Aurium Resources (ASX: AGU) has completed the first hole of a maiden drilling program at the Mt Padbury Prospect within the Peak Hill Iron Project joint venture in the mid-west region of Western Australia, where geological mapping has identified iron ore targets with potentially significant hematite-goethite mineralisation.
An exploration target of 20-28 million tonnes at 55-60% iron has been defined for the Mt Padbury Prospect.
Managing director Terry Quinn said establishing a direct shipping ore (DSO) source is a key strategic focus for Mt Padbury as the joint venture progresses the Peak Hill Iron Project.
“DSO can offer the opportunity for early cashflow and would support the development of the company’s Telecom Hill magnetite resource,” he said.
Early last month Aurium received Government approvals required to expand DSO targeted exploration to the Mt Padbury Prospect, where 39 reverse circulation holes are planned.
Earthworks have also been completed for up to 35 locations to be tested in this drilling campaign.
The drilling program is scheduled to finish in late January, with results from test work on core samples expected in the first quarter of 2012.
Aurium has a 30% stake in Peak Hill, with Padbury Mining (ASX: PDY) holding 70%.
Mt Padbury subsurface testing
The Mt Padbury drilling is the follow up subsurface testing of potential hematite mineralisation identified in exploration mapping carried out earlier in 2011.
These operations will be integrated within the ongoing evaluation drilling of the magnetite and hematite potential nearby at Peak Hill's Telecom Hill prospect.
This combined program is the largest undertaken by Aurium and is part of a focused strategy to build the Peak Hill Iron Project base.
Peak Hill currently hosts an Inferred JORC Resource of 850 million tonnes at 27.3% iron, which was defined from less than a half of the 10 kilometre strike length – indicating a strong chance of a resource upgrade in the near future.
Aurium/Padbury Merger Discussions
Aurium and Padbury have entered into formal, good faith merger negotiations between the two companies.
An agreement has now been signed which sets out a 60-day exclusivity period and the necessary confidentiality obligations, and confirms that each party will undertake due diligence reviews of the other, plus discuss possible merger terms and structures.
Terms of any merger have not yet been agreed and will be discussed as part of the negotiations, which will be subject to shareholder approval.
Article originally published at: http://www.proactiveinvestors.com.au/companies/news/23092/aurium-resources-targets-early-cashflow-with-maiden-dso-iron-exploration-at-peak-hill-23092.html