Monday 23
rdMarch, 2020
Portfolio Stock Developments
Chalice Gold Mines - (ASX: CHN, Share Price: $0.38, Market Cap: $104m, coverage initiated @ $0.16 in
March 2019 – current gain of 138%)
Key Catalyst
First drill-hole at Julimar Project in WA intersects outstanding intercept comprising 19m @ 2.59% nickel, 1.04% copper, 8.37g/t palladium and 1.11g/t platinum from 48m in fresh rock.
We initiated coverage of CHN during March 2019 due to CHN’s involvement in the burgeoning Victorian gold exploration scene. CHN’s primary focus is Victoria through its 100%-owned Pyramid Hill Gold Project, which encompasses a 5,190 sq km district-scale land holding within the highly prospective (and reinvigorated) Bendigo gold district of Victoria. This is a region that has produced more than 60M oz of high-grade gold, yet has seen minimal exploration under shallow cover. CHN has been actively exploring the project since early 2018 and has outlined several large-scale targets through shallow reconnaissance drilling to date. Significantly too, CHN has not raised any capital since 2011 due to its commercially-driven exploration business model that has generated net proceeds of >$100 million to date from asset sales,
Latest Activity
Julimar Project Update
CHN surged in Monday’s trade from a previous close of $0.16 last Friday to a close today of $0.38 – a whopping 138% one-day advance.
The explanation for the market interest revolves around today’s announcement of the discovery of significant high-grade nickel-copper-PGE sulphide mineralisation at the company’s 100%-owned Julimar Nickel-Copper-PGE Project, located just 70km northeast of Perth.
Julimar is one of CHN’s generative exploration opportunities that is being progressed alongside ongoing drilling programs at its Pyramid Hill Gold Project in Victoria.
The results from Julimar are particularly significant because they involve the first-ever drilling undertaken at the project, with parallels to the discovery of the Nova nickel deposit by Sirius Resources in WA’s Fraser Range region.
Results Overview
CHN is in the midst of a maiden 4-hole RC drilling program at Julimar to test several high-conductance MLEM targets that were identified during Q4 2019 and appear to be associated with the margins of a discrete ‘lens-shaped’ magnetic anomaly.
Excitement has been generated by the first completed RC drill-hole, JRC001, which was drilled to a depth of 150m to provide both baseline geology for this poorly-exposed intrusive complex and a platform for down-hole EM surveying at Conductor ‘E’, located along the southwest margin of the magnetic anomaly. JRC001 has returned a significant intersection comprising 19m @ 2.59% Ni, 1.04% Cu, 8.37g/t Pd and 1.11g/t Pt (down-hole width) from 48m (cobalt and other PGE assays are currently pending). Significantly, the massive sulphide zone coincides with the interpreted position of Conductor ‘E’, indicating that MLEM has been successful and highly effective at targeting shallow sulphides.
The intercept includes a massive sulphide zone of 13m @ 3.15% Ni, 1.19% Cu, 8.85g/t Pd and 1.09g/t Pt from 48m, along with a matrix/stringer sulphide zone of 6m @ 1.39% Ni, 0.72% Cu, 7.33 g/t Pd and 1.16g/t Pt from 61m.
At this early stage, the true width of the mineralised intervals are not known, however MLEM Conductor ‘E’ is modelled as a steep westerly-dipping plate, indicating an interpreted near-true width intersection. The MLEM plate has an estimated strike length of ~140m. However, due to the strength of the conductor that masks any response at depth, it has not been possible to model the true depth extent. Therefore, the conductor is considered poorly constrained and the zone is open in all directions.
Figure 1: Julimar Cross Section 6,512,320mN Technical Significance
The initial result is enormously encouraging, particularly as it involves the very first drill-hole into the Julimar project, generating outstanding grades of nickel, copper and PGM from a shallow depth of just 48m. Even at this very early stage of exploration, the discovery of a shallow high-grade massive sulphide zone within a large layered ultramafic-mafic intrusion is very exciting, as it draws potential parallels with other large-scale nickel-copper-PGE sulphide discoveries worldwide.
Parallels can be drawn with the Nova discovery by Sirius Resources in the Fraser Range region of WA during 2012. In that instance, the early drill-holes delivered intercepts of between 15m and 51m, grading between at 2.8% and 4.6% nickel (plus copper in comparable ratios to the Julimar intercept). A key differential however is the high levels of platinum group metals at Julimar, which would provide an enormous boost if and when a resource is calculated/estimated. Given the recent all-time high palladium price of more than US$2,800/oz, the result is especially significant.
Next Steps
The second drill hole - JRC002 – is located ~900m north-east of JRC001 and is currently being drilled to test MLEM Conductor ‘A’, located along the northeast margin of the magnetic anomaly. Conductor ‘A’ is modelled as a 680m x 135m plate, located at a depth of 214m with a conductance of ~5,300 Siemens. JRC002 as of 22 March was at a down-hole depth of 184m, intersecting a sequence of intrusive mafic to ultramafic rock-types. The target MLEM plate is modelled at ~40m below the current hole depth.
Figure 2: Julimar Project RC drilling, EM targets and soil geochemistry over regional magnetics.
The current program of four RC drill holes will be completed over the coming weeks and further drilling is currently being planned. Down-hole EM will also commence shortly in order to better define the
conductors with the aim to provide step-out drill targets as drilling continues.
Refinement of MLEM modelling is currently underway based on logged geology, and will be updated with down-hole EM as received. Selective samples will be submitted for petrographic analysis to better
characterise the host geology and sulphide mineralogy.
In light of results from JRC001, CHN has applied for +2,300 sq km of new exploration licences in the region to expand its strategic footprint in a potential new nickel-copper-PGE province. Targets are also being evaluated on its Barrabarra Nickel Project, located ~250km north of Julimar, which also hosts an interpreted intrusion complex in a similar geological setting, near the western margin of the Yilgarn craton.
Project Overview
CHN’s 100%-owned Julimar Nickel-Copper-PGE Project was staked during early 2018 and is located ~70km northeast of Perth on private land and State Forest. The project was staked as part of CHN’s search for high-potential nickel sulphide exploration opportunities.
CHN interpreted the possible presence of a mafic-ultramafic layered intrusive complex at Julimar based on high resolution regional magnetics. The large complex is interpreted to be ~26km long and ~7km wide and is considered highly prospective for nickel, copper and platinum group elements - however, it has never been explored for these metals.
CHN is targeting high-grade nickel-copper-PGE discoveries and accordingly undertook a systematic, regional-scale greenfield exploration program during mid-2019, initially in the southern portion of the project on private land. This included 200m-spaced Moving Loop Electromagnetic (MLEM) with selective 100m infill lines, targeted soil geochemistry over high-priority MLEM conductors, and geological mapping which failed to identify any bedrock exposures over the area of interest.
Two MLEM conductors were shown to be associated with anomalous nickel-in-soils and preferentially located along the margins of a ~2km x 0.5km discrete magnetic anomaly interpreted as a potential feeder zone located near the southern extent of the intrusive complex. An initial RC drill program has
commenced during Q1 2020.
Summary
Julimar is one of CHN’s generative exploration opportunities that is being progressed alongside ongoing drilling programs at its Pyramid Hill Gold Project in Victoria. The results from Julimar are particularly significant because they involve the first-ever drilling undertaken at the project. Even at this very early stage of exploration, the discovery of a shallow high-grade massive sulphide zone within a large layered ultramafic-mafic intrusion is very exciting, as it draws potential
parallels with other large-scale nickel-copper-PGE sulphide discoveries worldwide. There are also parallels with the discovery of the Nova nickel deposit by Sirius Resources in WA’s Fraser Range region.
CHN has three more high-priority geophysical targets within the intrusion to test in the current program, with down-hole EM surveying to commence in the coming days to define step-out targets. Just as importantly, CHN is cashed-up with around $23m in working capital and
investments, so unlike the majority of its exploration peers it doesn’t have to concern itself with trying to raise exploration funds in a dire market.
We await further results with great interest – both in WA and Victoria – with the stock already generating a gain of 138% since our coverage initiation 12 months ago.
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. I wrote this article myself, it expresses my own opinions and I am not receiving compensation for it. In preparing this article, no account was taken of the investment objectives, financial situation and particular needs of any particular person. 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. 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. I have no positions in the stock mentioned and no plans to initiate any positions within the next 72 hours.
