AUSTRALIA’S long drought in world-class mineral discoveries may be about to break at Red Metal’s Maronan prospect, 50km south of Cloncurry. By David Upton
Since floating onto the ASX a decade ago, the Sydney-based junior explorer has been chasing a giant lead-silver deposit at Maronan to rival BHP Billiton’s Cannington mine, 120km south
A new drill hole begun this week may finally achieve a breakthrough if a new geological model by Red Metal’s lateral-thinking geologists is accurate.
The latest hole is testing a hypothesis that previous drilling has skirted a thick zone of carbonate facies that is rich in silver, lead and zinc sulphides. This central zone is thought to be the core of seafloor vent system.
All previous drilling has been outside the central zone, although excellent lead and silver grades have been found where thin carbonates are interbedded with iron sulphides
Maronan is a Cannington-type deposit, but until the recent deep drilling it was not clear if it had scope to become a giant deposit.
If Red Metal is correct and it does find Cannington-type tonnages as well as high grades at Maronan, the company could be sitting on the biggest mineral discovery in Australia in decades.
Cannington is the world’s largest silver and lead mine and a profit powerhouse even for BHP Billiton. The Big Australian is developing plans for a giant open-cut operation to extend the life of the underground mine.
Red Metal believes it has now finally unravelled the tonnage secret, and many investors are also convinced.
The company’s share price doubled between July and September to around A20 cents a share and has climbed as high as 38c in recent days. A number of new investors climbed on board last month through a placement at 18c a share that raised $3.5 million.
It is a welcome turnaround for the company, which has pushed through all kinds of market conditions to maintain its exploration program. Less than six months ago, the company went to shareholders with a rights issue at 10c a share to raise just under $1 million.
The majority of the funds were spent on a gutsy decision to sink a diamond drill hole (MRN12003) more than 1,000 metres (and a subsequent daughter hole, MRN12003B) to test the depths of the Maronan prospect.
Red Metal managing director, Rob Rutherford, told MiningNewsPremium the deep hole cemented a lot of the company’s ideas.
“When we drilled MRN12003B we found a 50-metre thick intercept of interbedded carbonates and iron sulphides. Within the carbonates there was 10.6 metres of true width going 5.5 per cent lead and 208 grams per tonne silver.”
“This mineralised, interbedded zone was quite a dramatic change in the geology from the silicates and magnetite only 150 metres away in drill hole MRN8001. That’s when the penny dropped on this zonation model.”
The new model predicts a transition from magnetite/silicates to iron sulphides and then to base metal sulphides over short distances, with an intermediate zone of interbedded rock types.
This reflects the change in facies from sulphides/carbonates to oxides/silicates as distance increases from the central seafloor vent.
Rutherford said previous drilling above the central zone had been confusing.
“A lot of our historic drilling was in that mixed or intermediate position, where you get some iron sulphides, some lead sulphides and some magnetite all interbedded over a 50 metre section.”
He said the deep drill hole had given strong support to the zonation model, as well as proving the Maronan mineralisation plunged to the north and was wide open.
“There is 800 metres of strike potential wide open to the north and the continuing down plunge potential that have never been drilled.
“We are also excited that the two potentially mineralized iron formations are each about 50 metres thick. Either one or both of these could potentially transition into 50 metre thick zones of lead sulphides.”
The recent deep hole also answered a puzzling question about deep weathering. “MND21 was a historical hole that produced 70 metres of 3% lead and 6g/t silver mineralisation at depths down to 400 metres, but it was highly weathered and potentially leached.
“We were never quite sure what to make of that until we drilled the recent deep hole, which intersected what we think is an unweathered version of this rock. When the iron and lead sulphides weather they create acid and dissolve the carbonate host rock, creating a vuggy mess of a rock like we hit in MND21.”
He said the presence of the weathered rock made sense if drilling was in fact getting closer to the sulphide-rich core of the system.
The path to the current understanding of Maronan has been long and winding, with BHP Billiton playing a significant role.
Red Metal acquired the prospect as a part of a package of tenements spun out by Phelps Dodge. (Rutherford had been the Australian exploration manager for Phelps Dodge for a number of years before founding Red Metal).
“Red Metal came into drill a couple of holes, but early on we realised it was a silver-type play so we offered it as a joint venture to BHP because of the proximity of Cannington.
“They were there from about 2004 to 2008 and drilled a number of holes.
Towards the end of the program they were speculating it plunged towards the south and drilled a series of holes on that model. All of them came in with no mineralisation. When the GFC hit, they handed the project back to us.”
Rutherford said Red Metal spent the next year putting together all the data from the previous years of exploration.
“By a process of elimination it became pretty obvious that it really couldn’t plunge to the south. There was no room left. It could only plunge to the north.”
He said BHP Billiton had collected downhole EM readings, which showed some strong EM anomalies on the north side. In fact, the deepest hole drilled by BHP (MRN8001), had a very strong off-hole conductor.
“So in December of last year we drilled a hole, trained on the shallower EM conductors with some kind funding support from the Queensland State Government under the Greenfields 2020 initiative. We hit this strong, bedded mineralisation of Cannington grade, and that encouraged us to drill MRN12003, aimed at the deep off-hole conductor in MRN8001.”
The drill hole that began this week (MRN12004) will test the heart of the newly defined central zone over the next four weeks. Assays should arrive by the end of January.
Rutherford acknowledges there’s still plenty of risk at Maronan.
“We might drill more holes and end up with more of the same. That’s still not out of the question, but we’re hopeful our interpretation is on the money and that’s what the drilling is about to prove or disprove.”
A discovery would be great reward for the persistence, creativity and courage of Red Metal’s small team, which is big on lateral thinking.
“You can see that in a lot of our projects. We are a glass half-full rather than glass half-empty sort of team. It’s very easy to be negative in exploration, and of course with that attitude you will be right 99% of the time because of the imprecise nature of geology.”
“That’s the fundamental problem with a lot of exploration groups. If you are too overly critical, you will easily talk yourself out of drilling, be proven correct most of the time but never find anything.”
RDM Price at posting:
32.5¢ Sentiment: LT Buy Disclosure: Held
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