This is a good start to a highly anticipated drill program at Vulcan.
The hole, VUD 9 intersected the basement at approximately 779 metres, and was completed prematurely at 1,111m due to drilling problems.
Significantly, the thick hematite breccias are similar to the hematite breccias which occur within the central, barren core of the Olympic Dam deposit, approximately 30km to the south.
The breccias in first hole (VUD 9) did not contain significant visible copper sulphides and assay results for this initial hole are not expected to be high, the company said today.
At Olympic Dam, high grade mineralization is known to occur at depth beneath similar hematite breccias. Hole VUD 9 had to be terminated prematurely due to drilling problems.
The Vulcan Project was first identified by Tasman in 2009.
It is located 30 kilometres north of Olympic Dam and is defined by a large gravity anomaly approximately 12km2 in area and is comparable in size to the area to BHP Billiton's (ASX:BHP) Olympic Dam deposit.
Drilling of the second hole, VUD 10 has commenced.
A Rio Tinto subsidiary farmed into the project. Tasman has received initial payments totalling $10 million from Rio. Tasman will fund the Initial Exploration Program from the First Milestone Payment and will conduct, operate and complete the Initial Exploration Program in consultation with RTX.
Rio has the right to earn an initial 55 per cent interest in the Vulcan tenements by spending $42 million.
The Initial Exploration Program is to be completed within 12 months.
Today's drill update is just the first in a significant drill program to be undertaken at Vulcan by Tasman and Rio. It is the first of eight to ten deep holes to be drilled at Vulcan by Tasman. The key takeway from today's update is that the thick hematite breccias are similar to the hematite breccias which occur within the central, barren core of the Olympic Dam deposit.
The farm-in from Rio is a significant endorsement of the potential it sees in Vulcan to replicate Olympic Dam.
Based on a Residual Gravity comparison with Olympic Dam, Vulcan is uncannily similar.
RTX may pay TAS $7m & spend $25m on exploration for 55%. If TAS dilutes, RTX may spend $50m for further 25% (ie 80%). TAS may then contribute or require RTX to buy TAS share (20%).
Tasman had cash of $10.5 million at June quarter end.
The first drill hole represents a promising start to exploration at Vulcan. VUD 9 was stopped out prematurely at 1,111m due to drilling problems. At Olympic Dam, high grade mineralization is known to occur at depth beneath similar hematite breccias.
Although early days, Vulcan displays many, many similarities to Olympic Dam that investors should be looking at topping up on Tasman Resources given current valuation of $29 million includes $10 million in cash.
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