St George Mining Slays Mt Alexander
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St George Mining (ASX: SGQ, Share Price: $0.175, Market Cap: $34m) has captured the market’s attention over the past few weeks with the commencement of diamond drilling to test high-grade massive nickel-copper sulphide mineralisation at its Mt Alexander project in Western Australia. XRF analysis has revealed outstanding nickel grades of 6.7% - 10.9% and copper values from 1.24% - 5.85%.
The company has this week announced that high-grade massive nickel-copper sulphide mineralisation has been intersected at its Mt Alexander project and although assay results have not yet been received, XRF analysis has returned high-grade nickel and copper results from shallow depths.
St George Mining’s share price has surged since the beginning of April as market interest has built around the company’s diamond drilling program at Mt Alexander, aimed at testing two EM conductors at its Cathedrals prospect. The company has confirmed that initial results have identified high-grade, near-surface nickel-copper mineralization, with outstanding XRF results of up to 11% nickel and 15% copper from the first two drill-holes. Drill intercepts like these are rare and whilst caution should be exercised until actual assay results are received, I’m prepared to take the punt now and add the stock to our Portfolio.
Mt Alexander is located 120km south-southwest of the Agnew-Wiluna belt, which hosts numerous world class nickel deposits. The Cathedrals nickel-copper discovery and the Stricklands prospect are held within a joint venture with Western Areas (ASX: WSA) (25%) and St George (75%). St George is the Manager of the project, with Western Areas retaining a 25% non-contributing interest until there is a decision to mine.
Three diamond holes have so far been drilled to test two EM conductors at the Cathedrals prospect in the current drill program – and encouragingly both conductors have been confirmed as nickel-copper sulphide mineralisation.
Drill holes MAD15 and MAD16 were completed to a down-hole depth of 100 metres and 120 metres respectively, with nickel-copper sulphide mineralisation intersected exactly as predicted in both holes by the modelled EM conductors. Hole MAD14 didn’t return any conductive material, but will be tested further.
Although assay results are still awaited and therefore caution should be exercised, initial XRF readings are enormously encouraging. The nickel values of the massive sulphide range from 6.7% to 10.9%, with an average of 8.9% - whilst copper values in the massive sulphide range from 1.24% to 5.85%, with an average of 3.2%. These represent outstanding initial values in anybody’s language.
What’s also significant from my perspective is the relative shallowness of the nickel-copper sulphides, with hole MAD15 intersecting approximately 9 metres of sulphide mineralisation at a depth between 22.4 metres and 31.34 metres, whilst hole MAD16 intersected approximately 9.5 metres of sulphide mineralisation at a depth between 51.7 metres and 61.25 metres. Based on the intersection angle of the drilling and interpreted EM plates, down-hole widths are interpreted as being close to approximate true widths.
The combination of the shallow depth and robust grades of the nickel and copper mineralisation is rarely seen in other komatiite-hosted nickel sulphide deposits in Western Australia and is likely to be highly favourable for the overall economics of the project.
From a broader perspective, the results from these first holes have also provided additional confidence that the remaining EM conductors too have excellent potential to host nickel-copper sulphide mineralisation. Together with the three EM conductors successfully drilled by BHP Billiton during 2008, the Cathedrals prospect has in fact an extraordinary success rate of testing EM conductors.
The fertile ultramafic that hosts the Cathedrals and Stricklands EM conductors is defined by strong magnetic anomalies within the Cathedrals Shear Zone, which is currently interpreted to extend over a strike length of 1.5km. The addition of the Investigators area has the potential to extend this prospective mineralised trend over more than 2.5km.
Investigators is located in the western section of the Cathedrals Shear Zone and directly along strike from the Stricklands prospect and the Cathedrals discovery. This area is unexplored, with no prior EM coverage or drill-testing. The MLEM survey has been very successful to date with three strong EM anomalies identified that are interpreted as bedrock conductors and could represent massive sulphides.
Drilling is currently underway at MAD17, which will test an EM conductor modelled at a down-hole depth of 167 metres. Once MAD17 is completed, the drill rig will mobilise to the Stricklands prospect to test the modelled EM conductors – which will be the first ever drilling completed at this particular target.
We are acquiring St George Mining and introducing it to our Portfolio.
The results from Mt Alexander are as good as could be expected at this initial early stage and although St George Mining has enjoyed a significant surge in price following the release of the latest results, the company’s market value is still relatively modest at around $30 million. We won’t be able to have full confidence until assay results are released, however what is encouraging is both the seemingly robust nickel-copper grades encountered, as well as the very shallow depth to mineralization. When you combine the two you have the basis for potentially lucrative project economics. Well-respected Perth mining identity, Terry Streeter, also recently acquired a major stake in the company.
After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.
Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.