peru iron ore update apurimac project

www.strikeresources.com.au
STRIKE RESOURCES LIMITED A.B.N. 94 088 488 724
Level 14, 221 St Georges Terrace, Perth WA 6000
ASX Code: SRK T | (08) 9214 9700 F | (08) 9322 1515 E | [email protected]
Wednesday, 23 August 2006
MARKET ANNOUNCEMENT
Peru Iron Ore Update Apurimac Project
The Company refers to its recent announcements regarding its Apurimac and Cuzco Iron-Ore Projects in Peru.
As part of its continuing due diligence on the projects, the Company has further analysed the drilling data and
gravity survey results presented by AMEC Consultants (Peru) on reconnaissance drilling conducted in the first 2
(Opaban I and Opaban III) of the 21 concessions that make up the Apurimac Project.
Location of 9 Apurimac Project Concessions in Opaban Area
This drilling programme was undertaken by AMEC in 2005 to commence validation of the 730 million tonnes of
high grade iron-ore resource estimated by Takahashi Trading S.A. in 1961 and the Peruvian Ministry of Energy
and Mines to exist within the areas covered by the 21 concessions in the Apurimac Project.
Whilst the initial drilling has so far only covered targets in 2 of the 21 concessions, these results to date appear to
support the original Takahashi and Peruvian Ministry of Energy and Mines estimates for these concessions and,
by extrapolation, for the Apurimac Project as a whole.
Resource Estimates
From its analysis of the data in just these two concessions, the Company now provides the following resource
estimates:
• A JORC compliant Inferred Resource of 21 million tonnes of 63.1% Fe based on drilling, located
on a gravity anomaly, in Opaban III;
• A resource target of 210 to 260 million tonnes at Opaban I, based on widely spaced drilling (15
drill holes over a strike distance of 2.2 kilometres); and a gravity anomaly which is of an order of
magnitude 10 times larger than that encountered at Opaban III.
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(It is noted that the potential quantity referred to above in relation to Opaban I is conceptual in nature;
there has been insufficient exploration to define a JORC compliant Mineral Resource in this concession
and it remains to be ascertained if exploration will result in the determination of a Mineral Resource).
The southern portion of Opaban III and 19 additional concession areas including prominent ones at Los Andes
and Cristoforo 22 (near Opaban I) and Pampachiri (located approximately 40 kilometres south of Opaban I) are
still to be drilled and analysed. It is expected that these deposits will also continue to be high grade with widths
likely to be in excess of 100 metres in a similar manner to those at both Opaban I (between 100 to 350 metres)
and Opaban III (average of 200 metres).
The Company also notes that the 21 million tonnes Inferred Resource in Opaban III is of sufficient size and grade
to potentially commence a trucking operation of up to one million tonnes of direct shipping ore per year, that could
generate short term cash-flow whilst the grades and tonnages of iron-ore in the remaining 26 concessions in both
the Apurimac and the Cuzco Projects are being defined.
Resource Quality
Drilling to date suggests high-grade magnetite/hematite mineralisation (63.1% Fe at Opaban III and between 51%
and 64.4% Fe at Opaban III). The Company notes that deposits containing magnetite and hematite aggregate of
such high quality and of this magnitude are limited and found in only a small number of locations throughout the
world. Illustratively, various magnetite projects currently promoted in Australia are based on generally lower
grades (29 to 36% Fe) magnetite, with iron minerals occurring in extremely fine grained rocks mostly within very
hard banded iron formations (BIF) which typically require expensive crushing and beneficiation.
Due Diligence Progress
The Company continues to perform its legal and commercial due diligence on these projects which is due for
completion by 15th September 2006.
The following information provides further details of the summary above.
Gravity Survey
The high-grade nature of mineralisation in the Apurimac Project area lends itself to definition in the subsurface
through the use of gravity surveys. Accordingly an initial orientation gravity survey was undertaken in Opaban I
and Opaban III. The gravity survey included lines spaced east-west 100 metres apart in Opaban I and 50 metres
apart in Opaban III with station spacings of 50 metres along the lines, covering parts of Opaban I and III. The
gravity data was processed and a map showing the residual gravity was produced. It is shown on the following
page.
Subsequent reconnaissance drilling in parts of the two concessions has shown that the gravity mapping picks up
the thickness and the extent of subsurface mineralisation quite accurately.
In Opaban I most of the drilling is scattered along the perimeter of the mineralised body defined by residual
gravity. In Opaban III the drilling is concentrated around a smaller gravity anomaly at the north-central section of
the concession to establish a smaller resource. It is noted that gravity mapping has not been conducted in the
southern portion of this concession nor in the adjoining Cristoforo 22 concession.
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Residual Gravity Anomaly - Opaban I and Opaban III
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Reconnaissance Drilling
A total of 31 diamond core holes were drilled for a total of 2,667 metres in the two concessions.
At Opaban I, the larger of the two resources, only 15 holes were drilled at wide spacing essentially to define the
perimeter of the mineralisation. Surface outcrops in this deposit are up to 350 metres wide and extend with small
gaps, for a strike distance of approximately 2.2 kilometres.
At Opaban III, a smaller outcrop area at the north-central section of the concession of approximately 500 x 200
metres was drilled approximately every 100 metres along strike and in a fan pattern across the width of the
outcrop with 16 drill holes.
Other nearby concession areas with significant outcropping mineralisation were not drilled. These provide an
early opportunity to expand the resource base.
The gravity map illustrates the width and strike length of the two deposits at Opaban I and Opaban III.
Sampling, Analysis and Grades and Magnetite versus Hematite
AMEC Consultants analysed all samples from the drilling, where possible, as +6.3 millimetre (the premium lump
fraction) and -6.3 millimetre fractions.
AMEC’s report shows that in both concessions in the mineralised zones, the -6.3 millimetre fraction weighs on
average less than 10% (typically between 5% and 8%) of the total weight of the sample.
Therefore the analytical results summarised below for Opaban I and Opaban III represent the grades and quality
of greater than 90% of the resource drilled in those deposits.
The Company also notes that, with respect to Western Australia iron-ore, the market currently appears to
distinguish between hematite ores (generally regarded as ‘high grade’) and magnetite ore (generally regarded as
‘low grade’). In comparison the mineralisation in the Opaban I and Opaban III concessions within the Apurimac
Project is a mix of high grade hematite and high grade magnetite, which presents as an aggregate of the two
minerals. This high grade nature of the aggregate mix makes the deposits significantly better in quality than the
majority of the magnetite projects currently proposed in Western Australia and equivalent to many high grade
hematite deposits in Western Australia.
Results of Drilling
Drilling results from Opaban III and Opaban I are summarised below.
Opaban III
Drill hole intersections in Opaban III:
Hole Easting Northing Dip Azimuth Depth From To Width Fe LOI P S SiO2 Al2O3 S
m m degrees m m m m % % % % % % %
OP001 680650 8481200 -90 0 67.5 0 67.5 67.5 63 2.37 0.079 0.07 3.63 1.24 0.07
OP002 680650 8481200 -45 225 77.6 0 69 69 64.53 1.8 0.055 0.04 2.49 1 0.04
OP003 680700 8481150 -90 0 64.25 0 60.6 60.6 64.09 1.27 0.078 0.011 3.69 1.04 0.011
OP004 680740 8481000 -90 0 60 1.5 53.2 51.7 63.18 2.57 0.058 0.097 3.64 1.42 0.097
OP005 680740 8481000 -45 225 74.2 0 63 63 63.7 2.01 0.055 0.043 3.98 0.88 0.043
OP006 680700 8481150 -45 225 74.15 0 57.65 57.65 62.62 2.28 0.056 0.01 4.55 1.31 0.01
OP007 680700 8481150 -45 45 31.6 0 21.5 21.5 63.25 2.59 0.077 0.015 3.17 1.31 0.015
OP008 680740 8481000 -45 45 112.85 0 105.4 105.4 62.5 2.59 0.074 0.23 4.54 1.05 0.23
OP009 680850 8480975 -90 0 65.4 0 20.65 20.65 64.15 2.47 0.084 0.224 3.06 1.03 0.224
OP010 680850 8480975 -45 225 63.4 0 22.8 22.8 64.7 0.8 0.044 0.016 2.93 1.7 0.016
OP011 680780 8480940 -90 0 54.1 0 49.1 49.1 63.63 2.64 0.082 0.092 3.01 1.14 0.092
OP012 680800 8481050 -90 0 87.4 0 82.5 82.5 61.23 2.4 0.081 0.7 5.55 1.43 0.7
Including 0 26 26 64.23 2.24 0.072 0.01 2.95 0.95 0.01
OP013 680780 8480940 -45 225 88 0 74.5 74.5 63.65 2.35 0.073 0.111 3.36 0.98 0.111
OP014 680800 8481050 -45 225 42.65 0 42.65 42.65 64.13 1.16 0.063 0.01 3.56 0.98 0.01
OP015 680650 8481250 -45 225 66 7.5 60.05 52.55 63.37 2.03 0.058 0.011 3.67 1.3 0.011
OP016 680750 8481100 -45 225 73.15 3.5 58.4 54.9 62.07 1.7 0.072 0.02 5.67 1.38 0.02
Average grade for all mineralised intervals in this deposit is 63.12%Fe, 2.10% LOI, 0.069%P, 3.98% SiO2, 1.16%
Al2O3, and 0.11% S.
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Opaban I
Drill intersections and assay data for the +6.3 millimetre fraction (representing greater than 90% of the
mineralised intervals by weight) in Opaban I:
Hole Easting Northing Dip Azimuth Depth From To Width Fe LOI P SiO2 Al2O3 S
degrees m m m m % % % % % %
OP017 679200 8484500 -90 0 112 28.6 106 77.4 58.87 1.2 0.04 7.59 2.13 0.046
Including 55 104 49 62.35 -0.28 0.04 5.34 1.34 0.019
OP018 679250 8484700 -90 0 104.5 9.9 97.8 87.9 63.26 0.87 0.03 4.7 1.03 0.049
OP019 679500 8484402 -89 0 80.8 16 69.5 53.5 51.19 0.94 0.06 14.63 2.71 0.01
OP020 679270 8484350 -90 0 131 0 128 128 59.81 2.23 0.04 6.35 2.05 0.108
Including 0 37.5 37.5 64.45 1.44 0.032 2.74 1.35 0.026
“” 50.35 73.1 22.75 63.96 1.96 0.03 3.15 0.97 0.09
“” 77.35 82.3 4.95 62.41 2.09 0.03 4.44 1.94 0.01
“” 89.5 99.6 10.1 60.75 2.02 0.05 5.45 1.28 0.078
“” 110.2 119.9 9.7 62.33 0.6 0.04 5.21 0.73 0.181
OP021 679548 8484204 -45 270 168.3 30 162.1 132.1 54.44 2.97 0.03 10.76 2.54 0.066
Including 56.5 62.9 6.4 62.93 2.31 0.04 4.36 0.89 0.035
“” 85.5 162.1 76.6 61.62 2.58 0.03 5.17 1.27 0.105
OP022 679450 8484075 -90 0 106.9 24 99.6 75.6 57.29 2.99 0.04 8.73 2.42 0.032
Including 24 45.3 21.3 64.1 2.08 0.03 3.61 0.45 0.047
“” 51.6 57.9 6.3 60.79 2.11 0.03 6.03 1.42 0.03
“” 76.8 99.6 22.8 61.29 2.35 0.03 5.48 1.4 0.033
OP023 679550 8484800 -90 0 125.4 13.4 106.4 93 55.99 3.41 0.04 6.84 1.98 0.058
Including 13.4 66.5 53.1 60.89 1.76 0.04 4.85 1.49 0.068
“” 106.4 13.9 62.34 1.12 0.04 4.41 1.17 0.038
OP024 679273 8484252 -90 0 75 No significant mineralisation (drilled outside resource boundary)
OP025 679457 8484602 -90 0 80.8 47.1 20.2 62.47 0.53 0.03 5.13 0.93 0.01
OP026 679150 8484600 -43 90 90 77.6 42.7 58.35 2.48 0.03 8.26 2.06 0.035
Including 58.2 23.3 60.4 2.47 0.03 6.18 1.73 0.039
“” 77.6 7.6 60.96 0.16 0.02 8.25 1.03 0.01
OP027 679801 8485400 -90 0 37.6 29.5 15.9 63.18 2.19 0.02 3.82 1.03 0.047
OP028 679720 8485264 -90 0 131 63.7 42.4 59.13 2.82 0.03 6.96 2.26 0.075
OP028 679306 8484002 -90 0 131 105.2 8.7 58.7 1.99 0.04 5.75 1.71 2.9
OP029 679801 8485400 -45 90 78.4 60.1 58.1 58.19 2.99 0.03 7.43 2.17 0.059
Including 11.6 9.6 62.74 2.21 0.04 4.25 1 0.113
“” 60.1 36.6 61.5 2.26 0.02 4.81 0.98 0.056
OP030 679300 8483544 -90 0 62 15.2 4 61.95 1.31 0.09 4.73 1.23 0.115
OP031 679401 8483798 -45 270 181 89.9 8.5 61.73 2.78 0.02 3.79 0.77 0.373
OP031 679401 8483798 -45 270 181 111.5 11.1 62.78 1.73 0.03 4.43 0.62 0.077
OP031 679401 8483798 -45 270 181 181 22.8 61.93 1.37 0.03 4.31 1.23 0.017
It is noted that Opaban I holes OP18 and OP 20 were drilled towards the centre of the deposit and show thicker
intersections of high grade mineralisation for 87.9 metres at 63.26% Fe (OP18) and cumulative thickness of 85
metres at 63.5% Fe within a thickness of 128 metres at 59.81% Fe (OP20). The mineralised zone is likely to be
thicker and deeper in the centre of the deposit where the gravity anomaly is highest.
Resources
Opaban III
Mapping and drilling suggest that the dimensions of the iron deposit in the north-central section of the concession
are approximately 500 x 200 metres. 16 drill holes confirm the quality of the mineralised material and the extent of
the deposit. Average thickness of the deposit is estimated at 62.5 metres. Density measurements made by
AMEC on mineralised material from Opaban III suggest that the density varies between 3.23 tonnes per cubic
metre (t/cum) in the near surface brecciated earthy ore to 4.25 t/cum in high grade massive ore at depth. Based
on an average density of 3.8t/cum and high grade material representing 90% of the deposit an Inferred
Resource of 21 million tonnes of high grade material averaging greater than 63% Fe is estimated to occur
at Opaban III.
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Opaban I
The drilling done at Opaban I is widely spaced and largely along the perimeter. The strike length of the deposit is
approximately 2.2 kilometres with widths of between 100 to 350 metres. Average thickness of mineralisation from
the 15 holes drilled is estimated at 66.5 metres. This average does not take into account the central portion of the
main gravity anomaly in Opaban I, where only a few holes have been drilled and where it is assumed that the
mineralisation will be significantly thicker.
Based upon a 150 metre area of influence around the drill holes, AMEC Consultants considered a resource
potential of 104 to 122 million tonnes (Non-JORC) around the drill holes at Opaban I. Given the size of the
deposit relative to the drilling undertaken a JORC compliant resource estimate cannot currently be made.
However, based on a comparison of the gravity anomalies at Opaban III (21 Mt) and Opaban I (which presented a
gravity anomaly greater than 10 times that at Opaban III), the Company estimates a resource target of
between 210 and 260 million tonnes of high grade mineralisation at Opaban I.
Based upon mapping and extensive surface sampling, Takahashi Trading in 1961 suggested a resource target
greater than 270 million tonnes at Opaban I.
(It is noted that the potential quantity referred to above in relation to Opaban I is conceptual in nature; there has
been insufficient exploration to define a JORC compliant Mineral Resource in this concession and it remains to be
ascertained if exploration will result in the determination of a Mineral Resource).
Conclusion
The Company is encouraged by the high grade nature and thicknesses of mineralisation in Opaban I and Opaban
III. However, additional drilling will be required to gain further confidence and improve the quality of the JORC
resource estimate at Opaban III and to determine JORC compliant resource estimates within Opaban I and the
other 19 concessions of the Apurimac Project areas. In addition, no drilling work has yet been undertaken in the
Cuzco Project areas (located approximately 160 kilometres east-south east of the Opaban I concession in the
Auprimac Project area). The Company has identified that the initial work in the Cuzco Project area should include
a detailed gravity survey over existing outcrops and over large known magnetic anomalies prior to drilling.
Further exploration work however cannot commence until the Company has successfully signed off on the due
diligence of Apurimac Ferrum SA and the legal status of the concessions, which work is currently in progress and
is scheduled to be completed by 15th September 2006. The market is cautioned that a successful completion of
the due diligence cannot be guaranteed at this stage.
For further information:
Shanker Madan
Managing Director
T | (08) 9214 9700
E | [email protected]
The information in this market announcement that relates to exploration results has been compiled by Mr Hem Shanker Madan
who is a Member of The Australian Institute of Mining and Metallurgy. Mr Madan is the Managing Director of the Company. Mr
Madan has in excess of 5 years experience which is relevant to the style of mineralisation under consideration and qualifies as
a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore
Reserves (the JORC Code).” Mr Madan consents to the inclusion in this market announcement of the matters based on his
information in the form and context in which it appears.