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Ventnor Resources: Drilling Continues At Thaduna, Increased Share Price Target

Ventnor Resources (ASX:VRX) was listed on ASX in March 2011 with a focus on copper at Thaduna/Green Dragon (Copper), nickel at Warrawanda and Nickel Hills (Pilbara, Western Australia) and base metals and gold in the Georgina Basin (Mount Isa region, Queensland). Figure 1 sets out the Company's tenement portfolio.

Since listing, the Company has enjoyed remarkable success with its first two phases of drilling at the flagship Green Dragon/Thaduna Projects which comprise four Prospecting Licenses covering around 604Ha and two Exploration License covering 17 blocks. Proactive Investors considers a maiden JORC resource in the range of 200K tonnes of contained copper is likely by mid CY 2012.

The abandoned 700 metre long, 80 metre wide Thaduna Copper Mine (Figure 1, 2) is situated approximately 40 kilometres east of Sandfire Resources' (ASX: SFR) DeGrussa Project (14.6 Mt @ 4.6% Cu, 1.6 g/t Au) and is accessed from the Great Northern Highway by a dirt road for approximately 35 kilometres, and then by tracks for another 12 kilometres.

Three phases of RC and diamond drilling at the Thaduna and Green Dragon (situated approximately 40 kilometres east of Sandfire Resources Ltd (ASX: SFR) DeGrussa deposit 14.6Mt @ 4.6% Cu, 1.6g/t Au for 1.1Mt Cu Equiv) have been successful in outlining potentially economic, open pittable copper mineralisation at two prospects.

Thaduna Green Dragon

Initial RC drilling in early 2011 indicated that the Thaduna and Green Dragon Projects were likely to comprise high-grade (+3% Copper) supergene enriched shoots within the oxide zone to a vertical depth in the order of 80-100 metres.

In late CY 2011, however RC drilling at Thaduna outlined broad intersections of chalcopyrite mineralisation in three holes including THRC054 which intersected 142 metres @ 0.41% copper and terminated in visible chalcopyrite mineralisation. This broad, lower grade envelope contained a number of higher grade intersections including 19 metres @ 1.57% from 183 metres downhole. Similarly THRC 114 returned 62 metres @ 2.19% copper from 125 metres downhole.

THRC058 and THRC059 also terminated at 228 metres and 233 metres respectively (limit of rig capability) with visible chalcopyrite at the end of hole and follow up drilling is currently underway.

Preliminary metallurgical testwork indicates that the majority of sulphide mineralisation is associated with coarse grained chalcopyrite which is likely to be amenable to coarse grinding and a simple flotation circuit.

Proactive Investors initial projection of a JORC compliant Resource is now likely to be pushed back to 1Q 2013 on the back of results from the phase 1 to 3 drilling programs.

At Thaduna our current interpretation based on published assays, plans and cross sections is for a mineralised body within the top 200 metres, approximately 50 metres in width and striking for around 600 metres with an SG of approximately 2.7 giving a tonnage range in the order of 15.0Mt @ around 1% for 150,000 tonnes of contained copper. Green Dragon is projected to come in at around 50K tonnes of copper at a grade of approximately 3%.

Our JORC resource projections at Thaduna and Green Dragon have been upgraded from 50,000 tonnes (Proactive Investors, Ventnor Resources, 8 August 2011) to 100,000 - 150,000 tonnes (Proactive Investors, Ventnor Resources, 18 November 2011) to 200,000 tonnes of contained copper and on the back of four phases of RC and diamond drilling.

From now until late April 2012, the Company is drilling a further 7,000 metres which will include approximately 4,500 metres of RC and 2,500 of Diamond drilling (more specifically diamond drilling to extend existing RC drill holes) at Thaduna. This will include four 300 metre deep holes at Thaduna. A total of 1,000 metres of RC will be undertaken at Green Dragon.

Proactive Investors have therefore upgraded our 12 month price target from A$0.80 to A$1.00.


Exceptional Targets: Three phases of RC/Diamond drilling at Thaduna and Green Dragon have confirmed their potential to host high-grade potentially economic copper mineralisation that may be suitable for either toll treat (to DeGrussa) or a stand-alone operation. Proactive Investors believes a maiden JORC Resource in excess of 50Kt of contained copper at Green Dragon and 300Kt of contained copper at Thaduna is likely mid CY 2012.

Known Geology: Success phases of RC drilling and diamond drilling has increased the understanding of geological and structural controls and Thaduna and Green Dragon.

Undervalued: We have a twelve month price range of A$1.00 based on our current JORC Inferred and Indicated resource target of approximately 200,000 tonnes of contained copper and comparable copper explorers/developers valuation of A$438/tonne of JORC resources.

Drilling Imminent: Ventnor Resources is gearing up for a fourth phase of infill and follow up RC and diamond drilling that is likely to provide valuable information on shoot geometry in addition to metallurgical and geotechnical data that will assist with mining and processing evaluation. A preliminary environmental impact assessment (PEIA) has been completed and water studies are also likely to commence as a precursor to a Scoping Study.

Why Doolgunna-Goodin Dome Region? The 2009 discovery of DeGrussa which now stands at 14.6Mt @ 4.6% copper and 1.6 g/t gold for approximately 800,000 tonnes of Copper (equiv) provides investors with around A$6.70 Billion reasons to look for more! Enough said!

Directors & Management: The Company is well placed to gain maximum leverage from this exciting discovery. Managing Director Bruce Maluish has 30 years mining and mineral exploration experience. David Reid has also been appointed Exploration Manager and brings 25 years experience in base metals including a stint at the Dikilushi Mine in the DRC.

Historical Exploration and Mining

Thaduna produced 30,290 tonnes @ 8.7% Cu and has stockpiles of 48,400 tonnes @ 2.7% Cu and tailings of 20,500 tonnes @ 2.5% Cu. The nearby Green Dragon (Figure 1, 4) project was operated as a satellite deposit at the same time as Thaduna. In addition, the Ricci Lee copper mine, 3km south-southwest of the Thaduna Mine, was worked from 1942 to 1970 for a production of 2,912 tonnes of ore and concentrates containing 287 tonnes of copper. The Rooney Mine, 5 kilometres north-northwest of Thaduna, produced a small tonnage of cupreous ore, approximately 110 tonnes @ 7.7% Cu from small underground workings and a 3-m-deep pit.

Open cut mining and limited underground mining took place from 1955 to 1971.

Reconnaissance exploration during the 1970's was successful in outlining three copper-anomalous close to the two mines. Successive phases of Diamond drilling in the mid 1960's and in the late 1980's/early 1990's were intersected relatively narrow copper mineralisation beneath the Thaduna and Green Dragon open pit including a best intercept of 9 metres downhole @ 5.22% Cu.

Limited metallurgical testwork on the waste and tailings dumps in 1993 showed relatively poor flotation tests but encouraging heap leach results with more than 80% of the Cu recoverable over a 70-100 day leach cycle.

Geology and Mineralisation

Mineralisation at Thaduna/Green Dragon comprises high-grade, shear hosted shoots and lower-grade disseminated mineralisation over 140 metres wide in places. Mineralisation is hosted within a package of silts/shales and greywacke which broadly contain primary chalcopyrite as blebs, clast fill and vein fracture fill. Higher grade mineralisation is associated with black shales surrounded by lower grade sediments.

Strong alteration zones of chlorite (after hematite) introduced by hydrothermal fluids envelope the mineralisation. The mineralisation is totally oxidised to a depth of around 50 metres. Secondary copper minerals include chrysocolla, malachite, azurite and cuprite with a supergene zone to 90 metres vertical depth containing chalcocite and lesser covellite. Chalcopyrite and bornite are the dominant copper bearing minerals in the primary zone (Figure 7). Supergene mineralisation is found to a vertical depth of 53 metres.

Structural Controls

The controlling structures (Figure 4, 8) appear to be two graphitic shears trending 90° and 60° which are mineralised with cuprite-chalcocite-malachite at their intersection and form a 50 metre long shoot striking broadly east-west. Two other sub-parallel shoots returned elevated copper from drilling with widths ranging from 0.5-5.2 metres.

Recent Exploration

Previous drilling in early CY 2011 by Ventnor Resources indicated that mineralisation at both Thaduna and Green Dragon 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 recent phases of drilling over late CY 2011 indicated that significant widths of mineralisation occur well beyond this footwall contact. For example, THRC054 returned 142 metres downhole @ 0.41% copper from 90.0 metres. This included several higher grade zones including 19.0 metres @ 1.57% copper from 183 metres downhole (Table 1).

The Company was aiming to complete a JORC resource at both Thaduna and Green Dragon in October 2011 however the intersection of these broad zones of mineralisation as detailed in ASX releases on 18 November and 6 December 2011 (Proactive Investors, Ventnor Resources, and 18 November 2011) saw an extended RC program eventuate.

Thaduna Project

2011-2012 Exploration Program
Over 2011-2012, the Company has completed 127 holes (15,888 metres) over three drill campaigns. Drilling during the Phase 3 program concentrated north of the Thaduna pit where the targets are shallower and were better suited for the smaller RC rig. In late CY 2011, two NQ2 diamond tails on THRC054 and THRC057 at Thaduna were completed. Figures 9-13 represent cross sections published over 2011-2012 however we anticipate the inclusion of recent drill data (in particular THRC054 which intersected 142 metres @ 0.4% copper) will reveal large zones of lower grade mineralisation interspersed with higher-grade copper mineralisation such as 37 metres @ 2.61% copper from 11 metres downhole (THRC 113) and 62 metres @ 2.19% copper from 125 metres downhole (THRC 114) (Ventnor Resources, ASX Announcement, 24th January 2012). High-grade primary mineralisation remains open down dip.


Preliminary mineralogical investigations (from THRC 058) at ALS Ammtec reveal that the majority of copper is associated pure coarse grained chalcopyrite, i.e. 98.4%, with minor bornite and covellite. While only limited sampling has been undertaken, the style of mineralisation is likely to support a relatively coarse grind of around 100µm and a high copper flotation concentrate grade from a relatively simple copper flotation circuit

As stated above and in our last report (Proactive Investors, Ventnor Resources, 18 November 2011), the significance of these results is 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 the last (phase 3) program has continued to confirm the presence of multiple higher-grade lodes within a broader lower grade envelope with primary mineralisation remaining open at depth.

Proposed Drilling

From now until late April 2012, the Company is drilling a further 7,000 metres which will include approximately 4,500 metres of RC and 2,500 of Diamond drilling (more specifically diamond drilling to extend existing RC drill holes) at Thaduna. This will include four 300 metre deep holes at Thaduna.

Green Dragon Project

The 330 metre long, 70 metre wide Green Dragon Prospect is located just 5 kilometres north of Thaduna

Three phases of drilling (Figure 11, Figures 12-14, Table 2) comprising 76 holes for 10,481 metres have to date tested a strike length of approximately 500 metres and a depth of 200 metres at the Green Dragon Project.

The phase 3 drilling (134 RC holes for metres) at Green Dragon continued to return encouraging intersections as set out below (also refer Table 2) including;

- GDRC39 with 10 metres @ 6.82% Cu from 34 metres, including 6 metres @ 10.96% Cu from 37 metres downhole;
- GDRC187 metres @ 4.43% Cu from 75 metres (GDRC18), including 5 metres @ 6.07% Cu from 80 metres downhole;
- GDRC with 19 metres @ 3.33% Cu from 63 metres including 12 metres @ 5.07% Cu from 64 metres downhole;

Proactive Investors is anticipating a maiden resource in the order of 2.50 million tonnes @ >3% Cu for approximately 50Kt of contained copper. Drilling over the last 12 months has consistently intersected high-grade copper mineralisation (2-12% Cu-Table 2, Figure 15-17) with infill drilling demonstrating generally good continuity between sections.

A fourth phase of twelve RC holes (approximately 1,300 metres) will test mineralisation to the north, additional near surface mineralisation and for a possible second shoot that is interpreted to splay from the main lode.

Two diamond holes (approximately 340 metres) will generate metallurgical and geotechnical data and provide further important structural information on shoot geometry.

Mineralisation remains open down plunge and we believe there is potential for a mineable resource underground however the immediate potential is clearly an open pit to a depth of 150-200 metres at a strip ratio between 10:1 and 12:1. A total of 1,000 metres of RC will be undertaken at Green Dragon between now and late April 2012.


Proactive Investors has upgraded the resource target (Thaduna and Green Dragon) to a minimum of 200,000 tonnes of contained copper from our last report (Proactive Investors, Ventnor Resources, 18/11/11).

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 (Table 3) enterprise value per resource tonne of contained copper of A$438/tonne, 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 (1,700Mt @ 0.41% Cu) have been discounted by the market.

Peer Analysis

On this basis, and upon initiation of a scoping study, applying our average EV metric of around $438, we derive an enterprise value of around A$87 million or around A$1.00 per share representing an approximate premium to the current share price of 52% by the end of CY 2012. Given the deposit remains open at depth and along strike, we believe the maiden JORC resource may surprise on the upside.

Peer Analysis 2

- Follow-up drilling may not demonstrate sufficient continuity down-dip, up-dip and along strike to allow the calculation of a JORC Inferred Resource. Complex shoot geometry may require additional drilling and add to the discovery costs of copper resources.
- The relatively small tenement holdings may cap the resource upside of Thaduna and Green Dragon with upside more limited to down plunge extensions which may require higher stripping ratios (and therefore higher mining costs) or more capital intensive underground mining methods.
- The Company is primarily exposed to copper (and to a lesser extent at this stage, nickel) which has weakened from highs of just over US$10,000/tonne in February 2011, however copper has inched higher to US$8,500 on the back of improving economic conditions.
- Further declines in equity markets may continue to put pressure on junior resource companies as investors switch out of "risk" into perceived safe haven investments such as cash, gold and counter cyclical equities. Our medium term view is that the risk premium has been eroded for many junior resource companies and we see near term upside.
- A strengthening Australian dollar (as funds flow back into riskier currencies) may make the price of copper in local (Australian) currency terms less attractive. This could have negative influences on Australian copper miners however it is more relevant to producing companies.

The last two phases of RC and diamond drilling have continued to re-affirm the view of Proactive Investors that the intersection of multiple shoots of both secondary (supergene enriched) and primary sulphide mineralisation at Thaduna is likely to increase our maiden JORC resource projection from our initial 50-100K tonnes (August 2011) to approximately 150,000 tonnes.

Green Dragon is likely to remain a higher-grade (3% Copper) supergene enriched copper orebody with a target in the range of 50,000 tonnes of contained copper. Along with Sipa Resources (ASX: SRI), and Sandfire Resources (ASX: SFR) Proactive Investors anticipates continuing investor appetite in this new copper province.

Our 12 month share price target is A$1.00 based on an Enterprise Value/Tonne of contained copper of around A$438/tonne. We anticipate that the news flow may slow over the coming months as detailed diamond drilling will take place in order to resolve what may be complex shoot geometry. In our view, a resource approaching this size with favourable metallurgical characteristics has a good chance of justifying a stand-alone operation and we expect Scoping/Pre-Feasibility studies to follow suit.

Disclaimer / Disclosure
This report was produced by Proactive Investors Pty Ltd 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.

WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor's objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

DISCLOSURE: Proactive Investors and/or its directors, associates, employees or representatives may not effect a transaction upon its or their own account in the investments referred to in this report or any related investment until the expiry of 24 hours after the report has been published. Additionally, Proactive Investors may have, within the previous twelve months, provided advice or financial services to the companies mentioned in this report. As at the date of this report, the directors, associates, employees, representatives or Authorised Representatives of Proactive Investors and RM Capital may hold shares in Ventnor Resources Limited.