Nexus Minerals Limited iis pleased to advise that it has entered into a Farm-in and Joint Venture Agreement (the Agreement) over the Pinnacles Gold Project (the Project) with Saracen Gold Mines Pty Ltd, a subsidiary of Saracen Mineral Holdings Limited (Saracen). This investment is consistent with the Company strategy of investing in advanced gold exploration assets.
The Agreement includes an Ore Sale and Purchase Agreement, whereby any future ore mined from the Project tenement will be purchased by Saracen for processing through its 2.4Mtpa CIL processing plant at Carosue Dam – 13km to the north of the project area. Under the Agreement, Nexus is the sole manager of the Pinnacles Gold Project and can earn up to 85% of the Project, by satisfying a series of staged farm-in milestones with specific exploration expenditure commitments required to increase its interest. Upon Nexus reaching 85% ownership, a contributing joint venture will be established, with each party contributing in proportion to its joint venture interest.
- Fig 1. Pinnacles JV Project location Fig 1. Pinnacles JV Project location
- Fig 2. Pinnacles JV Project Location Fig 2. Pinnacles JV Project Location
- Fig 3. Pinnacles JV Project Location Fig 3. Pinnacles JV Project Location
- Fig 4. Pinnacles JV& Current Nexus Pinnacles Project Fig 4. Pinnacles JV& Current Nexus Pinnacles Project
The Pinnacles Gold Project is located in the Eastern Goldfields of Western Australia, some 100km northeast of Kalgoorlie-Boulder. The project is located on a granted Mining Lease, M28/243 (expiry 2031), that covers an area of 4x2km and is currently held 100% by Saracen Gold Mines Pty Ltd, a subsidiary of Saracen. The tenement lies 13km to the south of Saracen’s Carosue Dam Mine facility. The tenement is surrounded on all sides by Nexus 94km2 tenement package (see ASX release 23/4/2015). Access into the project area is from the Carosue Dam Mine site via existing Saracen access roads and station tracks (Fig. 1 and Fig. 4). The tenement is immediately to the south of, and in conjunction with Nexus regional tenement package is contiguous with, Saracen’s Carosue Dam mining tenements, which includes the Whirling Dervish and Karari gold mines, currently in operation (Fig. 1 and Fig. 4). During 2014, the two mines produced 79,000 ounces of gold, and contain a current resource base of 1.4 million ounces.
The joint venture tenement exhibits historic gold mine workings and multiple parallel mineralised structures. Gold mineralisation occurs within a sub-vertical shear zone and is associated with quartz veining and sheared altered host rocks.
There are a number of small shafts that have been worked in the early 1900’s extracting gold bearing ferruginous quartz. There has been limited exploration undertaken on the tenements by a number of companies from the early 1980’s to present, but only in the search for shallow oxide gold potential.
- Fig 5. Pinnacles Long Section through Current Resource Fig 5. Pinnacles Long Section through Current Resource
- Fig 6. Pinnacles Cross Section Fig 6. Pinnacles Cross Section
- Fig 7. Pinnacles Geology with project location Fig 7. Pinnacles Geology with project location
The Project contains a JORC-2012 compliant resource, completed by Saracen, of 413,000t @ 2.1g/t Au for 28,000oz gold (see Saracen Mineral Holdings Limited’s ASX release 9 October 2014 ‘2014 Mineral Resources and Ore Reserves’ and ‘2014 Mineral Resource and Ore Reserve Statement Explanatory Notes and Table’). The Resource is defined to a depth of only 150m.
Some of the deepest RC drilling (~150m) has yielded significant high grade gold intersections (6m @ 12.3g/t Au). Mineralisation remains open at depth, and to the north and south along strike. Encouragingly, geological modelling of the deposit reveals a significant high grade “core” to the mineralised structure, with multiple repetitions of steeply dipping high grade ore shoots evident (Fig 5 and Fig 6).
Farm-In / Joint Venture Agreement with Saracen
The key terms of the Agreement are:
- Nexus is the sole manager of the Farm-in and Joint Venture (JV) from the commencement date.
- Year 1 - Nexus to spend $200,000 on the project to earn 25% interest (25%).
- Year 2 - Nexus to spend $200,000 on the project to earn a further 25% interest (50%).
- Year 3 - Nexus to spend $200,000 on the project to earn a further 12% interest (62%).
- Year 4 - Nexus to spend $200,000 on the project to earn a further 12% interest (74%).
- Year 5 - Nexus to spend $200,000 on the project to earn a further 11% interest (85%).
- Upon Nexus earning an interest of 85%, a contributing JV will be established with each party contributing to its JV interest – Nexus 85% / Saracen 15%.
- Nexus has the right to elect to exit the JV after a minimum spend of $200,000.
- Nexus shall have access to the Carosue Dam Mine facilities, infrastructure and mine village.
- An Ore Sale and Purchase Agreement (not toll treatment) whereby:
- Nexus agrees to sell and Saracen agrees to buy any future ore defined and mined within the tenement.
- The ore will be purchased by Saracen as delivered to the Carosue Dam plant ROM pad - post determination of recovery % / tonnes / grade, less a treatment charge.
- Payment for the ore will be based on delivery to the ROM pad of ore material (regardless of whether Saracen has treated the ore or not).
- Saracen are responsible for all treatment and royalty costs.
The Farm-in & Joint Venture not only allows for the opportunity to access a project with significant exploration drill results to date and high expectations for further exploration success, but also allows for access to the Carosue Dam Mine facilities, infrastructure and access roads. Upon establishment of any future mining operation on the tenement, the ability to access the Carosue Dam plant eliminates the requirement for any processing plant capital.
IMPORTANT NOTE: No Ore Reserves have currently been defined on the Pinnacles Gold Project. There has been insufficient exploration and technical studies to estimate an Ore Reserve and it is uncertain if further exploration and/or technical studies will result in the estimation of an Ore Reserve. The potential for the development of a mining operation and sale of ore from the Pinnacles Gold Project has yet to be established.
About the Pinnacles Gold Project
The Pinnacles Project area covers part of a highly deformed Archaean greenstone sequence of basalts, dolerites, and co-magmatic high-level intrusions. This mafic volcanic association is overlain by a series of medium to coarse grained volcaniclastic sandstones and subordinate felsic volcanic rocks. These greenstones have been intruded and disrupted by the forceful intrusion of a series of granitoid rocks (Fig. 7).
The tenement comprises predominantly underlying basalt, with felsic volcaniclastic sandstone and local conglomerate horizons. The sandstone is often ferruginized or laterized. The two main areas of workings (east and west zones) exhibit black slate within the basalt sequence. The outcrop in the area of these workings is either gossanous ironstone or laminated grey chert. A lateritic profile up to 10m thick is exposed on the northern part of the tenement, whilst to the south the laterite has been stripped exposing extensive alluvial flats.
The Pinnacles project lies in the eastern part of the Norseman-Wiluna greenstone belt, and is part of the Kurnalpi terrane subdivision of the Eastern Goldfields Superterrane. The project area covers a major regional shear zone that is part of the Keith-Kilkenny Lineament. This same structural setting hosts the Luvironza, Whirling-Dervish, Karari, Twin Peaks and Monty Dam deposits. The Whirling-Dervish and Karari deposits are currently being mined by Saracen Gold Mines.
The district scale structure also shows the dominant regional northwest structural orientation being re-oriented through north to north-northeast, in particular due to the regional scale granite doming events. The extensional event that is associated with the granite doming plays a major role in the creation of sites favourable for gold deposition. The distribution of gold mineralisation is structurally controlled, and the timing, style and reactivation of structures are major factors in determining the size of deposits.
The Pinnacles project gold mineralisation occurs within a sub-vertical shear zone hosted within volcaniclastic sandstones. It is associated with quartz within the sheared altered host rocks. There appears to be a sub-vertical and a sub-horizontal control on the mineralisation. Sub-vertical mineralisation reported to be associated with quartz-albite-pyrite alteration, while the flatter shallow dipping mineralisation shows a strong hematite-carbonate-pyrite alteration association.
Modern Exploration and Current Mineral Resource
Several companies have undertaken limited exploration in the Pinnacles region during the 1980’s to 2005. This work has included mapping, aerial photography, ground magnetics, rock chip sampling, channel sampling, petrographic analysis, RAB drilling and RC drilling.
Saracen purchased the tenement in 2006 and undertook 5,243m of RC drilling, in 42 drill holes during 2011 and 2012. Saracen produced a current JORC-2012 compliant resource of 413,000t @ 2.1g/t Au for 28,000oz gold (See Table 1). Saracen has prioritized other mining areas to focus its attention on, and as such the Pinnacles project became available for this Farm-in / JV agreement.
See Saracen Mineral Holdings Limited’s ASX release 9 October 2014 ‘2014 Mineral Resources and Ore Reserves’ and ‘2014 Mineral Resource and Ore Reserve Statement Explanatory Notes and Table’.
TABLE 1. Pinnacle Resource Estimate
The resource remains completely open along strike and at depth. Geological modeling of the deposit reveals a significant high grade “core” to the mineralised structure, with multiple repetitions of steeply dipping high grade ore shoots evident. The high grade component of the resource starts at approximately 50m below surface, with low grade mineralisation encountered in the shallower holes along the mineralised structure.
See Table 2 below for Pinnacles drill results.
Metallurgical test work of selected ore material carried out by Amtec (in 2000) has confirmed that the Pinnacles ore is suitable for treatment through the Carosue Dam plant with an average recovery of 96.3%.
Nexus Work Programs
In the first year, Nexus is planning to drill test the depth and continuity of the potential high grade mineralisation through a number of depth staged drill programs. Phase 1 will aim to target mineralisation from below the known resource (150m) at 250 - 350m vertical depth. Based on positive drill results from the Phase 1 program, subsequent programs will continue to test the depth extent, continuity and also the strike extent of the resource.
Table 2. Pinnacles Drill Results (+2g/tAu) (see Saracen ASX Quarterly Reports Dec 2011 – Dec 2012)