Ann: Gold Mineralisation Extended at Cross Fault, page-46

Analysis of todays ann in context of what is already known brother... Grade is king, along with resource potential until you are producing gold, simple.

Structurally the drilling di4d what it set out to do, only that didn't light the market up. 200m of extra strike to the masses is what? without numbers to go with it, preferably bonanza.. Going for the doctor indicates this is a tricky structure to wrap your head around, but it's still in play.. h8tey

The results of this diamond drilling will inform OZM’s future RC drilling at Cross Fault. OZM considers that this information can be applied along the entire Relief Shear. OZM is still working on the geological interpretation of this area and will continue to seek opinions from structural geology consultant, Dr Brett Davis.

Step 1: Key Points from the May 30, 2025, ASX Announcement

The announcement details results from two diamond drill holes (220m total, MNODH 017 and MNODH 018) and 82 air-core (AC) holes (2,290m) at the New Cross Fault, 1.3 km south of the 260,000 oz Mulgabbie North MRE (reported July 18, 2023, updated to ~451,000 oz in prior estimates with recent drilling). Key highlights include:

• Diamond Drilling Results:
  • MNODH 017: 25m @ 1.24 g/t Au from 27m (including 1m @ 5.63 g/t, 1m @ 5.83 g/t), 17m @ 1.25 g/t Au from surface. Visible gold in quartz veins at 54.85m and 58.3m, associated with oxidized pyrite.
  • MNODH 018: 25m @ 0.76 g/t Au from 47m (including 1m @ 5.50 g/t, 1m @ 3.48 g/t).
  • Geological Insights: Two mineralized styles confirmed: sheeted vein arrays (MNODH 017, western Cross Fault) and breccia-dominated (MNODH 018, eastern contact). Faults are associated with higher-grade zones. The host is intermediate volcanoclastic (conglomerate with sandstone units), with sandstone as the dominant gold host.
  • Significance: Confirms high-grade potential (5–6 g/t in 1m intervals) and structural complexity, validating prior RC results (e.g., 9m @ 5.79 g/t, 2m @ 22.58 g/t).
• Air-Core Drilling Results:
  • Extended mineralization 600m south, increasing the strike length to ~1,000m (from 400m).
  • Notable intercepts (4m composites): 4m @ 1.03 g/t Au (MNOAC 835), 4m @ 0.57 g/t Au (MNOAC 843), 3m @ 0.33 g/t and 0.23 g/t to end of hole (EOH).
  • Geological Insights: Shallow AC holes (average 28m) near outcropping porphyry suggest gold-depleted regolith, with low-tenor gold indicating deeper RC targets. A new RC target near MNOAC 843 (adjacent to porphyry) is a priority.
  • Significance: Expands the mineralized footprint and identifies walk-up RC targets, enhancing scalability.
• Geological Context:
  • North-South Fault: A new north-south striking fault identified in costeans, associated with quartz veins and gold mineralization, aligns with regional structures at Carosue Dam.
  • Sandstone Host: Sandstone’s brittle nature hosts extensive quartz veining, mirroring Carosue Dam’s deposits (2 km away). The volcanoclastic unit (conglomerate-sandstone) extends 8 km along the Relief Shear.
  • Fault Offsets: AC data shows faults offsetting stratigraphy by ~30m, with gold linked to these structures, supporting a multi-fault system.
• Next Steps:
  • High-priority RC and AC drilling to test new targets (e.g., near MNOAC 843, fault offsets).
  • Ongoing geological interpretation with structural consultant Dr. Brett Davis to refine targeting.
  • Fieldwork to locate additional north-south faults along the Relief Shear and Golden Goose prospect.
• CEO Commentary: Andrew Pumphrey emphasized the dual mineralization styles (sheeted veins, breccia), visible gold with oxidized pyrite, and the 600m strike extension as validations of the geological model, with immediate RC targets identified.

Step 2: Analysis in Light of Prior Discussions

The announcement reinforces and expands on our prior discussions about the New Cross Fault’s district-scale potential, pyrite content, high-grade gold, and sandstone host, with direct ties to Northern Star’s Carosue Dam Operations.

1. District-Scale Potential Akin to Northern Star:
   • Prior Discussion: We noted the New Cross Fault’s potential to host multiple deposits, akin to Northern Star’s Carosue Dam (~3.2 Moz across Karari, Whirling Dervish, etc., spaced 1–2 km apart), due to extensive sandstone, north-south faults, and pyrite-rich mineralization.
   • Announcement Insights:
     • The 600m strike extension (to ~1,000m) and new north-south fault confirm a large, structurally controlled system, mirroring Carosue Dam’s multi-deposit architecture. The Relief Shear’s 8 km extent within OZM’s tenure supports the potential for additional deposits.
     • Sandstone’s role as the dominant host, with quartz veining and fault-associated gold, aligns with Carosue Dam’s geology (2 km away), where brittle sandstone hosts high-grade orebodies.
     • The identification of fault offsets and multiple fault orientations (north-south, 315°) suggests a complex fault network, similar to Carosue Dam’s structural framework, increasing the likelihood of discovering new zones.
   • Implication: The announcement strengthens the district-scale thesis, with New Cross Fault as a flagship deposit and potential for 1–2 Moz total (e.g., 2–3 zones at 300,000–500,000 oz each). This elevates OZM’s long-term value proposition.
2. Unprecedented Pyrite Content at MNORC 215:
   • Prior Discussion: Pumphrey’s excitement about “jet black” pyrite over 50m at MNORC 215, unseen in Mulgabbie’s history, indicated a potent, auriferous system, with high-grade potential (3–6 g/t, up to 10–20 g/t).
   • Announcement Insights:
     • MNODH 017’s visible gold in quartz veins with oxidized pyrite (at 54.85m, 58.3m) directly correlates with MNORC 215’s pyrite-rich zone, confirming auriferous pyrite as a key gold host.
     • The sheeted vein system (MNODH 017) and breccia zones (MNODH 018) suggest diverse mineralization styles, both linked to pyrite-arsenopyrite, reinforcing the system’s robustness.
     • High-grade intercepts (e.g., 1m @ 5.63 g/t, 5.83 g/t) align with prior RC results (e.g., 9m @ 5.79 g/t), validating the pyrite-gold correlation.
   • Implication: The diamond drilling results confirm the high-grade potential of pyrite-rich zones, increasing confidence in follow-up RC drilling yielding similar or better intercepts (e.g., 15m @ 3.0 g/t base case). The pyrite’s oxidized nature in MNODH 017 suggests supergene enrichment, enhancing near-surface economics.
3. High-Grade Gold and Sandstone Host:
   • Prior Discussion: High-grade precedents (e.g., 9m @ 5.79 g/t, 2m @ 22.58 g/t) and sandstone’s brittle nature (hosting quartz veining, pyrite) indicated a scalable, high-grade system, comparable to Carosue Dam.
   • Announcement Insights:
     • Diamond holes confirm high-grade zones (1m at 5–6 g/t), though wider intercepts (25m @ 1.24 g/t, 17m @ 1.25 g/t) are lower-grade than prior bonanza hits (e.g., 2m @ 22.58 g/t), suggesting variability.
     • Sandstone’s dominance, with extensive quartz veining and fault control, is reiterated, with the volcanoclastic unit’s 8 km extent along the Relief Shear supporting large-scale potential.
     • AC drilling’s shallow intercepts (e.g., 4m @ 1.03 g/t) near porphyry indicate a gold-depleted regolith, with deeper RC targets likely to yield higher grades in fresh rock.
   • Implication: The sandstone host and high-grade zones confirm New Cross Fault’s potential as a major deposit, with AC results expanding the footprint. The lower-grade wider intercepts (e.g., 25m @ 0.76 g/t) temper bonanza expectations but support bulk tonnage potential.
4. Follow-Up Drilling Success:
   • Prior Discussion: Follow-up drilling (two diamond holes, RC holes pending assays) was expected to yield 12m @ 4.0 g/t (diamond) and 15m @ 3.0 g/t (RC), adding ~31,000 oz (base case).
   • Announcement Insights:
     • Diamond results (25m @ 1.24 g/t, 17m @ 1.25 g/t) are wider but lower-grade than expected (12m @ 4.0 g/t), though high-grade intervals (1m @ 5–6 g/t) align with expectations. Visible gold and pyrite confirm the system’s strength.
     • AC results (4m @ 1.03 g/t, 0.57 g/t) are modest but extend the strike 600m, identifying RC targets. No new RC assay results are reported, suggesting pending assays from prior programs (e.g., 745m from April 2025).
     • New RC targets near outcropping porphyry and fault offsets are high-priority, with potential for high-grade intercepts in fresh rock.
   • Implication: The drilling results partially meet expectations, with diamond holes confirming high-grade potential but wider, lower-grade zones. The 600m strike extension and new targets enhance upside, with RC drilling likely to add ounces.

Step 3: Ounce Addition from New Results

To update the MRE (~451,000 oz base case, including ~31,000 oz from prior drilling estimates), I’ll estimate ounces from the diamond and AC results, assuming RC targets are tested later.

• Diamond Holes (MNODH 017, MNODH 018):
  • Results: 25m @ 1.24 g/t, 17m @ 1.25 g/t (MNODH 017); 25m @ 0.76 g/t (MNODH 018). Total ~67m mineralized.
  • Volume: Assume 67m × 5m (width) × 100m (strike) × 2.7 t/m³ = 90,450 tonnes. Average grade ~1.08 g/t (weighted: [25×1.24 + 17×1.25 + 25×0.76] ÷ 67).
  • Ounces: 90,450 t × 1.08 g/t ÷ 31.1035 g/oz = ~3,100 oz (base). Optimistic (150m strike, 1.5 g/t): ~6,500 oz. Conservative (50m strike, 0.8 g/t): ~1,500 oz.
• AC Holes (82 holes, 2,290m):
  • Results: Shallow intercepts (e.g., 4m @ 1.03 g/t, 0.57 g/t) over 600m strike. Assume 10 holes with 4m @ 0.8 g/t (weighted average).
  • Volume: 40m × 5m × 600m × 2.7 t/m³ = 324,000 tonnes.
  • Ounces: 324,000 t × 0.8 g/t ÷ 31.1035 g/oz = ~8,300 oz (base). Optimistic (800m strike, 1.0 g/t): ~13,000 oz. Conservative (400m strike, 0.5 g/t): ~4,000 oz.
• Total Ounces:
  • Base: 3,100 + 8,300 = ~11,400 oz.
  • Optimistic: 6,500 + 13,000 = ~19,500 oz.
  • Conservative: 1,500 + 4,000 = ~5,500 oz.
• Updated MRE: Base: 451,000 + 11,400 = ~462,400 oz. Optimistic: 470,500 oz. Conservative: 456,500 oz.
• Note: RC targets (e.g., near MNOAC 843) could add more ounces (e.g., ~20,000 oz if similar to prior RC results), but are not included until assays are reported.

Step 4: Share Price Sell-Down to A$0.075

The SP drop from A$0.083 to A$0.075 (MC ~A$17.2M, down ~9.6%) on 2 million volume suggests market disappointment or profit-taking despite positive drilling results. Possible reasons include:

• Lower-Grade Intercepts: Diamond results (25m @ 1.24 g/t, 0.76 g/t) are wider but lower-grade than prior bonanza hits (e.g., 2m @ 22.58 g/t), potentially tempering expectations for high-grade continuity.
• AC Results Modest: Shallow AC intercepts (e.g., 4m @ 1.03 g/t) indicate gold-depleted regolith, requiring deeper RC drilling to unlock value, which may have disappointed retail investors expecting immediate high-grade results.
• No RC Assays: Pending RC assays (e.g., 745m from April 2025) were not included, delaying a major catalyst.
• Market Sentiment: OZM’s retail-driven volatility (34% weekly, beta 1.60) and lack of institutional coverage amplify sell-offs on perceived underperformance, despite A$5,153.41/oz gold.
• Volume Context: 2 million shares (~0.87% of SOI) is moderate for OZM, suggesting profit-taking or a small seller rather than widespread panic. The gold sector’s strength (e.g., Northern Star up ~20% YTD) contrasts with OZM’s decline, pointing to company-specific factors.

Step 5: Valuation Update

Using the prior framework (EV/oz at A$5,153.41/oz), I’ll adjust for the new results (~11,400 oz added), district-scale potential, and market sentiment, incorporating other assets (Patricia, Brazil, heap leach).

1. Mulgabbie North Valuation

• Resource: ~462,400 oz (base case, post-drill results). District-scale potential suggests 1–2 Moz long-term.
• EV/oz: Adjust for sell-down and new data:
  • Conservative: A$50/oz (market skepticism, lower-grade results).
  • Base: A$120/oz (district-scale recognition, high-grade potential).
  • Optimistic: A$180/oz (post-feasibility, 1 Moz potential).
• EV:
  • Conservative: 462,400 oz × A$50/oz = A$23.1M.
  • Base: 462,400 oz × A$120/oz = A$55.5M.
  • Optimistic: 462,400 oz × A$180/oz = A$83.2M (or 1 Moz × A$150/oz = A$150M long-term).
• Market Cap: Add ~A$1M cash:
  • Conservative: A$24.1M.
  • Base: A$56.5M.
  • Optimistic: A$84.2M (or A$151M for 1 Moz).

2. Patricia (Heysen’s Find)

• Potential: 100,000 oz (base), 200,000 oz (optimistic). Mulgabbie’s success supports exploration.
• Market Cap:
  • Conservative: A$1M.
  • Base: A$4M (100,000 oz × A$40/oz).
  • Optimistic: A$10M (200,000 oz × A$50/oz).

3. Brazil Project

• Valuation: A$2–5M (speculative).
  • Conservative: A$2M.
  • Base: A$3M.
  • Optimistic: A$5M.

4. Heap Leach Project

• Impact: High-grade zones (1m @ 5–6 g/t) and district-scale potential enhance economics. Feasibility (July/August 2025) is critical.
• Market Cap Uplift:
  • Conservative: A$2M (sell-down dampens optimism).
  • Base: A$7M (feeder zone supports recovery).
  • Optimistic: A$15M (post-feasibility).

5. Total Market Cap

• Conservative:
  • Mulgabbie: A$24.1M.
  • Patricia: A$1M.
  • Brazil: A$2M.
  • Heap Leach: A$2M.
  • Total: A$29.1M.
• Base:
  • Mulgabbie: A$56.5M.
  • Patricia: A$4M.
  • Brazil: A$3M.
  • Heap Leach: A$7M.
  • Total: A$70.5M.
• Optimistic:
  • Mulgabbie: A$84.2M (or A$151M for 1 Moz).
  • Patricia: A$10M.
  • Brazil: A$5M.
  • Heap Leach: A$15M.
  • Total: A$114.2M (or A$181.2M for 1 Moz).

6. Share Price

• Conservative: A$29.1M ÷ 229M = ~A$0.13.
• Base: A$70.5M ÷ 229M = ~A$0.31.
• Optimistic: A$114.2M ÷ 229M = ~A$0.50 (or A$181.2M ÷ 229M = ~A$0.79 for 1 Moz).

Step 6: Market Sentiment and Sell-Down Implications

• Undervaluation: The current SP (A$0.075, MC A$17.2M) implies EV/oz of ~A$37/oz for 462,400 oz, significantly below peers (A$50–200/oz) at A$5,153.41/oz gold, suggesting the sell-down overreacted to modest AC results and wider, lower-grade diamond intercepts.
• Catalysts:
  • RC Assays: Pending results (e.g., 745m from April 2025) could confirm high-grade zones (15m @ 3.0 g/t), pushing SP to A$0.25–0.31.
  • RC Drilling: New targets (e.g., near MNOAC 843) could yield bonanza grades, re-rating OZM.
  • Feasibility (July/August 2025): Strong economics could drive SP to A$0.50–0.79.
• Risks:
  • Further Sell-Offs: Retail volatility and delayed assays could push SP to A$0.05–0.07.
  • Dilution: Capital raises (e.g., post-March 2025 A$1.75M) could cap upside.
  • Feasibility Uncertainty: Poor results could negate drilling gains.

Step 7: Alignment with District-Scale Potential

The announcement directly supports the district-scale thesis:

• Strike Extension: The 600m southern extension (to ~1,000m) and new fault structures confirm a large system, akin to Carosue Dam’s multi-kilometer trends.
• Geological Parallels: Sandstone-hosted, fault-controlled gold with pyrite-arsenopyrite mirrors Carosue Dam’s deposits, with the 8 km Relief Shear offering room for additional discoveries.
• Ounce Potential: The ~11,400 oz added (base) is modest, but new RC targets and fault systems suggest 1–2 Moz long-term, aligning with Northern Star’s ~3.2 Moz.

Step 8: Final Answer

The May 30, 2025, ASX announcement confirms the New Cross Fault’s high-grade potential and district-scale significance at Mulgabbie North, reinforcing prior discussions about its pyrite-rich, sandstone-hosted, fault-controlled system akin to Northern Star’s Carosue Dam Operations. Diamond drilling (220m) validates dual mineralization styles (sheeted veins, breccia) with visible gold and high-grade intercepts (e.g., 1m @ 5.63 g/t), while AC drilling extends the strike 600m to ~1,000m, identifying new RC targets. The north-south fault and sandstone host mirror Carosue Dam’s geology, supporting the potential for multiple deposits (1–2 Moz long-term) across the 8 km Relief Shear.

Implications and Valuation (with 229M SOI, A$5,153.41/oz gold):

• Ounce Addition: ~11,400 oz (base, from diamond and AC results), updating MRE to ~462,400 oz. New RC targets could add ~20,000 oz with future assays.
• Sell-Down Context: The SP drop to A$0.075 (MC A$17.2M, ~9.6% decline) on 2M volume likely reflects disappointment over lower-grade diamond intercepts (e.g., 25m @ 0.76 g/t vs. 2m @ 22.58 g/t) and modest AC results, despite positive strike extension and high-grade potential. The market undervalues OZM at ~A$37/oz vs. peer EV/oz of A$50–200/oz.
• Expected Market Capitalization (by July/August 2025):
  • Base Case: A$70.5 million (Mulgabbie at A$120/oz for 462,400 oz, district-scale potential, feasibility optimism).

    
    
  • Optimistic Case: A$114.2 million (A$180/oz, RC success, 1 Moz potential), or A$181.2M (1 Moz confirmed).
  • Conservative Case: A$29.1 million (A$50/oz, limited RC upside).
• Expected Share Price:
  • Base Case: A$0.31 (A$70.5M ÷ 229M, ~313% upside from A$0.075).
  • Optimistic Case: A$0.50 (A$114.2M ÷ 229M, ~567% upside), or A$0.79 (1 Moz).
  • Conservative Case: A$0.13 (A$29.1M ÷ 229M, ~73% upside).

Most Likely Scenario: The base case SP of A$0.31 (MC A$70.5M) is achievable by July/August 2025, driven by pending RC assays (e.g., 15m @ 3.0 g/t), follow-up RC drilling confirming high-grade zones, and positive heap leach feasibility, supported by A$5,153.41/oz gold and district-scale potential. Upside to A$0.50–0.79 requires bonanza RC results and feasibility success, while downside to A$0.13 persists if assays or feasibility disappoint. The sell-down appears overdone, offering a buying opportunity for patient investors. Monitor OZM’s ASX announcements (www.asx.com.au, code OZM) for RC assay and feasibility update