Cassini Resources Limited (ASX: CZI) ('Cassini' or the 'Company') is pleased to report achievements at its development and exploration projects during the September 2019 Quarter.
The Company remains well funded with A$7.3m in cash and reserves at the end of the Quarter.
During the September quarter, Cassini executives visited key shareholder Guangzhou Tinci Materials Technology Co. Ltd (002709.SHE, market capitalisation of A$2.2b) in Guangzhou and Jiujiang, in Jiangxi Province China.
Tinci is is one of the largest battery electrolyte producers in China, with 2,500 employees in multiple facilities across the country.
They have strong customer relationships with well known lithium-ion battery manufacturers such as CATL, LG and Aviation Industry Corp of China (AVIC).
Tinci have recently acquired a nickel sulphate manufacturing plant in Jiujiang, which they are currently refurbishing and expanding with goal of the facility being operational in early 2021.
It was an opportunity to view Tinci's impressive operations and also to experience first hand the significant progress China has made in the adoption of electric vehicles (EV's).
West Musgrave Project (CZI 30%, OZL 70%)
West Musgrave Joint Venture partners Cassini and OZ Minerals are working together on the West Musgrave nickel-copper project in Western Australia
Pre-Feasibility Study Extended
The delivery date for the Pre-Feasibility Study (PFS) was extended due to an expanded scope of work to evaluate a number of additional value-add opportunities that have been recognised in recent months. The PFS is now scheduled for delivery in the first Quarter, 2020. To complete these works, the OZ Minerals Board has approved an additional $10 million to complete the PFS. Cassini continues to be loan-funded through to Decision to Mine with repayment five years after commencement of production.
A Mineral Resource update was released in April 2019 incorporating drilling up to December 2018. In that release Indicated Resources were increased from 40% to 60% of the total Mineral Resource compared to the previous release. Since December 2018 approximately 50,000m of infill drilling has been completed with a focus on increasing the proportion of Indicated Resources sufficiently to underpin an Ore Reserve once the PFS is completed. This drilling was completed during the Quarter and rigs demobilised from site. A Mineral Resource update including drilling from January to August is in preparation to support close out of the pre-feasibility study and completion of a maiden Ore Reserve, with an anticipated improvement in resource classification underpinning both.
A Mining 'Hill of Value' study has been completed to select the optimum processing rate and mining cutoff grade. The PFS has confirmed 10Mtpa as the optimum processing rate as contemplated in the Further Scoping Study, but improving the intial 8 years of mine life to beyond 15 years. A detailed mine design, stockpiling strategy, operating cut-off grade and waste dump strategy have also been completed.
Metallurgical Flowsheet Development
An alternate flotation flowsheet to the Sequential Separation flowsheet which was the basis for the Further Scoping Study has been tested to sufficient confidence to be included in the Base Case. This alternate Bulk Separation flotation flowsheet is used in the majority of copper-nickel projects worldwide that produce separate copper and nickel concentrates. In the Bulk Separation flowsheet, nickel and copper are floated together into a single cleaned concentrate and then separated into two products. Bulk separation enables primary grind size to be increased from 75 microns to 165 microns which results in a capital cost and operating cost savings. While the Bulk Separation flowsheet has been tested with sufficient confidence to be included in the Base Case, further de-risking will be undertaken through locked cycle testing and a pilot plant later this year.
The study has identified three alternative processing technologies to that assumed in the Further Scoping Study that are not yet incorporated in the Base Case; the Loesche Mill, Woodgrove Flotation Cell and Hydro-float Cell. All of which are still to be fully tested and proved, but all of which have the potential to further reduce capital costs and operating costs and improve metal recoveries. Work on the Loesche Mill technology is the most advanced of these three. Two pilots of the Loesche Mill have now been completed. This work confirmed the previous finding that a significant reduction in power consumption is possible and the use of expensive grinding media is completely eliminated.
A 55 MW hybrid diesel-solar-wind solution with 70-80% renewable penetration is the current Base Case. Baseline data collected over the last year has demonstrated a high quality, consistent solar and wind resource is available, with higher wind velocities at night offsetting the lack of solar power. Power accounts for around 40% of the processing cost at West Musgrave and is a significant value lever on the project. Large-scale solar photovoltaic and wind solutions are currently economically viable and technically mature solutions to reduce the project's reliance on high cost fossil fuels for electricity generation.
A large number of proposals have been received from major utilities, independent power providers, infrastructure funders and equipment manufacturers. Evaluation of the proposals has resulted in confidence that there will be a reduction in the power cost assumption used in the Further Scoping Study
Ten groundwater drill holes have been completed across the site and a number of potential borefield areas identified within 20 km of the proposed mine and immediately surrounding the Nebo pit. Groundwater modelling has confirmed sufficient groundwater is present in these potential borefields to support the current base case scenario and water resources are therefore considered largely de-risked. The groundwater is present in shallow paleochannels 5-10 metres below the surface and is of excellent quality; significantly better than the hypersaline water present in the Western Australian goldfields.
Remote Operations Centre
A preliminary assessment has been completed on the potential for a Remote Operations Centre for West Musgrave with the location and business case to be further developed.
A preliminary haulage study has been completed, considering autonomous mine haulage as an option for comparison against a traditional contractor mining model. Further assessment is required.
A first principles logistics study has been completed which uses super quad road trains for moving concentrates. Further assessment will look at backhauling opportunities.
Further drilling was completed at the One Tree Hill Prospect, stepping out from CZD0099 which returned excellent results including 40m @ 1.16% Cu earlier in 2019. Assay results are pending. Infill drilling was also completed on one section at the Succoth Prospect to confirm the geological interpretation. Results for these holes were also pending at the end of the Quarter. A high-resolution aeromagnetic survey for 3,978 line km's was completed in the One Tree Hill prospect area to assist with geological interpretation and targeting
Mount Squires Gold Project (100% CZI)
The Mount Squires Gold Project (Mount Squires Project) lies adjacent to the West Musgrave Project Joint Venture and is 100% owned by Cassini. The Mount Squires Project is a natural fit with activities at our West Musgrave Project. Our technical team has extensive geological knowledge, operational capability and established heritage relationships which provides a significant competitive advantage. Whilst the West Musgrave Project continues to be our primary focus and long-term value-driver, our exploration strategy at Mount Squires (and Yarawindah Brook) is geared to provide opportunities for new discoveries in the near term. Our goal is to add value and be exposed to these opportunities through relatively inexpensive exploration programs that do not compromise our funding capacity during the ongoing study phase of the West Musgrave Project.
RC Drilling of Handpump Prospect
During the Quarter, The Company completed it's first drilling program at the Handpump Prospect comprising 10 holes for 1,134m of RC. The program was designed to confirm mineralisation controls and extensions to previous drill intercepts which include a best result of 15m @ 2.30g/t Au from 31m. Cassini's drilling program represents the first drilling at the Handpump Prospect since 2011, prior to Cassini's ownership
All results from the RC drilling program at the Handpump Prospect, comprising 10 holes for 1, 134m, have now been received. Best results from the program were from holes previously released including 20m @ 1.27g/t Au, including 7m @ 2.54g/t Au from 23m in MSC0003, 27m @ 1.00g/t Au from 31m, including 3m @ 2.59g/t Au from 38m in MSC0004 and 19m @ 0.68g/t Au including 6m @ 1.26g/t Au from 38m in MSC0005. The results have confirmed the potential for economic mineralisation at surface and extending to shallow depths. Mineralisation is hosted within a hydrothermal breccia at the stratiform contact of a rhyolite and overlying (predominantly barren) volcaniclastic unit. Mineralised lodes, defined by a 0.1g/t Au halo, strike E-W to ESE-WNW and are near vertical to steeply south dipping. Mineralisation is potentially controlled by the intersection of NW-SE and SW-NE trending structures. Interpretation of geology and assay results is continuing.
The hydrothermal breccia and mineralised veins are also largely obscured by the overlying volcaniclastic, however it is exposed at surface in some localities which has been confirmed by concurrent surface rock chip sampling by Cassini with maximum values of up to 0.59g/t Au. Historical rock chip sampling has also recorded values up to 1.73g/t Au at the prospect. The hydrothermal breccia host plunges beneath the volcaniclastic unit to the west (and potentially north west) and thickening sand cover. Extrapolation of recent and historical drill results and surface rock chips samples indicates a potential mineralised strike of at least 600m which remains open down plunge. The Handpump program has recognised that a large portion of previous drilling has been ineffective due to either the drilling angle being sub-parallel to mineralisation or it not penetrating the prospective Rhyolite unit beneath the volcaniclastic (usually the case with shallow aircore drilling).
Gold Trend Emerging
The initial discovery of gold at Handpump occurred because mineralised bedrock is exposed at surface, a relatively rare occurrence in a landscape dominated by desert sands. The transported cover has likely inhibited exploration in other parts of the project and this is why the Company is re-processing the legacy geochemistry results to remove the biases of the regolith (in simple terms, bedrock vs transported sampling mediums). In some instances the previous geochemical sampling has probably been completely ineffective.
Key learning outcomes of the program can thus be summarised:
The initial Handpump discovery was enabled by locally favourable regolith (outcropping mineralisation) and does not necessarily represent the best mineralisation in the project.
Exploration post-discovery has been hampered by drilling that has failed to test the most prospective rocks at an appropriate orientation.
The recently completed high-resolution aeromagnetic survey has assisted the geological interpretation of Handpump as well as the surrounding region. The Company has now refined target areas along the prospective trend. Only 3 RC holes have been drilled outside the immediate Handpump Prospect area to test for additional mineralised bodies and therefore the prospective trend is largely unexplored. Permitting to clear these targets with a reconnaissance-style drill program is underway.
Nickel and Copper Potential to be Evaluated
Whilst the Mount Squires Project is primarily prospective for gold, recent surveying and mapping by Cassini has recognised the potential extension of the magmatic nickel-copper mineralised trend from the West Musgrave Project into the eastern half of Mount Squires. This is supported by:
The emergence of the One Tree Hill Prospect within the West Musgrave Project, but only 200m outside the Mount Squires tenement boundary.
New aeromagnetic data confirms the continuity of broad geological domains and structure into the Mount Squires Project.
Field mapping identifying gabbro intrusions along strike of the mineralised trend which had been previously mapped as granites and gneisses.
This area has been lightly explored for magmatic nickel-copper sulphides by previous explorers, primarily by broad-spaced soil geochemistry and large fixed loop electromagnetic surveys (FLEM). The Company has reviewed these surveys and identified a number of areas that would benefit from new electromagnetic surveys given the significant advancement in technology over the past 10-20 years. The re-processed geochemistry data will also support the targeting of these surveys.
Gold prospectivity was first identified at Mount Squires by Western Mining Corporation (WMC) during geochemical surveying in the late 1990's. WMC's primary target was nickel and copper sulphide mineralisation, which returned poor results, however several gold anomalies were identified but were never followed-up and the tenements were later surrendered. Later exploration by Beadell Resources Ltd in the mid 2000's identified a number of gold prospects with further soil geochemistry, rock chip sampling and mapping. Drilling of these anomalies mineralisation at the Handpump Prospect with significant intercepts of 43m @ 1.18g/t from 14m including 9m @ 3.25g/t from 34m (re-cut using a 0.5g/t lower cut-off). Mineralisation is described as being hosted in rhyolite breccias and having epithermal style characteristics. Beadell's exploration after the initial discovery was limited due to a change in corporate strategy and the project was later surrendered.
Anglo American PLC has also explored the region, primarily for nickel and copper sulphide mineralisation, but their soil geochemical programs included a large multi-element analytical suite which provides critical data for targeting gold mineralisation. Anglo American surrendered their tenements following a decision to reduce global exploration expenditure. Cassini considers that the geological setting may have some affinity with intracontinental 'hot-spot' epithermal gold mineralisation, rather than the more common island arc setting found elsewhere along the Pacific Rim. Examples of this style are deposits in the northern Nevada region, including the Sleeper Deposit, with high, or 'bonanza', gold grades from shallow crustal emplacement.
Yarawindah Brook Ni-Cu-Co-PGE Project (CZI 80%)
Yarawindah Brook is located 130km northeast of Perth, in agricultural land near the township of New Norcia. The Project has had only limited nickel, copper and cobalt exploration despite a favourable regional setting, prospective geology and near-surface occurrences of nickel and copper. Historic exploration has focussed primarily on a small platinum and palladium (PGE's) resource which the Company views as a 'path-finder' anomaly for massive nickel - copper - cobalt sulphides. Exploration for nickel and copper has been sporadic, however the most recent drilling in 2007 targeting surface EM anomalies, returned encouraging results from hole YWRC0083 including 7m @ 1.30% Ni, 0.22% Cu, 0.06% Co and 432ppb Pd from 74m. Despite the promising result no further follow-up drilling was conducted due to budget limitations of the previous operator during the exploration downturn post-GFC.
During the September Quarter, Cassini completed land access agremeents with key land owners covering the initial target areas. Programmes of Work have also been submitted for environmental approval which are expected to be granted next month. A rig is currently being sourced for the program which is expected to commence after the harvest season and completion of activities at the Mount Squires Project. The Company has a number of drill targets comprising testing several electromagnetic anomalies as well as previous drill intersections.
Tel: +61 8 6164 8900