create the JORC and so the basis of the existing model. The red dots represent the new drills from the just started second phase drill campaign. There is plenty of scope to add additional mineralisation,  particularly to the north and NW (which will be drilled). As an aside we can see that the first two drill pads, each have two holes, so they will have drilled very quickly.

(Taken from the VoxMarkets presentation)

The IP survey, when superimposed over the open pit, reinforces the extensions to the north and north-west. As well as this there looks to be a potential high grade intrusion branch to the east – the area in the red box, which has been missed by existing drilling, which will be drilled to hopefully provide further mineralisation within the open pit.

The phase 1 drilling has already added considerable mineralisation with a  .2% cut off, above the modelled .15%. Phase 2 drilling will add much more. All of the mineralisation will be free, as the material will need to be extracted regardless as it lies within the open pit design, it will directly increase the NPV and bring the copper breakeven price down. It is therefore a reasonable conclusion that the added material, higher grade mineralisation and further refining of the design and capex requirements will bring the copper price break even down to around $3.6 lb, with an NPV of 1.3bn with copper prices at between $4.6 and $5.

This alone would be a fantastic achievement, creating a profitable and desirable mine, however, the expectation is that considerably more mineralisation exists outside the open pit design.

As the above side view of the open pit shows, there is considerable mineralisation outside the open pit, for initial capex and operational reasons. Once the pit has been built and with the processing equipment still in place. There are expansion possibilities with easy and limited underground mining, adding a potential NPV of around A$1bn to a further post open pit phase.

The largest expansion comes from the areas to the SE of the open pit, the model output above shows the a potential new mineralisation area by looking at the recent IP mapping. It represents a 100-150% increase to the already modelled open pit. If this does represent mineralisation above a .15% cut off, then it would mean a further 9-14 years for the LOM and a potential A$1.5bn to 2.5bn NPV. With the mineralisation being near surface and the processing capability in place the profit margin would be substantial and the copper break even cost as low as $2 lb.

The red dots show that XTR will be putting some exploratory holes into this potential new resource area over this current drill campaign.

 

Conclusions: XTR have been brave showing warts and all for their starting position. It has shown where the exploration gains need to come from to add the most value. It determines the potential for the project. It allows the company to maximise its exploration drilling so that, each and every drill has a demonstrable impact on the NPV and profitability of the project and license area.

If you’ve been following my blogs, you will see that I’ve never really had any doubt with regards to the potential of the project. The figures below are mostly mine based on my understandings and information received. I hope they show the potential of the project. Majors will really like the ability to mine here for 30+ years. They will like the simplicity of the project, its location and low risk theme. If XTR can get the break even copper price down, which as has been shown is likely, they will be interested. As an XTR share investor I can look forward to every drill knowing it will add significant value.

 

			Copper breakeven price US$ lb	IRR	Potential NPV A$ at $5 lb	LOM
Current Pre XTR scenario			4.6	20%	260m	9 years
Further mineralisation Open Pit			3.6	50%	1300m	5 years
Underground Mining Ext			3	35%	1000m	5 years
Secondary Targets (SE)			2	60%	1500-2500m	9-14 years

 

Xtract Resources - XTR Bushranger IP anomaly release.

 

It's important to start with this picture. I am sorry for the rough nature of this post, It's literally been typed in about 15 mins.

For simplicity, in Blue we have a fault line (probably subduction). Its dipping pretty much east-west (going down at a 45 degree angle as you move west)

The yellow area is the area of possible mineralisation.

The brown area the area of more likely mineralisation - maybe heavier.

The most important thing about this map - imo, is the fault. This would have been evident within a week or two of the IP survey and was not evident prior.

Secondly we have the extent of the IP - mineralisation zone.

Thirdly we have the slightly unusual fact that the mineralisation seems to follow the IP anomaly completely. This includes the small open pit to the east of the JORC. - not common place for porphyry.

Conclusions:

The IP anomaly is far to big and doesn't in anyway resemble the finger porphyry intrusion anomalies of Boda or Northparkes.

The fault line is also a clear signal, as the IP anomaly shows the potential mineralisation dipping as the fault dips.

It's a give away that we are looking at a skarn/dyke deposit, with associated finger intrusion porphyries, providing the higher .4-.5 CU values.

It's no wonder that XTR are looking at open pit as this plays perfectly into open territory.

The IP mapping seems to push Bushranger from Boda/Northparkes to Winu/Copper version of Cadia.

The new geological understanding of finger intrusions within a dyke/skarn system would explain perfectly the large extent of the outer alteration zone, in comparison with the smaller size of the intrusion body.

Put simply, as the east side of the subduction zone travelled south, it would have pushed fluids up through smaller fracture zones, creating the tilt we see in the initial JORC finger intrusion. smaller fracture zones cooled more quickly providing the illusion of gold rich mineralised. The heavier mineralisation would have re-treated down, to the larger fractures closer to the intrusion, and possibly closer to the fault zone?...the slower cooling allowed for more copper rich formation.

A final word IF the assays come back with .1 to .3 cu within the outer alteration zone i.e the anomalies shown indicating the skarn/dyke mineralisation, then this is potentially at least as large as Rio's Winu..

Xtract Resources - XTR's Eureka maybe I was wrong!

 

It’s no secret that I have attributed very little value to the African assets that Xtract Resources hold. I am a huge proponent of Bushranger and the potential of the porphyry asset;  it’s model, its attractiveness to large companies and its ability to be commercialised.

The biggest problem with the African assets, are the general lack of information in the public domain. They tend to be complicated both in ownership and geology. Valuing assets in Africa is very tricky due to uncertain political situations, and often hidden and surprising costs. Trying to commercial African assets is very challenging. Lumping all the African countries together in a single basket is maybe not the best country risk approach, there is certainly considerable difference in the country risk between Gambia and Nigeria or Botswana and the Congo. Regardless, there is still an African risk factor associated with the long potential LOM (length of mine) that this industry has.

Now, lets turn our attention to Eureka. Eureka is your typical African-AIM project. It has been mined previously using labour intensive, older mining techniques. The easy to extract and higher-grade copper has already been extracted. There is without doubt still mineralisation on the license, but we immediately have questions. How much is there? Is it going to be patchy? What will the costs be? Is it worth the effort? Simply we do not know.

I don’t invest in these kinds of scenarios for all the reasons above, the risk reward just isn’t there. The risk is that we will only find bits of copper, that it will be a pain to extract, that the costs will just keep going up. The reward is limited, some profit can be made. Profits large enough to overcome the costs of director wages, AIM admission etc are tricky. For a private investor owning the resource, the risk might well be worth it; as a shareholder in an LSE listed company the answer is normally, no.

That doesn’t mean that the African assets that Xtract holds are a problem. They require minimal capital expenditure and if they do go on to be mined, will probably be neutral to the company overall. With luck they might contribute money to the company, not enough to sustain a large share price, but enough to be a welcome contribution.

To be a real driver of the share price, any of the African projects needs to become something it currently is not. It needs to be transformed. So, is Eureka on the verge of being transformed?

Eureka is not a porphyry like Bushranger, it does not have a central intrusion, with a quartz outer shell. With layers of onions and vast alteration zones. Eureka is a far more localised breccia, a fractured mineralisation of small veins, created by a rising magma outlet. Leaching of minerals then pushes it wider through a mish mash of small fractures. Grades can be anything from 0.1% to 20% copper. The biggest problem with these kinds of deposits is the consistency. It looks like the near surface breccia that existed in the nape of the fault was largely mined out. Around this was a layer of lower mineralisation, some of which is still intact.

The area for mining is roughly 150m long and up to 40m in width.

 

Open pit exploration has pushed the mineralisation in a thin band NW up through P3, giving a shallow 5m depth at 2.65% copper. In 2020 Xtract produced a small 3D model of the mineralisation.

 

The above is an IP anomaly map of the key license area. IP anomalies are NOT the be all and end of exploration. If only it were that easy! Mining exploration companies like to make out it is. They all put out the maps, as evidence that they have between 100-200 tier 1 mining assets…The truth is that IP anomaly maps by themselves are just geological guides, they show magnetised areas which 90% of the time are barren of any kind of valuable mineralisation. Even if they are loaded with copper or gold, they give no indication of how much. To make much sense you need trenching and sampling to find moly, copper, gold etc near surface (an indication that they are sourced from an anomaly). To make matters worse, porphyries might be in the centre surrounded by positive anomalies, whereas a breccia might exist on top of one. Without information to back up the IP anomaly maps, preferably drilling but at least very extensive trenching I tend to ignore them.

Eureka, certainly this far, is a simple breccia (magma event) oxide deposit sat atop a positive anomaly. An IOCG – an oxide and sulphate system would also tend to follow the positive IP anomaly.

Moving forward to the latest results. They show that to the SE of the main deposit, the mineralisation tails off. This is expected. The IP anomaly shows the highest gradient towards the SE and the shallowest gradient to the NW. This would indicate the mineralisation/magma rose up from the NW moving SE as it hit the surface. The natural conclusion would be that the mineralisation would therefore get deeper as we move from the deposit to the NW. At this point a standalone small breccia would see limited mineralisation to the NW. However, mineralisation – particularly at depth in the NW, would indicate the source flow that created the breccia is still in situ.

The diagram below, shows the IP anomaly and where the current open pit sits, at the top of the anomaly at surface. In my opinion the drilling results indicate a joint deeper flow rising up, topping out at surface with the current open pit. The green is the possible extent of the mineralisation, probably down to 300m depth if the IOCG is loaded. To my knowledge no exploration has explored this potential.

Conclusions. Drilling showed the original open pit to still contain high grade 3-20% copper, probably enough for 3-5 years, as it extends with 10-25m of overburden to the NW. Drilling to the NW seems to indicate that the source flow and subsequent breccia events do exist as hoped. Deeper drilling will be needed, but if sulphides are found and an IOCG is confirmed it would provide higher copper grades are turn Eureka into a potential strategic resource, with a LOM of 20-30 years (some 10-30 times its current size). A LOM of this size WILL attract majors even in Africa, particularly given Eureka would be a working mine and the IOCG would be a massive extension.

This update for Eureka, ticks off a couple of boxes. It is still Africa. It is still a risk. However, for a smallish company like Xtract it is looking far more likely to add considerable revenues, if they get the sample production flowing later this year. It has also ticked the beginning box of a much deeper, strategic IOCG. A deeper hole (probably to 150m or so) would prove this. IF and it’s still an IF, this is the case it could prove to add almost as much value to Xtract as Bushranger.

Xtract Resources XTR – Bushranger Progression

 

Exceptionally well funded.

“With this level of mineralisation, XTR should have no trouble increasing the JORC -after a planned infill program- to trigger the 2mt of Copper that requires Anglo American to buy 80% of the project. The company has talked about further IP surverys etc, but a second drill plan should complete a new, trigger JORC by the end of the year.

XTR has talked about finding new nearby porphyries that can attract an economy of scale in the same vein as the Cadia-Ridgeway grouping.

There is no doubt that further funding will be needed to complete the infill drilling and JORC creation of Bushranger to the 2mt mark. Whether that funding is created by the revenue streams of the African projects, via share issue or even by a partner coming on board for a cut of any sale price is largely immaterial for 2021.”

XTR have now announced the fundraising of a further £5m @5.6p to pay for the 16000-20000m of exploration that needs to be undertaken to complete phase 2 of Bushranger, this will complete the infill drilling and probably the outer margin exploration, to meet and exceed, the 2Mt CU EQ that will trigger the AA buy-out clause.

As I mentioned above, over a month ago above, this was fully expected by the market, the director buy, from Colin Bird @ 5.7p prior the fundraise put a likely floor in the placing price, at which the company would have been unlikely to have deviated much from. The placing also rose £1/4m through broker warrants at 5.6p and further warrants at 8.5p to raise an additional £4.2m if they are executed. Given the current buy price that would be over a 50% gain before they would be executed, giving a built in fundraise at a very attractive price for the future. The warrants do need to be voted on to take effect, but this is not a barrier to the placing funds being raised and spent, as the shares are to be tradable from the 10^th of May. To conclude the finance discussion Colin Bird again brought shares in the open market, post placing, 1m @ 5.7p. A pleasant display of Director confidence.

Xtract Resources– Bushranger – Hole 1 920m @0.3% Copper.

We still only have the single exploration assay result of 920m at 0.3% from XTR. Normally a degree of uncertainty would still exist in determining the success of the phase 1 drilling and its 5 holes. The financing that has been raised and the planned expansion of phase 2, to include 2 diamond drill rigs along with the much-needed building of an inhouse team.

Despite the importance of the assays of holes 2 to 6, to some extent it has already been superseded by the planning of the commencement of phase 2. -It is probably important to add here, that although 5 holes were completed hole 4 was stopped, as it was only really confirming what was already learnt in hole 3. The completed holes were 1,2,3,5 and 6, making 5 holes in total.

I fully expect the company to release assays this week, to help with the understanding of what we will be looking at it’s probably worth examining holes 2 and 3.

Hole 2 was drilled across the core intrusion, with an aim to intersect the down plunge. It was drilled at a close to vertical dip. It was not testing the extension of the near surface mineralisation, which was seen particularly in holes 5 and 6 and to a lesser extent in hole 3. Hole 2 was drilled to a greater depth than planned, as it was still finding mineralisation beyond its initial estimate. My expectation from hole 2 is of a zone of 60-80m containing .4 Cu eq at a depth of approx. 500m. A wider zone of mineralisation extending from 400m to 600-650m at .25% Cu Eq. The big unknown of hole 2 is how much mineralisation existed prior 400m, and beyond the 600-650m. If any of this is above cut off grade, then that will be a welcome bonus to the modelling of the Bushranger deposit.

Hole 3 was drilled across the width of the intrusion, at a far shallower angle to hole 2. In many regards it was a reformation drill of the existing Anglo American JORC drilling. The hope of hole 3 was really to extend the lower grade but above cut off mineralisation – in other words extending the commercial width of Bushranger.

A detail interpretation by the company is below:

0 - 119m Unaltered and unmineralised andesitic to basic volcanics interlayered with andesitic sandstone and siltstone

119 - 123m Shear/Breccia zone with quartz-pyrite alteration and minor sphalerite and chalcopyrite

123 - 188m Unaltered volcanics

188 - 198m Quartz-pyrite-pyrrhotite alteration zone with minor chalcopyrite

198 - 240m Unaltered volcanics

240 - 495m Volcanic rocks - outer alteration zone of porphyry copper system with pyrite and lesser chalcopyrite-sphalerite mineralisation as veinlets and stringers

495 - 570m Intermediate volcanic alteration zone with pyrite-pyrrhotite-chalcopyrite both disseminated and hosted in veinlets/stringers

570 - 598m Porphyritic intrusion - pyrite-pyrrhotite-chalcopyrite both disseminated and hosted in veinlets/stringers

598 - 825m Central volcanic (potassic) alteration zone with pyrite-pyrrhotite and stronger chalcopyrite mineralisation, both disseminated and hosted in veinlets/stringers

825 - 890m Intermediate to outer volcanic alteration zone with continuing pyrite-pyrrhotite-chalcopyrite, similar in style to the earlier zones

890 - 975.5m Outer porphyry alteration zone. Continuing pyrite-pyrrhotite-chalcopyrite, both disseminated and hosted in veinlets/stringers. Sphalerite-galena occurs in places, also hosted in veinlets/stringers. Mineralisation diminishes towards the base of the hole

The unaltered volcanics will not be mineralised, so we would expect low grade copper .1% to .25%  Cu eq. to extend from 250-500m. 500m to 650m to be >.25% Cu eq. 650m-850m should contain approx. 100-150m @.3-4% Cu eq. and 850-900, to be .25% Cu eq. This would give a headline figure of 400m at .25% Cu eq. with a core of 100-150m at >0.3% Cu eq.

As with hole 2 it will be interesting to see whether this 400m above cut off is expanded by the outer alteration.

Expectations.

I think its important to set realistic expectations with regards to the drill assays, in part so that they can be assessed correctly, but also to refute suggestions that the assays might not be commercial. The expectations I have laid out are to ensure that the Bushranger prospect remains on track to be both commercial and attractive for Anglo American or any other mid-sized or above miner.

There has been some discussion as to why Anglo might not want Bushranger or that its copper targets will be met by other copper targets such as Africa. This is a mistake. Any mid-cap miner will be able to easily raise funds in the current market. Copper production targets are largely driven by risk. There will be a desire to restrict the possibility of over extending themselves by taking on too much risk and thereby having an expensive failure. Every time a new project is taken on board, the key geo-political risks increase. Essentially it’s a balancing act. Bushranger, and to be fair almost any Australian project has minimal geo-political risk. It’s mostly geological and price risk. If Xtract can determine a JORC giving 2Mt of copper, the geological risk is largely removed, leaving mainly price risk for Bushranger. Price risk, is the risk that the price of copper will fall low enough as to make the project uncommercial. Price risk, is without doubt the biggest risk that will be attached to Bushranger. Personally, I am of the opinion, that the risk is small, due to the demand for copper over the next 20 years and the limitations of supply. I’ll leave it up to the reader to pick which of the many price forecasts they want to use, or the in-depth reports into how supply will increasingly come from lower cut off, bulk projects or risky geo-political gambles. The consensus is pretty clear.

Xtract and Bushranger Valuations.

In my opinion one of the reasons for the rather subdued share price is the inability to put any firm valuations on the company or its projects. There is simply too little firm information to put a valuation on the company’s African assets. Bushranger, with only a single new assay, also doesn’t have the solid information for a valuation target, yet!

Although an investor might view this as a negative, it is precisely this fact, which means that the share price has such strong potential for growth, as the future valuations are not priced in.

The key points going forward to achieve share price growth. 1. The African assets having enough information, firm dates and concrete actions to make a fair valuation possible. 2. Confidence in the Bushranger JORC expansion through phase 1 assay delivery. 3. Delivery of new resource model. 4. Phase 2 exploration results meeting or exceeding expectation. 5. Successful identification of secondary porphyry targets on surrounding licenses.

We have confirmation that phase 2 drilling will take place end of June-July. The assays for ALL phase 1 holes should be delivered by the beginning of June. The updated 3D model that will drive phase 2 drill targets will be available by the end of June.

To conclude this update, the speed of exploration at Bushranger has been incredible. At the start of the year Xtract Resources had not completed a single new hole, by the end of 2021, two drill campaigns will have taken place and, we hope, an JORC update will be delivered confirming a strategic copper resource for the mining giant that is Australia.

Xtract Resources – Bushranger – Hole 1 920m @0.3% Copper.

 

Xtract Resources– Bushranger – Hole 1 920m @0.3% Copper.

Well, we have the first assay results for Xtract Resources (XTR) on the Bushranger prospect in Australia.

Porphyries are not easily understood by the market and the response from XTR has unfortunately, not been the exception.

There is no doubt that Bushranger is a copper porphyry. What I mean by this is that this porphyry is dominated by the later, copper rich intrusions, which have overwritten the early barren or gold centric intrusions. There was much talk about mineralisation evidence of the kind of quick fluid cooling that leads to a gold rich, copper reduced porphyry. However, it is clear that this has been over-written by the later copper stages of intrusion action.

For simplicity sake, also for the cheaper capex, being just copper rather than a small copper and gold, is probably an advantage.

Moving onto the geology of the later section of the hole. We still find solid, if not spectacular copper grades. At first glance this might be concerning, we expect copper and gold to increase at depth. However, we know that the best mineralisation results are in the alteration zone next to the intrusion. Hole 1 was drilled to intersect this mineralisation, using the location of the intrusion from the existing JORC and to see if it continues. The problem is that a drill, operates in a straight line -near enough, therefore when the intrusion plunges or flatlines, as per fluid dynamics, it is impossible to remain in the sweet-mineralised area. Particularly if you are going to drill over 1km in length.

It looks like the mineralisation has travelled at a shallower dip from around the 500m mark, meaning that drill 1 passed through the outer mineralisation zone from about 500-600m to EOH. Hole 5 and 6 will be crucial in understanding this depth, particularly hole 6.

If we look more closely at the results, we can see that the top section 110m – 550m 400m is 0.42%. This is important, as any development or commercial decision of Bushranger, will be split. The common method of developing these systems in Australia, is to open pit down to the 500m level and then undertake targeted underground mining. With this known, the top section of mineralisation needs to be good, and 0.42% is more than good enough. A comparison to Rio Tinto’s Winu is useful here.

We know from an internal Anglo American Geology report, that more than a single porphyry exists at Bushranger. The below is a sample I’ve taken from that geology report that talks about Porphyry 2 at depth and in the outer northern edge of their Bushranger drill program in 2014-2015.

“"Porphyry 2: Kspar+Plagioclase+Biotite-phyric Dacite Porphyry
This distinctive porphyry unit is present in TBRC030 @ 315.8m in contact with volcaniclastic
sandstone, and @329.6m, and@335.2m), in BRC032 @ 221.8m and @217.65 where it clearly
intrudes the monzonite), and in BRC034 (@ 169.3m, and @224.4m where it occurs in contact
with Porphyry 1). It also occurs in hole RACED020 where it is clearly intruding a volcaniclastic
siltstone.

This porphyry is distinctive in having large (to almost 1cm long) blocky Kspar phenocrysts that
often include one or more small plagioclase phenocrysts."

Given this and the alteration, porphyry mineralisation observed from as little as 50m depth in holes 5 and 6, we can assume that the second porphyry intrusion has an outer alteration zone that extends near to surface. Later assays will need to support this, but a safe assumption is that the second porphyry is also copper rich and will add to a potentially 1km east to west and 2km north to south open pit potential to 500m depth.

With this level of mineralisation, XTR should have no trouble increasing the JORC -after a planned infill program- to trigger the 2mt of Copper that requires Anglo American to buy 80% of the project. The company has talked about further IP surverys etc, but a second drill plan should complete a new, trigger JORC by the end of the year.

XTR has talked about finding new nearby porphyries that can attract an economy of scale in the same vein as the Cadia-Ridgeway grouping.

There is no doubt that further funding will be needed to complete the infill drilling and JORC creation of Bushranger to the 2mt mark. Whether that funding is created by the revenue streams of the African projects, via share issue or even by a partner coming on board for a cut of any sale price is largely immaterial for 2021.

So, to conclude; Bushranger this year will -very likely- become the second largest single copper deposit in the Lachlan Fold, behind Cadia East. The Rockley-Gulgong sub arc belt within the Lachlan Fold, was the sub belt that formed last in the geological history of the Fold, and as such, looks like the intrusions in the area will be predominantly copper rich. Just as Cadia is the gold work horse of the Fold, so the license areas held by XTR – which is the majority area of the Rockley-Gulgong volcanic area- looks to be the copper workhorse of the Fold. The unique characteristics of the sub belt leaves Bushranger and XTR in a unique position in a copper demanding world. If I can recognise that sat here thousands of miles away, I have no doubt that the copper experts in Australia do too!

Xtract - Hole 5

 An estimated position, of hole 5. Given Sentinel Sat Information.

Xtract - Racecourse becoming a little clearer.

Since my last update below. We've had the XRF results for Drill 1.  Three XRF results were taken every metre, giving what should be quite a conservative, but realistic indication of the copper. It will of course give no indication of the gold content. One take away for me is that from about 750m to 1000m, drill 1 looks like it maybe missed the exact centre of the intrusion.. This could be a step down, but might be a increase in the width...it will be interesting to see drill 3, when it crosses further down.

Back to drill 2. If drill 1 was all about the intrusion, drill 2 is all about the alteration. We know the alteration gives the greatest mineralisation at the edge of theintrusion and reduces as it goes out. For drill 2, it's about increasing the size of the mineralisation/alteration envelope within the 0.15% copper cut off or above .2% CU EQ.

There are 3 layers of alteration, the key zone, which is directly next to intrusion. The inner zone, pretty much the zone mapped in the 3D JORC modelling. The outer zone, which to this point has not been included due to the high cut off used.

So far drill 2 picked up the outer zone at about 150m and carried it to about 400m. The inner zone started around 400m and will hopefully go to 550m or so, then the key zone. Then everything in reverse.

I've included a very poor mock up of what I think it might look like and how this compares to the existing 3D model.

I've extended the inner alteration in a simple manner(green hash area), personally I think it might be wider, but would like that to be shown by drill 3.

The patchy green spray in the extent of the outer alteration zone, which will decline in mineralisation as it travels further from the blue centre. 

The yellow is there to represent the higher gold content as you go down, in what I believe is the first of several intrusion events. The first event is the gold and pyrrhotite event, the second etc the copper ones.

The important take away, is how much bigger the new mineralised system is to the old geological model that Xtract inherited.

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.