WITS 2.0 in the Pilbara?

Hi All,

I’m not overly active on HC and usually don’t post with a preference for taking a back seat to observe and gather insight but I feel I have some information worth sharing.

I’ve been closely following what some have labelled as a potential “Wits 2.0” gold story unfolding in the Pilbara from the first day the famous nugget videos were released from Purdy’s Reward (https://w ww.youtube.com/watch?v=5UlDwCSUZ9c & https://w ww.youtube.com/watch?v=SiAGlWyjRq8). On that same day, I bought some ARV shares to get a position in on what looked to be a very promising discovery. At first, it was a bit of a punt, but over the past couple months of doing my own research and listening to the various interviews with Quinton Hennigh (Novo CEO), I’ve decided that there is enough smoke for me to continue holding and no, that’s not meant to be a cross promotion for ARV. I know most of the recent KAI holders hold ARV anyway.

I bought into KAI shortly after they released their announcement that they had commenced a review of their Pilbara tenements for conglomerate-host gold potential after they were “approached by third parties seeking potential farm-in joint venture arrangements” (announcement released 5th August). Again, more smoke signals.
It’s important to acknowledge that it’s still very much early days for KAI who only recently sent out geologists into the field to see what all the fuss is about. The purpose of this post is more so to explore the “potential” of KAI, purely from the aspect of how much conglomerate-host mineralisation they are likely to have on their tenements. Whether it is gold bearing or not, is the million dollar question.

The KAI tenements that I’ve focused on are (E 47/3522 & E47/3523).

From what we currently know, gold found within the conglomerates at Novo’s Beatons Creek Project is contained within the Hardey formation, which is within the Fortescue group. The Fortescue group itself overlies the Mount Roe Basalt Formation (see sketches below). The 2.16oz/t bulk sample from ARV’s Purdy’s Rewards was also collected from outcropping conglomerates from the Fortescue Group, most likely the Hardey.

The maps you can see below were put together using publicly available information and company announcements.

The first map is the regional area taken from a recent KAI announcement (important to note that they have the incorrect location for Mt Oscarwits). The zoomed in area shows KAI’s tenements E47/3522 & E47/3523. The light green shading of KAI’s tenement signifies that the tenement is “Live” while the surrounding tenements shaded light blue are “Pending.” If you look closely at the zoomed in area you will see a yellow outline. This represents the Hardey Formation (contained within the Fortescue group). The majority of the Hardey formation appears to outcrops over KAI’s tenement but it also goes across into the western tenement which is under application by Novo Resources.

The next 2 maps show the Hardey Formation (again outlined in yellow) overlying a satellite image (Left), and the spacial location of the Hardey formation relative to the interpreted bedrock geology (Right).
I’ve included the maps of the Mount Roe Basalt (below the Hardey) and the Kylena Formation (above the Hardey) for completeness.

The next set of maps show the regolith of the surrounding area. Yellow represents the unconsolidated material covering the bedrock, and the grey colour represents the bedrock outcrops. The Hardey formation is shaded in aqua. The key take away with this map is that there appears to be significant areas of Hardey outcropping over KAI’s tenement (i.e. where the grey and aqua overlap).

As before, I’ve included similar maps of the Mount Roe Basalt and Kylena Formation (below) for completeness.

Furthermore, the map below illustrates the extent of the Hardey formation between Karratha and Port Headland. The map also shows KAI’s tenements in relation to the Hardey formation. For comparison purposes, I’ve also included what I believe are the most prospective ARV tenements that overlie the Hardey formation closer towards Karratha.

Although not shown on the map above, the majority of land between the ARV and KAI tenements has been staked by Novo Resources (see map below).
Despite Novo owning the lion’s share of the Hardey formation, KAI’s tenements towards the east actually cover quite a bit of the formation (as seen by the area circled in red on the previous map).

Now, at this point in time, we still don’t know whether there is actually any conglomerate host gold within KAI’s tenements, however after researching the surrounding area I was able to find that not too far from where KAI’s tenements are (approximate 25km NNE) at a placed called Egina, “flat pieces” of nuggets the shape of “beans” (or watermelon seed) were discovered in the past. Below is a newspaper clipping that I’ve managed to find while investigating.

Source : http://trove.nla.gov.au/newspaper/article/58384974

And another reference to Egina (below):

Source: http://www.roebournebankmurders.com/pontt_brothers.shtml

You may also notice that directly south of Egina is another small section of the Hardey formation.
The final map that I thought was worth showing is the tenement package (E45/4989) directly south of KAI’s tenements (E 47/3522 & E47/3523). The yellow outline in this map is the Kylena formation (which sits directly above the Hardey). Whoever the tenement applicant is, they have made a deliberately attempt to capture the entire northern outline of the formation, as this is where it would likely outcrops at surface. I wouldn’t be surprise at all if this tenement is under application by Novo, given how aggressively they’ve been staking ground around KAI and the wider region.

I’ll leave it at this for now. It’s probably already obvious to all holders what is likely happen to our valuation should the recent site visit (which the company stated we should be getting an updated on shortly) mention any positive news in regards to gold. We only need to look at what happened with ARV who are presently valued at a market cap of close to ~$100M.

As I was wrapping up my research last night I came across this video (https://w ww.youtube.com/watch?v=thARb8UiOvQ) which I think many will find interesting. It talks a lot about the recent discovery of what could be a WITS 2.0 in the Pilbara as well as theories on the nature of the gold deposition and the potential quantity of it.

As always DYOR.

Cheers

P.S. I've attached this post as a PDF as I imagine there will be issues posting the images directly to the forum. Not sure how to upload images that are copied from documents etc. Sorry for the inconvenience.