Alkane Resources discovers new copper-gold porphyry zone at Kaiser Tuesday, April 08, 2014 by Proactive Investors
Alkane Resources has discovered a new copper-gold porphyry zone at Kaiser, New South Wales Alkane Resources has discovered a new copper-gold porphyry zone at Kaiser, New South Wales
Alkane Resources (ASX:ALK) should trade firmer after defining a new zone of porphyry style gold-copper mineralisation at the McGregor Prospect of its Kaiser Project in New South Wales.
Drilling at the prospect returned 8 metres at 1.06% copper and 0.34 grams per tonne gold from 109 metres, including 5 metres at 1.42% copper and 0.51g/t gold from 110 metres.
The initial five hole program totalling 1,094 metres also confirmed porphyry style mineralisation at the Kaiser Prospect with an intercept of 60 metres at 0.81g/t gold and 0.91% copper from surface, including 41 metres at 1.15g/t gold and 1.24% copper from 18 metres; and the Kaiser East Prospect with 22 metres at 1.63g/t gold and 1.64% copper from 37 metres.
The Kaiser Project lies within the broader Bodangora Project where similar porphyry style gold-copper mineralisation associated with the Comobella Intrusive Complex was identified in 2012.
It lies at the northern extent of the Molong Volcanic Belt - a well-defined geological region and host to several economically important gold-copper porphyries such as the Cadia Valley alkalic porphyry deposits.
In particular, it was noted that the Kaiser mineralisation has a similar geological setting to Newcrest Mining's (ASX: NCM) Ridgeway porphyry deposit in the Cadia Valley.
Alkane has the right to earn a 100% interest in Kaiser from Ajax Joinery for payment of $10,000 on transfer of the licence, $200,000 following expenditure of $500,000 on exploration within two years, and a 2% net smelter return on saleable products.
Kaiser Project
The newly identified McGregor Prospect at Kaiser comprises chalcopyrite and bornite mineralisation within altered volcaniclastic and porphyry host rock.
The discovery of the McGregor zone has validated a geological interpretation where the high grade Kaiser alkalic porphyry system appears to have been displaced to the west-northwest by a complex fault system.
McGregor also appears to be broadly coincident with a magnetic high feature that strikes northwards for greater than 400 metres.
The Kaiser Prospect was subject to limited historical mining activity between 1875 and the 1930s with intermittent exploration activity conducted since the 1960s.
It was drilled to characterise its geochemical signature before testing the McGregor zone at depth with the newest intercept of 41 metres at 1.15g/t gold and 1.24% copper from 18 metres comparing well with that reported in the closest historical drill hole with 40 metres at 0.57g/t gold and 0.64% copper from 16 metres.
The exploration success follows on Alkane officially opening in March its Tomingley gold mine in New South Wales following first gold pour in February.
It boasts a base case life of mine production of 7.5 years for 350,000 to 400,000 ounces at an average sustaining cash cost of $1,000 to $1,100 per ounce.
Yearly cash flow will be around $20 million to $25 million at current gold prices based on yearly production of 50,000 to 60,000 ounces.
Additional exploration at the Caloma Two deposit has added another 109,300 ounces of gold to the resource inventory, and further development of potential underground operations could extend the mine life to 10 years.
Analysis
It is still early days at the Kaiser Project, but Alkane Resources’ discovery of a new zone of porphyry style gold-copper mineralisation at the McGregor Prospect highlights its excellent exploration potential.
That it is located close to Newcrest’s Ridgeway porphyry deposit in the Cadia Valley, where underground mining is continuing, further demonstrates its prospectivity.
Over 7.5 million ounces of gold has been produced from Cadia Valley since commercial production commenced in 1999.
ALK Price at posting:
31.5¢ Sentiment: LT Buy Disclosure: Held
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