PROSPECT RIDGE PROJECT
Exploration Licence EL5/2016 covering the Arthur River and Lyons River magnesite deposits (“Project”) in north-west Tasmania was granted in September 2016. Geoscience Australia’s website notes that the Arthur-Lyons River area now covered by EL5/2016 contains the third largest inventory of magnesite Economic Demonstrated Resources (EDR) in Australia (refer www.ga.gov.au).
Magnesite is the primary source of magnesia (MgO), which is mainly used in agriculture, mineral processing, paper manufacture and refractory industries. Magnesia is also used to produce magnesium (Mg), a light metal widely used in the aerospace, automotive and electronics industries. Both magnesite and magesium are included on the EU’s latest list of 20 critical materials.
A 2012 resource estimate completed by Beacon Hill Resources Plc estimated Inferred Resources of 25Mt @ 42.4% MgO* (40% cut-off) for the souther part of the Arthur River deposit only. No resources were estimated for the Lyons River deposit.
Jindalee holdes a 100% beneficial interest in the Project, with the consultant who introduced the Project to Jindalee retaining a 1% gross royalty.
EL5/2016 is centred approximately 55km SW of Burnie, Tasmania (refer Figure 1). Magnesite was first discovered in the area in 1925 with exploration in the 40 years from 1970 to 2010 undertaken by companies including Mineral Holdings Australia, CRAE (now Rio Tinto), TasMag and Crest Magnesium significantly advancing the Project to the point where, in September 1999, Crest Magnesium rejected an offer from Xstrata (now Glencore) to purchase the Project for $105M in cash and royalties.
African coal miner Beacon Hill Resources Plc (AIM: BHR, ASX: BHU) (“Beacon Hill”) purchased the leases covering the Arthur River and Lyons River deposits in September 2009 and in the period to 2014 completed extensive pre-development activities at the Arthur River deposit including drilling, hydrological studies, environmental and Aboriginal Heritage studies, metallurgical testwork and resource estimates.
However, the slump in coal prices, which began in 2011, impacted on Beacon Hill’s African coal operations and the company was unable to service its high level of debt. In January 2015 Beacon Hill was placed into administration and the leases covering the Arthur River and Lyons River deposits lapsed.
The most recent resource estimates for the Arthur River deposit are contained in Beacon Hill’s ASX announcement dated 2 May 2012 and summarised in Table 1. These resources were reported in accordance with the JORC Code 2004. Jindalee understands that there has been no drilling at Arthur River since 2 May 2012 and there has been no material change to this information since that date.
Table 1: ARTHUR RIVER DEPOSIT RESOURCES (INFERRED)*
Resources estimated by Derwent Geoscience Pty Ltd.
*The Mineral Resource estimates were originally compiled and announced by Beacon Hill Resources Plc (AIM:BHR, ASX:BHU) and last reported in their ASX announcement dated 2 May 2012, utilising parameters from the 2004 JORC Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Jindalee believes that this information has not materially changed since it was last reported. However, it is important to note that:
- the estimates are historical estimates and are not reported in accordance with the JORC Code 2012
- a competent person has not done sufficient work to classify the historical estimates as mineral resources or ore reserves in accordance with the JORC Code 2012; and
- it is uncertain that following evaluation and/or further exploration work that the historical estimates will be able to be reported as mineral resources or ore reserves in accordance with the JORC Code 2012.
EL5/2016 covers 14km of prospective stratigraphy which includes the Arthur River and Lyons River deposits (refer Figure 1). Most recent work has focussed on the southern part of the Arthur River deposit and Jindalee considers there is very good potential to increase the resource base at Prospect Ridge by drilling the extensions of this deposit. There is also excellent potential to establish JORC compliant resources at Lyons River where historical drilling by CRAE (a subsidiary of Rio Tinto) in the early 1980’s returned wide, high-grade intercepts, including 200m @ 43.0% MgO from DDLR1, and 180m @ 42.0% MgO from DDLR2 (source: MRT website www.mrt.tas.gov.au).
Jindalee has commenced accessing and compiling the extensive database for the Project and has commissioned a geological consultant to determine if the current resources can be updated to a JORC 2012 compliant resource estimate. Jindalee has also engaged an expert with extensive experience in magnesite processing to review historic metallurgical testwork and recommend further work to progress the Project.