Ventnor Resources (ASX: VRX) today announced details from its third phase of RC drilling at the Thaduna Prospect.
Broad intersections of chalcopyrite mineralisation in 3 holes (confirmed by portable XRF readings) at the Thaduna prospect including THRC054 which intersected 142 metres of copper mineralisation. The hole terminated in visible chalcopyrite mineralisation.
THRC058 and THRC059 also terminated at 228 metres and 233 metres respectively (limit of rig capability) with visible chalcopyrite at the end of hole.
RC Intersections are below the projected footwall and holes ended in mineralisation and a second rig has been mobilised to extend these three holes with diamond drilling. Mineralisation remains open along strike and at depth at the Thaduna Prospect.
Proactive Investors initial projection of a JORC compliant Resource is now likely to be pushed back to 3Q 2012 on the back this significant development.
THRC054, THRC058 and THRC059 and were terminated at 233 metres, 228 metres and 233 metres respectively which is the depth capacity of the RC rig that drilled the holes. Each of these holes had visible chalcopyrite at the end of hole and will now be extended with the diamond drill rig.
Additional mineralisation was also identified previously undetected mineralisation in both the hanging and footwalls.
Proactive Investors considers the intersection of broad zones of copper mineralisation as a significant development for the Company. Our previous interpretation was that the project had a minimum target JORC Resource of 50,000 tonnes of contained copper with a 12 month target of 100,000 tonnes of contained copper.
Our current interpretation in the top 200 metres is for a mineralised body of perhaps 100 metres width, 200 metres depth striking for around 200 metres with an SG of approximately 2.7 which would give a tonnage range in the order of 10.0Mt @ around 1% for 100,000 tonnes of contained copper.
Our estimate of grade is purely that however published data suggests that higher grade mineralisation (+3% copper) is likely to be interspersed with broader zones of perhaps +0.5% copper.
Additional RC and Diamond drilling has the potential to outline approximately 100,000 tonnes of contained copper by mid CY 2012 with a target of 150,00 to 200,000 tonnes of contained copper by late CY 2012 (excluding Green Dragon).
Examination of the majority of the drilling at Thaduna indicates that almost all the drill holes have failed to intersect this deeper footwall lode which leaves plenty of room for the discovery of additional mineralisation at the prospect.
Proactive Investors have therefore upgraded the price target to 80 cents with a 12 month target in excess of A$1.00. As flagged in our last report (Proactive Investors, Ventnor Resources, 29/8/11) Thaduna and Green Dragon are likely to surprise on the upside.
Broad Zones of Copper Mineralisation
The chalcopyrite was confirmed visually with the aid of a hand lens and copper mineralisation was confirmed with a hand held portable XRF (OTC:HPXRF). Analytical results will be required to determine final copper mineralisation grades and the extent of intersections.
In THRC054 included:
- Visible chalcopyrite from 136 metres downhole to 233 metres (EOH).
- Copper mineralisation from 91 metres to 233 metres.
In THRC058 included;
- Visible chalcopyrite from 135 metres to 144 metres downhole
- Visible chalcopyrite from 159 metres to 228 metres downhole (EOH)
- Copper mineralisation from 135 metres to 228 metres downhole (EOH).
In THRC059 included;
- Visible chalcopyrite from 189 metres to 233 metres downhole (EOH)
- Copper mineralisation from 134 metres to 233 metres downhole (EOH) (OTC:HPXRF)
As stated above, the significance of these results are that Thaduna now appears to have a significant primary source underlying a copper oxide cap.
There was a widely held belief that both Thaduna and Green Dragon had more limited potential <150,000 tonnes of contained copper) however this recent drilling has turned that theory on its head. Previous exploration had only been successful in intersecting relatively narrow primary bornite and chalcopyrite south of the Thaduna pit in the top 100m.
Previous drilling by Ventnor Resources indicated that mineralisation was confined to a 3-5 metre wide mineralised zones surrounded by a 10-15 metre lower grade envelope. It was previously believed that mineralisation terminated at this footwall contact, however this recent phase of drilling indicates that significant widths of mineralisation occur well beyond this footwall contact.
For example, HPXRF (hand held portable x-ray fluorescence device capable of delivering readings on certain elements to an accuracy of +/- 20%) readings on THRC054 indicates mineralisation extends for 142 metres to the EOH depth (233 metres).
Follow Up Drilling
A second multi-purpose drill rig (capable of diamond drilling) has been engaged which will result in two rigs drilling over December 2011/January 2012.
Furthermore the recent results would indicate that the discount we were applying due to the smaller potential of Thaduna/Green Dragon was probably not warranted based on recent results.
We derive a peer group average enterprise value per resource tonne contained copper of A$417/tonne (reflecting the recent softening of LME copper prices), with the higher grade deposits such as Sandfire Resources and Discovery Metals attracting a premium. Lower grad/larger tonnage deposits such as Intrepid Mines Tuju Bukit deposit (990Mt @ 0.40% Cu) have been discounted by the market.
On this basis, and upon initiation of a scoping study, applying our average EV metric of around $417, we derive an enterprise value of around A$42 million or around 80 cents per share representing an approximate premium to the current share price of 16%. Note: There may be some weakness in the short term as as the share price has risen significantly and volatility factor is high.
A larger tonnage containing +1% copper could however attract a higher valuation given the potential for a stand-alone operation if a JORC Reserve in the range of 150-200Kt was outlined.
Disclaimer / Disclosure
This report was produced by Proactive Investors Pty Ltd, which is a Corporate Authorised Representative of RM Capital Pty Ltd (AFSL 221938). Proactive Investors received a fee for the compilation and distribution of research reports. Proactive Investors has made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Proactive Investors does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities. The securities recommended by Proactive Investors carry no guarantee with respect to return of capital or the market value of those securities. There are general risks associated with any investment in securities. Investors should be aware that these risks might result in loss of income and capital invested. Neither Proactive Investors nor any of its associates guarantees the repayment of capital.
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