Karora Resources (TSX:KRR) (formerly RNC Minerals (TSX:RNX)) has made tremendous progress as a company over the course of the last year, and with the one year anniversary of the purchasing of the Higginsville mill and land package just passing, we thought it would be a good time to do a report on the HGO acquisition and what it really meant to the company. The true value of this operation seems to get lost in translation and so the following report is aimed at helping people better understand the producing, past producing and prospective areas within the HGO l and tenements.
Over the last 100 years of mining in the Western Australian Gold Fields, incredible discoveries have been made! Some of the worlds largest nuggets have come from this area and the best may be yet to come. In the early days of mining, tools were limited, water was hard to come by and technology just wasn’t advanced enough to identify ore bodies below the surface. Therefore, artisanal mining operations chased high grade deposits that could be seen and followed with ease. Once the high grade visible gold veins stopped, men would simply pick up and move on to greener pastures.
With today’s technology and geological understanding, those past producing areas present new opportunities. Karora had the vision of turning Beta Hunt into a much larger mining operation, one that could produce hundreds of thousands of ounces per year for many years to come. Well, the acquisition of the HGO mill and land package has opened the door to being able to accomplish just that. There is an abundance of opportunities for Karora to not only capitalize on past producing mining operations but to also make new discoveries as most of the land package is still relatively unexplored.
On June 11th, 2019, Karora completed the acquisition of the Higginsville Gold Operation (HGO) which included a relatively new 1.4 mtpa (4,000 tpd) Carbon in Pulp (CIP) Mill along with 192 tenements covering an approximate 1,800 square kilometer land package. This package also came with a 1.2 million ounce measured and indicated gold resource and an additional 700,000 ounces inferred, 3 inactive but prospective underground mines and over 20 open pits yet to be put into production, in the heart of the Western Australia Gold Fields. Not only did this change the way Karora would operate, it also opened the doors to a world of opportunity in the form of open pit potential. This was a turning point for Karora and in my opinion, it was the difference in the company becoming a successful producer and maximizing the value of Beta Hunt.
The Higginsville Mill is around 75 kilometers South of Kambalda and situated between the gold mining camps of Norseman (6m oz) and St Ives (14m oz). To the east you will find the Zuleika Shear, which is home to several mining operations run by companies like Northern Star, Tribune Resources, Rand Mining and Evolution Mining. Historically these mines have combined production pushing well North of 10 million ounces and the HGO operation is literally in the heart of the Western Australian Goldfield which remains relatively under explored.
Prior to the acquisition of HGO, Karora Resources was subject to mill availability and tolling fees, which did not bode well considering the high royalties on the Beta Hunt Mine. This left little room for profits, unless of course they could hit pockets like the FDV consistently. However, due to the nature of the coarse gold being difficult to predict, Karora had no choice but to expand their operation in order to lower their costs and build on the amazing discovery of September 2018. While it was not ideal timing for the company, the transaction fit the bill for everything KRR needed to expand and refine their operation.
The Back Story
For some insight, Alacer gold first discovered the Trident deposit not long after they acquired the property in 2004 and immediately went to work building a mine. By 2007 the Higginsville mine was completed along with a paste fill plant, a camp capable of housing 300 workers and a 1 mtpa mill which was later modified by adding a Trio TC51 Quaternary crusher and associated circuit modifications made to augment the existing three-stage crushing circuit which was completed in 2010. The company then opted to buy the neighboring Chalice deposit from Chalice Gold Mines Ltd. and combined the two operations to form the beginning of the Higginsville Gold Operation. Several other land tenements were added to the HGO land package when Avoca merged with Alacer Gold and then the operation was acquired by Westgold Resources, who was a wholly owned subsidiary of Metals X at the time. In 2016 Westgold de-merged from Metals X and in 2018 acquired the polar bear land package from S2 Resources to complete the Higginsville Gold Operation. Not long after, in 2019 Westgold cut a deal with Karora Resources for the entire package which included the 1.3 mtpa mill.
Karora originally had a deal in place with WestGold Resources Limited (WGX) for the South Kalgoorlie Operation (SKO) in 2017, which ultimately didn’t work out, but during this process Mark Selby (CEO of RNC at the time) developed a relationship with Chairman of WGX, Peter Cook. So when the decision was made by WGX to sell HGO, naturally a phone call was made to Mark. A little known fact is that Peter worked at Beta Hunt years ago and was among the first miners to carry coarse gold out of the mine early in his career. Naturally this was a good fit for HGO as it gave them exposure to Beta Hunts success with 25 million in shares being part of the deal along with 25 million in cash. It’s taken some time for people to come around to the idea of diluting the stock and taking on debt to acquire the mill, but the benefits are becoming very apparent.
Mark wound up tabling the idea to the board and while he was met with resistance, Paul Huet (newly elected chairman at the time) saw the value in this asset and was in full support of the acquisition given his experience with centralized mills fed by several mining operations. Paul was very successful in developing a similar type of operation when he took Klondex from pennies to a $7.00 stock by following a similar model, so he was fully aware of the potential it offered the company beyond the handcuffed Beta Hunt Mining operation.
Inadvertently, When Karora acquired HGO they effectively took away other companies milling solutions. WGX often did 3rd party tolling for Mincor and other small companies in the area, but after Karora took it over; many were forced to put their mines on care and maintenance. Effectively, Karora now controls the immediate area and can use this to their advantage. So while the retail market was rather upset about it early on, it has proven to be a major turning point in the companies progression to becoming a mid tier producer. Yes I said mid tier and by the end of the article you will see why.
The Higginsville Mill Overview
The flow sheet of the mill is a conventional Carbon in pulp mill with quaternary crushing, ball milling and a gravity recovery circuit. This set up is very well suited for the needs of Karora’s Beta Hunt nuggetry gold. The gravity recoverable gold is treated separately from the rest and requires no additional steps before being melted down to produce dore bars. The rest of the material flows through a leach circuit, then into carbon adsorption tanks followed by an acid wash and elution. It then goes into an electro winning circuit which produces a calcine for smelting. The mill operates at a recovery rate of between 94-97%, which is pretty standard for these types of mills, but like anything, fine tuning improves efficiencies. Finally, there is also a smelter on site, so the company is able to pour their own dore bars making them a fully integrated mining operation.
Geological Features of the Higginsville Area
Without going into too much detail it would be wise to have an understanding of the geology so we can correlate how they line up with the prospective targets. While most of the gold in the district is considered to be narrow vein and mesothermal in nature, Western Australia has everything from placer gold to lode deposits, unlike anywhere else in the world. In Higginsville’s case there are a number of controlling faults, splays and palaeochannels which alter the conduits that fed the gold throughout the land package.
Higginsville is sitting on the lower portion of the Norseman-Wiluna Greenstone Belt of the Archaean Yilgarn Craton and I think it’s important to note that the stratigraphic sequence of the rock has been altered by several regional deformation events and shearing/ faulted contacts. This region is made up predominantly of younger (2.71 – 2.66 Ga) and minor older (2.73 Ga) greenstone successions and has been categorized into of six geological domains which we will give you a brief summary of below.
The Central Corridor (Formerly the Trident line of lode)– The majority of mineralization in this deposit is hosted within a thick Gabbro and high-MGO dyke complex known as the The Poseiden Gabbro. This structure is over 500m thick and 2.5 km long which has been broken into 5 distinct zones. Zone 3 is the most favorable for gold mineralization and it is believed that the fault and shear systems play a large role in the deposition of gold in this region forming the primary control for fluids (see figure 1).
Chalice – Is a located within a North South trending greenstone terrane which is between 2-3 kilometers wide. The mafic-ultramafic rocks of the greenstone terrane have been intruded by a complex network of multi-generational granite, pegmatite and porphyry bodies. Gold mineralization is observed to be hosted within a fine grained, weak to strongly foliated amphilbolite which is derived from basalt. It is also noted that the grades generally increase as you get closer to the source of the mineralization (see figure 2).
Lake Cowan – Is situated near the center of a regional anticline between Zuleika and the Lefroy faults, with complex intrusions of massive Preteozic Binneringie dykes. These dykes vary from hornblende dominated dolerite to feldspar dominated granodorite and are complexly interrelated to the mineralized structures of the Lake Cowan area. Unlike other local deposits which follow the East-Northeast/West-Southwest trending dyke system. The Lake Cowan binneringie dykes seem to follow a more North/South, deep seeded crustal weakness. This alteration seems to have come post mineralization as the majority of mineralization is hosted within Archean aged material surrounded by the Binneringie dyke (see figure 3.
Southern Palaeochannels – Throughout the HGO land package, several gold deposits are hosted by sediments within this Paleochannel network. Many of these channels host mineralization in the form of placer gold and chemically precipitated gold within the channel fill materials. The two main palaeochannels are the Mitchell and Challenge/Swordsman which get deeper towards the south as they once flowed into Lake Cowan (see figure 4).
Mount Henry – Is located 75 kilometers south of Higginsville and only 15 kilometers south of Norseman, in the Eastern Goldfields region of southern Western Australia. Situated within the Norseman Terrane, the area is predominantly mafic volcanic rocks with inter layered units of felsic volcaniclastic and sedimentary rocks, and is intruded by dolerite sills and dykes. The Mount Henry gold deposit is hosted within the Noganyer Formation which is made up of banded iron formations with minor meta-basalts and dolerite dyke formations. Early on it was believed that gold was associated with dyke formations but there is some doubt to the validity of this information (see figure 5).
Polar Bear Group – Polar Bear is dominated by complexly deformed Achaean greenstone assemblages of the Norseman‐Wiluna Greenstone Belt which have been metamorphosed to upper green schist facies. Interestingly, this area resembles that of the Zuleika shear, yet they are largely separated by a banded iron formation that is hosted within the Norseman Terrane. There are also comparisons to the Kalgoorlie-Kambalda region in the sense that they are bounded on all sides by major regional faults. The boulder Lefroy fault runs North South, approximately 10 kms to the North East to the polar bear region, while the Mission fault merges with the Black Knob fault which is believed to be the extension of the Zuleika Shear. This highly prospective area is not only host to several known gold deposits but also offers great potential for nickel, as it is believed to be the southern extension of the stratigraphy that hosts the Kambalda and Widgiemooltha nickel deposits (see figure 6).
Open Pit operations and opportunities
Since the acquisition of the HGO Project in June, 2019, Karora has completed 314 holes totaling 17,475m. Drilling has focused on short term mining opportunities to support the HGO mill feed over the next 2 years and those deposits targeted for drilling include Baloo, Mouse Hollow, Hidden Secret, Fairplay.
Paul Huet really set the table for success when he was able to re-negotiate the royalty agreement with Morgan Stanley that seen the royalties go from a 1.75% NSR and a 50% participation payment on the difference between realized gold price @1340 per ounce. The restructured royalty has an adjusted legacy royalty on the first 10,000 ounces sold per year comprised of a 1.75% NSR plus a reduced 27.5% participation payments on the difference realized gold price and 1,340 per ounce. This legacy rate will apply for 11 years or up to a total of 110,000. After the first 10,000 ounces a flat NSR of 2% but only effective after the first 37,500 ounces produced from the applicable land tenements.
Since that deal was made Paul went an extra step further and reached an agreement with Morgan Stanley to purchase the remaining royalty for a purchase price of $9 million in cash. Once completed, the transaction will eliminate all remaining NSR royalty obligations with the exception of the Western Australia state royalty of 2.5%. RNC will pay 30% immediately and the remaining balance will be settled within 30 months, to the tune of 1.26 million every 6 months.
Is an open pit target approximately 15 kilometers away from the Higginsville mill and was first identified in March 2014 when Sirius did a regional air core test program over a number of structural targets within the Northern portion of the Polar Bear project. A total of 84 holes spaced at 80m were completed on Lake Cowan near the Eundynie Peninsula and what was found, constituted a follow up program. Later that year, the company drilled 33 more holes over a 500m strike length that returned a high grade result of 33m @3.81 g/t Au. Additional infill drilling was completed in 2015 and the company moved forward with diamond drilling to test the deposit at depth. By the end of 2015 there had been 443 air core and 28 diamond drill holes drilled on the project.
Baloo falls within the Polar bear geological region. Mineralization is believed to be controlled by the Buldania Fault which strikes NNW dipping shallowly at around 30° to the East with mineralization plunging moderately to the SE. Also, this area is part of a palaeochannel system whereby deeper channels within Lake Lefroy contain thick sequences of transported clay’s with intercalated lignite beds from 1-20m thick. These sequences overlay the Norseman formation of probable Eocene age. Some of these channels are mineralized and have been historically mined as in the case of the Challenge-Swordsman palaeochannel on the Eundynie Peninsula.
In February 2017, an updated Mineral Resource estimate for Baloo was announced by S2R. The Mineral Resource estimate for the Baloo gold deposit comprises 4,220,000 tonnes grading 2.0 g/t gold for a contained 264,000 ounces of gold at a lower cutoff grade of 0.8 g/t gold. Of this, 1,160,000 tonnes (or 53%) containing 71,000 ounces of gold (or 56%) of this is classified as higher confidence indicated category material, with the balance being lower confidence inferred category material.
Westgold first acquired the Baloo pit project in 2018 from S2 Resources and started getting all the permits in place to start mining, so when Karora took over, the project was almost ready to go. Two stages of exploration drilling targeting the northern offset of the main Baloo mineralization along with down-dip infill drilling of the Baloo pit have been completed by RNC in 25 holes totaling 798m (see figure 7). To the North, drill hole BLOR003 intersected strong mineralization including 8.7 g/t over 3m from 63m and 4.3 g/t over 2m outside of the current workings, while the infill program and the testing of the Eastern foot wall have yielded great results of their own.
The company received their permits almost immediately and started mining Baloo in June of 2019 with the expectation of stage one being complete by the end of the year. However, with the exploration efforts of the company they extended stage one into June 2020. In late January, the company received permits for stage two of the Baloo open pit which is scheduled to commence after the completion of stage one, barring additional developments which could extend stage one even further. Baloo provides roughly 30,000 tons per month of feed for the mill currently grading in and around 2.5 g/t, making this a very profitable open pit operation with great upside.
Additional work has been completed on the Baloo open pit project of late. Grade control using RC drilling has extended high grade gold mineralization beyond the current pits design at the southern end of the pit. The company also tested the extension of mineralization at depth and confirmed mineralization below the current pit. Infill drilling will be carried out in the coming months. here are some of the more recent highlights from their current exploration program.
Historical drilling highlights from S2 resources show mineralization at depths of over 100m
Is only 1 kilometer to the South of the Higginsville mill and was originally discovered in the early 80’s along with Poseidan, Graveyard, Aphrodite, Mitchell and Challenge. These pits were mined from 1988 to 1997 when the original HGO processing plant was active. However, in 1997 the plant was placed on care and maintenance and production from this area all but stopped. Alacer acquired the land tenements, which they used to feed their newly built mill in 2008, but Fairplay sat idle for a period of time as Alacer focused on the Trident deposit and Mt Henry as their main source of feed. Fairplay was largely a storage facility for tailings for a many number of years until Westgold got permitting to transfer the tailings over to the Aphrodite pits.. It wasn’t until Karora took over the tenements that they started doing exploration around the pit as their team had identified potential mining opportunities (see figure 8).
Fairplay is part of the Central Corridor and much of the Archaean stratigraphy is covered by 20-50 m of Tertiary sediments. A number of lead style gold deposits have been identified occurring in reducing clayey quartz grit lenses within the fluvial sedimentary sequence. The area is transected by the Zuleika Shear Zone, a regional deformation corridor running Northwest-Southeast throughout the mining area .It is believed that Archaean gold mineralization is controlled by subsidiary splays off this structure.
After a review of historical data, Karora opted to move forward with an exploration program at Fairplay North that would see them drill 26 resource definition RC holes totaling 1,721m. The focus was to upgrade the existing historical resource within and on the margins of an optimized pit shell. Assay results came back with very encouraging results and confirmed the mineralization interpretation of the deposit and extended the near surface potential of the pit.
The Company received permits for mining at Fairplay North earlier this year and as of January 23 they had already begun shipping ore to the mill. The stage one is planned to run through July, followed by stage 2 which will push production into January 2021, with potential for additional expansion. There is one other thing worthy of noting as we roll into the next project, plans were developed for an access ramp for underground operations on the Aquarius (Corona) deposit, which is looking to be a very positive opportunity for Karora.
Previously called Corona, Aquarius is a highly prospective high grade gold deposit on the Central Corridor region of the HGO property and only 2.5 kilometers away from the Higginsville mill. The discovery was first made by Alacer on May 7th, 2012, when they hit 658 g/t Au over 2.35m and 225 g/t Au over 1.90m (see figure 9). The company immediately began evaluating the feasibility of creating an 11 million dollar access ramp at the bottom of the Fairplay pit which would allow access for diamond drillers to define the Aquarius ore body (see figure 9). Despite just getting going on the project in 2013, Alacer sold the project to Metals X in June of 2016 and before Westgold split from Metals X, a total of 18,143 ounces of gold of indicated and inferred resource contained in 62,640 tonnes grading at 9.01 g/t Au were reported in the Metals X annual mineral resource report. After this point, information becomes limited until Karora acquired the property.
The Aquarius deposit is also part of the Trident Line and Lode region which has produced some of HGO’s best gold resources over the years to the tune of 1 million ounces in the top 300m. Historical drilling has shown that gold mineralization is associated with a steeply east-dipping, north/south striking laminated quartz vein up to 2.0 metres wide. The vein extends over 300 metres down dip, is continuous in strike over 50 to 100 metres lengths and is part of a more extensive 2 – 10 metre wide shear zone (see figure 9.5).
Being that Karora is already mining at Fairplay, with good success, it was only natural that they revisit the Aquarius (Corona) deposit. After an in depth review of historical data, the company has highlighted it as a point of interest and being considered as a potential high grade open pit and/or underground operation.
This is a great opportunity for RNC to expand the pipeline of feed to the mill. The close proximity and high grade nature of the deposit bodes very well for the economics of putting it into production and the deposit remains open in all directions. This is considered a high priority target for 2020 and could be a big part of the company’s future operations.
Hidden Secret/Mouse Hollow
Situated in the Eundynie gold field, these deposits were first discovered in the early 1900’s and owned and operated by Albert Sampey, one of the first pioneers of the area. Mining operations didn’t last long though, as it started up in 1906 and died off by 1910. For the first few years any ore was transported up to the Sons of Erin Battery mill in Higginsville until they finally set up a battery mill in 1909, only to watch the mining camp all but dry up (or so they thought). Since, it has remained relatively inactive aside from some prospecting in the 30’s, not much remains beyond a few shafts, piles of tailings and with any luck, some gold!
The historic mines are located 10 kilometers away from the Higginsville Mill to the south east in the Eundynie gold field on a peninsular stretching into Lake Cowan. Several other mines popped up in the area focused on a north/south trend that dipped vertically, but not much geological information is available. Sitting just off the Zuleika Shear, this deposit is more than likely fed by a splay off of this shear but Karora’s re-evaluation of the area should offer some insight to the controls in the near future.
Following the re-negotiation of the Morgan Stanley royalty at HGO, Karora began a review of historical data and immediately sent a team to the area to do some prospecting. To their delight, an outcrop was discovered which had visible gold (see figure 10), in turn this led to the company doing a follow up drill program. Karora has now completed a total of 204 reverse circulation (“RC”) drill holes for 8,108 metres at Hidden Secret and Mouse Hollow (see figures 11 and 12). The drilling confirmed the high grade nature of the mineralization and came up with a grade of approximately 2.0 to 2.5 g/t. They have also extended mineralization along strike and down dip, with Hidden Secret mineralization now having a strike length over 200 metres and a down-dip extent of 170 metres.
This new discovery on old mine workings is a fine example of the potential of these old mining properties located throughout the HGO land package. This will offer Karora additional feed for the mill as they set out to put 2 years of feed ahead of the mill. Given the historical workings, it should be relatively easy to get the permits to mine it and could be added to the pipeline this year or early in 2021.
The Pioneer gold deposit is located 13 km south south-west of the HGO processing plant. Karora commenced drilling at Pioneer late last year with the aim of upgrading and increasing the Historical Mineral Resource. The work involved a two-stage reverse circulation (“RC”) drill program totaling 86 drill holes for 7,953 metres. Results from the 2019 – 2020 drilling have extended the mineralization along strike to the south and down dip and identified a shallow, south plunging high-grade shoot (figure 12.5). Further drilling is planned through the second half of 2020 to test the continuity of the mineralization at depth and the potential for an underground operation by drilling the interpreted high-grade shoot extensions.
Mineralization at Pioneer is interpreted to dip approximately 30° towards the east and is hosted within a mafic package comprised mainly of silicified basalt with narrow, cherty interflow sediments. Mineralization is interpreted as bounded by steeply east dipping, north northeast trending regional shears.
This area is just another example of an open pit project that can be put into production fairly quickly with continued success.
The Monsoon gold prospect is located 4 km south of the Baloo Gold Deposit, along the same prospective trend beneath Lake Cowan. A reconnaissance aircore drilling program on an 80 metre by 40 metre grid defined sporadic mineralization over a 1 kilometer strike length, associated with quartz veining and arsenopyrite alteration within a north-northeast trending shear zone on a mafic – shale contact. The best results achieved to date include 12 metres at 16.9g/t from 68 metres and 32 metres at 2.47g/t from 16 metres.
In 2016 S2 drilled 2 diamond drill holes which were twinned to confirm the results of previous RC drilling. Upon completion of the two holes, S2 confirmed that the result confirmed the previously expressed view that gold mineralization at Monsoon appeared to reside in discrete, narrow structures with highly variable grades and the noted the presence of free gold and arsenopyrite.
Monsoon is one of many near term projects that Karora can add to their pipeline of feed for their mill along the Lake Cowan trend. This North south feature is home to several prospective open pit operation as will be highlighted as we continue to explore this area.
Nanook is located 6 kms south of Monsoon along the Lake Cowan trend. This highly prospective area is just one more feather in the cap of RNC if you will as reconnaissance drilling confirmed the presence of extensive gold mineralization. The Nanook anomaly has been defined over 2 kilometres and the Bindy anomaly over 1.8 kilometres. Aircore drill intersections for the Nanook Prospect include 13m @ 23.89g/t, 8m @ 2.89g/t, 6m @ 2.71g/t and 9m @ 2.54 g/t gold. Equally strong results were achieved for the Bindy prospect with 8m @ 3.96g/t gold found within the core of the gold anomaly.
S2 Resources completed a mineral resource estimate on Nanook in 2016 which defined 2.2 million tonnes grading at 1.2 g/t for 84,000 ounces. During the definition drilling at Nanook it was confirmed that continuity and thickness of gold mineralization in gravels at the base of the palaeochannel extended into the weathered bedrock immediately beneath it.
Earlobe is located to the west of Nanook and Bindy and is well advanced with drill intersections that include 8m @ 5.56g/t, 4m @ 4.95g/t, 2m @ 26.6g/t and 4m @ 6.09g/t gold. The known gold mineralization is split into an upper and lower gold lode with individual quartz veins up to 4 metres thick. Both lodes remain open along strike and down dip and as yet the limits of this mineralization have not been defined.
Several other areas have been identified in this area which largely remains open for additional exploration, nut with so many near term opportunities for Karora this area may go on the back burner for the time being.
The palaeochannel deposits at HGO are becoming a bigger part of the plan as the 2020 exploration campaign hits full stride. The palaeochannels are host to a number of past producing pits and remains largely open to the south of Mitchell, Jupiter and Pluto. Jupiter and Pluto belong to the Challenge palaeochannel system which lies 3 kms east of the Mitchell and the Mitchell palaeochannel.
Historical mine production totaled 2.1 Mt @ 3.4 g/t (232,000 contained gold ounces) and has an existing Historical Indicated Mineral Resource of 1.5 Mt @ 2.2 g/t for 102,000 contained gold ounces and a Historical Inferred Mineral Resource of 0.3 Mt @ 2.1 g/t for 14,000 contained gold ounces. More work needs to be done on the palaeochannels but early indications suggest that they will be part of Karora’s plan in the near term scope of work.
The three areas of interest are Mitchell, Jupiter and Pluto and are being targeted for infill and extensional drilling, with the objective of upgrading and adding to the historical mineral resources. Drilling will also test the continuity of primary mineralization previously intersected at the Jupiter prospect, in hopes of building out a JORC compliant resource. Drilling will be executed in two stages totaling 4,060 m. Stage one will comprise 33 drill holes for 2,140 m, targeting both the Jupiter primary and the overlying palaeochannel mineralization and infill the Mitchell 3 and 4 Historical Mineral Resources. Stage two will comprise 32 drill holes for 1,920 m, targeting an upgrade and extension of the Pluto Historical Mineral Resource.
Historical Drill Highlights
5 km Structure Identified by a High Density Gravity Survey
Karora conducted a high density gravity survey over a 60 km2 area covering a 5km strike distance North of the previously mined 1 Million ounce Trident gold deposit north of the Higginsville mill. The surveyed area had previously been the focus of reconnaissance aircore drilling and limited bedrock drilling as part of a regional approach taken by previous owners. Following the re-negotiation of the Morgan Stanley royalty, Karora decided to re visit this area with the aim of defining both shear-hosted and paleochannel structures on a 200m x 100m line spacing.
Results from the gravity survey highlighted a new 5km long north-south structure interpreted to be a splay off the main Burke-Barcelona mineralized shear which lies parallel and west of the regionally significant Zuleika Shear. The new gravity defined structure, combined with historical shallow aircore drilling, highlights the prospectivity of the full 5 km length of the structure and enhances the potential for mineralization at depth. This area remains highly prospective and just one more feather in the cap for the company.
Underground Operation potential
There are 3-4 underground operations which still have plenty of upside in the Trident, Chalice, Two boys and the previously discussed Aquarius deposits. While Trident and Chalice underground operations have been mined for years and currently closed, there is still potential for exploration drilling. Several of these mines started as open pits and transitioned to underground operations over the years as they continued making discoveries the deeper they went.
Trident – Within the Trident mine there are a number of ore bodies that have been mined over the years in Athena, Apollo , Ares, Pluto, East and Western Zones, Artemis and Helios. This mine was a primary focus of Alacer Gold when they owned the project. The mine was shut down in 2016, as new owners, WGX opted to focus on Mt Henry and near surface opportunities. Now that Karora owns it, we believe it still presents exploration potential down the road, but will not be a primary focus for the company in the short term.
When Trident was in full operation it was in the top 3 for largest underground mines in Western Australia, producing almost 200,000 ounces per year with a grade of approximately 3.8 g/t Au. The mine produced over 2 million ounces over the course of its life as the deeper they went the more they found.
Chalice – Within the Chalice mine there are also a number of ore bodies that have been mined over the years in Atlas, Olympus and Olympus footwall, Grampians, Ultramafic, Halo and Kronos. Over the life of mine they produced over 800,000 ounces up to a depth of 450m from surface, with garades between 4 and 5 g/t Au. Not currently in operation, this is another mine they may yet have fruits to bear but will need additional exploration dollars to define additional reserves.
The mine is located about 20 kilometers to the West of the Higginsville plant and is not currently in operation. Controlling the mineralization are at least 4 identified generations of dyke intrusions throughout the deposit and 2 stages of gold deposition. The mine is hosted in a sequence of intercalated mafic and Ultramafic amphibolites, and a post peak metamorphasism monzogranite dyke. There have been a number of small historical mining operations but nothing worthy of noting, but again a completely different geological setting where RNC can spend some time poking around in the future.
So far we have highlighted the main areas of focus for Karora to fill out their pipeline of feed for the mill but haven’t really touched on any of the other points of interest that the HGO property has to offer. HGO is an 1800 square km land package! With an abundance of past producing operations and highly prospective areas dating back to the early 1900’s, when mining techniques were primitive at best. This is where the old adage comes into play “best place to find a mine is next to a mine” and Karora has plenty of them to revisit (see figure 14).
Lake Cowan Region
Within the Lake Cowan group several prospective areas have been identified and/or mined over the years which are still open for exploration. We can’t possibly go through each one individually as there is not enough information available on them but we can name each in relation to their geological regions in relation to the HGO property.
Past and Potential points of interest
There is also a very large portion of this land package to the West which has seen little to no exploration. This could be a treasure trove of opportunity as the Boulder/Lefroy fault comes together with the Zuleika shear, both of which are well know conduits of gold stretching all the way up to Kalgoorlie, the home of the super pit which has produced over 60 million ounces of gold.
The Central Corridor (Formerly the Trident line of lode)
We have already been over many of the operations within this region such as Aquarius and Fairplay. We have also talked about the Trident and Poseidon mines but this North/South Gabbro offers more opportunities beyond the existing mines. The areas in between these pits still hold potential as well, given that they are also part of the Mitchell Palaeochannel system that once flowed into Lake Cowan. Let’s have a looks at some of the prospective areas that are already known.
Past and potential points of interest
While much of the Palaeo channels have been exploited in the upper reaches, the southern reach and maybe moreso into the lake sequence when looking at the challenge swordsman palaeochannel , has seen little to no activity. Challenge open pit which produced over 300,000 ounces during its life has offered indications that the immediate area may not be done producing as there are a number of targets RNC intends to follow up on once they have their 2 years of feed ahead of the mill.
Past and Potential points of interest
All of these passed producing pits are in the upper and lower reaches, leaving the southern Palaeochannels open to exploration. Are you starting to see the bigger picture for potential?
Polar Bear Region
Several prospective pits have been identified throughout this region yet few have been mined or seen sufficient exploration. This entire package within the HGO land tenements might be one of the more exciting opportunities the company has in front of them in my opinion. With over 14 prospective targets Karora has years of exploration ahead of them! (see figure 15)
Past and Potential points of interest
Mt Henry and Chalice offers their own exploration opportunities but given what Karora has in front of them, I do believe their focus will be on opportunities in close proximity to the mill and mainly on surface unless warranted by extremely high grades. With so many areas to explore, the company is set for the foreseeable future. It should be noted that the lack of interest in MT Henry is due to the nature of the ore, it is very sulphidic which requires finer grinding than currently set up for at Higginsville which is why the recovery rates were not as good.
This list does not include 5 identified nickel targets and the Northeast and Southwest corners of the claims are completely open for new exploration. The polar bear region which sits in Lake Cowan could prove to be an incredible asset as Karora steps up their exploration efforts and builds out their long term plan for mining.
I have looked at HGO in great detail but nowhere near to the extent that I have over the last month or so as I pieced this information together. I must admit that despite my knowledge about Karora’s operations, this article was a huge eye opener to the true potential Karora has in front of them. HGO was an absolute steal for 50 million dollars and in hindsight (as I always believed), it was the single most important event to happen to the company since the discovery of the Fathers Day Vein. Without the mill and the abundance of feed that came with it, Karora would be in a very different position and very reliant on Beta Hunt producing coarse gold hits regularly.
I referred to Karora becoming a mid tier producer in the beginning of this report and I think it is abundantly clear by now that the company is well on its way. Paul Huet has the experience to build this company and I will admit I have met few people with as much drive and fire as Paul and I am genuinely excited for the future of the company. Being in a very cash positive position, Karora can write their own ticket to becoming not only the best turnaround story of the year, but a very large mining company with a dominant land position in the Western Australian gold fields.
For more information please visit
http://www.rncminerals.com/ Will be updated soon
https://insidexploration.com/rnx/ Will be updated soon
For an in depth geological report on the Kambalda dome and the Beta Hunt gold deposition please follow the link below.
In 2019, insidexploration got an exclusive site visit at Beta Hunt and produced a short video of the mine.
For additional pictures of the mine click on the picture below
For exclusive core photos from their 40,000m drilling program last year at Beta Hunt click on the picture below
Disclosure: Karora Resources is a sponsor of Insidexploration. The author holds a long position at time of publishing and may buy or sell at any time without notice.
Disclaimer: The work included in this article is based on current events, company news releases, historical documents and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this article are that of the author and do not necessarily reflect the views of Karora Resources. KRR Management did review this document for fact checking purposes but the opinions remain those of the Author.
This article is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.