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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Classic Minerals Limited    CLZ   AU000000CLZ3

CLASSIC MINERALS LIMITED

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Classic Minerals Limited : - Lady Ada Resource Upgrade

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01/21/2020 | 10:21am EST

Classic Minerals Limited (Classic or the Company) (ASX Code: CLZ) is pleased to announce that a recent update to its Lady Ada mineral resource estimate at the Forrestania Gold Project (FGP) in Western Australia has realised a 71% increase in the contained gold ounces for the deposit to 1.35 million tonnes grading 1.38g/t gold for 59,700 ounces.

Classic holds 80% of the gold rights for the FGP, which also includes the unmined Lady Magdalene resource of 5,922,700 tonnes grading 1.32g/t gold for 251,350 ounces, centered about 1km north of Lady Ada and located in the same geological rock sequences.

With the recent update to the Lady Magdalene mineral resource, the FGP now comprises existing resources of 7.27Mt at 1.33g/t for 311,050 ounces of gold. Resources are located beneath an existing open pit shell at Lady Ada and the unmined, near-surface deposits at Lady Magdalene.

The project presents an opportunity for near term mining operations and production. The current mineral resources are reported in compliance with the JORC Code (2012) and are estimated with a lower cut-off grade of 0.5g/t gold.

When a higher cut-off is applied (1g/t gold), it is possible to delineate higher-grade pockets of the mineral resources, particularly at Lady Ada, which was previously mined at an average grade of 8.8 g/t gold. Classic continues to focus on delineating these higher-grade zones at both deposits, to potentially generate early cash-flow and support the costs associated with mining, haulage and toll treatment.

At a block cut-off grade of 1g/t gold, the Lady Ada resource is estimated to contain combined Indicated and Inferred resource of 590,750 tonnes grading 2.17g/t gold for 41,200 ounces and at a block cut-off grade of 2g/t, the Lady Ada resource estimate produces 218,300 tonnes grading 3.56g/t gold for 24,950 ounces.

As development efforts ramp up, and in addition to engaging reputable 3rd party consultants as required, Classic will bolster its team with personnel experienced in gold to ensure the company delivers value from the FGP to its shareholders.

As part of its due diligence process, Classic will engage consultants to undertake a review of the updated mineral resource and related technical data, to complete an update Scoping Study on the FGP. Classic is hopeful that plans for a JV to mine and process ore will be finalised in the first half of 2020.

The Forrestania Gold Project (FGP)

The FGP tenements cover parts of the southern portion of the well-endowed Archaean Southern Cross - Forrestania Greenstone Belt. The greenstone belt trends north to northwest and has a strike length of over 300 kilometres from Carterton in the north to Hatters Hill in the south.

The FGP currently consists of two major deposits, located approximately 120 km south of Southern Cross, WA and 17 kilometers southwest of the historic Bounty Mine site (mined/current resources of +2.0 million ounces of gold). The area is accessible via historic haul roads which branch off the well maintained unsealed Forrestania-Southern Cross Road.

The FGP area deposits occur at the northern end of the Forrestania greenstone belt, which is the southern extension of the north-south trending Southern Cross greenstone belt, a 40 km wide supracrustal belt, bounded by Archaean granitoid/gneisses and is intruded by less deformed granite/pegmatite assemblages, and is cut by easterly-trending Proterozoic doleritic dykes.

Work has been conducted by a series of companies in previous years throughout the Forrestania district, initially for nickel deposits and latterly for lithium deposits. The discovery of the Bounty deposits by Aztec Mining in 1986 outlined the gold prospectivity and potential of the Forrestania greenstone belt and many deposits have been identified since that time.

The FGP deposits (formerly known as Blue Haze and Red Haze) were discovered due to grassroots exploration of prospective ground undertaken by Aztec Mining. Regional soil-auger sampling programs identified anomalies at the FGP. These were RAB drilled to nominal depth, with only limited success. However, the drill holes did confirm the interpreted geology deduced from regional mapping programs, ground and aeromagnetic reconnaissance traverses.

Mining at Lady Ada (formerly Blue Haze) pit commenced on the 5th December 2002 and concluded on the 23rd of May 2003. A total of 95,865 tonnes at an average grade of 8.81 g/t Au was mined for 27,146 ounces of gold. Mining was completed by conventional open pit mining techniques, employing 10m berm heights in the oxide material, and 20m berm heights in the fresh zone. The final pit was mined to approximately 60 m below surface.

Locally, primary gold mineralisation is hosted by a shallow, east-dipping quartz dolerite unit. This unit is bounded by high-MgO basalt to the west and low-MgO ultramafic to the east. The so-called, higher-grade, Sapphire shear zone strikes between WNW-ESE and WSW-ENE, and dips at approximately 15-degree - 35-degree , hosting the bulk of the gold mineralisation at Lady Ada, in association with a number of flatter lying shears.

These flatter lying shears are more prevalent at the Lady Magdalene deposit, about 1km to the north of Lady Ada and produces multiple lodes over numerous ore mineralised domains. Gold mineralisation is associated with vein quartz within moderately to strongly foliated dolerite. Pervasive ore related calc-silicate alteration consists of diopside-biotite-quartz +/- arsenopyrite +/- pyrite. The Sapphire shear is generally less than 3m thick vertically; however, at shear intersections, mineralisation widths may be up to 20 metres (vertically).

There is also interpreted to be a significant supergene gold overprint at Lady Ada, which may or may not, be present at Lady Magdalene. A lot of valuable technical and geological work has been completed on the FGP by various holders since the discovery of Lady Ada and Lady Magdalene, including multiple resource estimations and reiterations of resource models as the geological understanding has increased.

Key historical resource and reserve statements including those completed by Forrestania Gold NL in 1999; Viceroy in 2000; Sons of Gwalia in 2002 and 2003 and St Barbara Mines in 2007 have now been complemented and superseded via various drill programs completed by Classic during 2017-19, which has allowed an updated mineral resource estimate for Lady Ada and the recent update at Lady Magdalene.

Classic's proposed future activities will be focused on Lady Ada and Lady Magdalene. In regard to Lady Ada, an examination of the dominantly west-dipping orientated drill lines, shows a south-easterly plunge to higher-grade shoots and from interpretation, this system currently remains open at depth at both deposits.

The mineralisation at Lady Ada is hosted within the so-called Sapphire shear zone, which presents as at least two zones of stacked shallow dipping faults. The grades within the shear are variable (typical of shear hosted systems) and present commonly as intervals of 2-3 metres wide, with average grades frequently ranging up from 5 - 15 g/t gold.

Gold mineralisation at Lady Magdalene is hosted within a sheared mafic suite. The mineralisation is over nearly a kilometre long and is drilled to a down-dip length of up to 400 m (240 m vertical depth), generally over 3-5m thick (true thickness), with grades ranging between 1 - 5 g/t Au (peaking at 31.1g/t gold over 1m). The area was the subject of historical RAB, RC and diamond drilling, heap- and dump-leaching metallurgical column test work completed by Forrestania Gold NL (LionOre subsidiary) in mid- to late 1999. The gold mineralisation strikes north-south and is hosted within the same Wattle Rocks Dolerite unit as Lady Ada, but differs in having multiple, wide, subparallel lower-grade shear zones.

The recent drilling by Classic and resource estimation work for Lady Magdalene appears to indicate that higher-grade zones may well cross-cut the deposit, but that the current drill spacing (approximately 50m north x 25m east) is probably too wide to allow delineation of these shoots in any continuous detail at this stage.

Historical diamond drill hole FWRD011 contained an intersection of 7.0m @ 9.07 g/t Au (true width), with visible gold less than 25m from the natural surface and alludes to these, higher-grade, cross-cutting, sheared intersections being present in the ore system at Lady Magdalene. Overall though, Lady Magdalene presents occasional, discontinuous high-grade gold zones and hence, is considered a high-tonnage, low-grade gold system.

There is scope for significantly increasing the mineral resources at Lady Magdalene further, mostly by drilling down-dip extensions, but there is also poor definition of the known, narrow, higher-grade intersections, closer to the surface.

This could be somewhat rectified, by a large program of infill RC resource definition drilling, with selected diamond drilling to better understand the orientation of gold mineralisation in these interpreted highergrade zones.

In compliance with the requirements of the ASX listing rules, the following information provides further technical detail on the updated Lady Ada mineral resource as discussed in this announcement:

Geology and Geological Interpretation

Regional Geology

The Wattle Rocks deposits occur at the northern end of the Forrestania Greenstone belt, the southern extension of the north-south trending Southern Cross Greenstone belt, a 300 km long, 40 km wide supracrustal belt, bounded by Archaean granitoid/gneiss and intruded by less deformed granite/pegmatite and cut by east-trending Proterozoic doleritic dykes.

The Forrestania Greenstone belt comprises a thick volcanic pile overlain by psammitic/pelitic schists that form a large, regionally north-plunging synclinal structure. The Wattle Rocks deposits are located on the northwestern limb of this regional scale syncline and are similar to other moderate tonnage lateritic/supergene gold deposits that strike between WNW and NE and dip shallowly to the east or southeast, on the western edge of the greenstone belt.

Prospect geology

Geological interpretation indicates that the general stratigraphy consists of metasediments, BIFs and cherts to the east of the tenement, overlying an older sequence of metamorphosed komatiitic and high-magnesian basalts to the west. Black shales/pelites occur as small interbedded units throughout the stratigraphy, which dips gently to the east (10-35-degree) and strikes N-S, bending in a NNW direction in the far north of the tenement.

An Archaean-aged quartz dolerite unit (informally the 'Wattle Rocks Dolerite') is emplaced along a contact between high-MgO basalt to the west and low-MgO ultramafic to the east, in the western part of the tenement and is the host rock for the Lady Ada and Lady Magdalene mineralisation. Strongly magnetic Proterozoic dolerite dykes cross-cut the stratigraphy in an east-west direction, splaying to the ENE, following fault directions interpreted from the aeromagnetics.

A number of narrow shear zones lie subparallel to the shallow-dipping metasediment-mafic contact within the host stratigraphy and are interpreted to be important sites and conduits for the observed gold mineralisation. The Sapphire shear zone strikes approximately WSW-ENE, dipping to the SE at about 15 - 25-degree, and appears to crosscut all lithologies.

Thisshearzone and associated shears host the bulk ofthe gold mineralisation at Lady Ada. Similar flat-dipping shears are known to crosscut the Lady Magdalene area. Approximately 8-12 metres of transported sands and a gold depleted weathering profile ofsaprolitic clays overlie the Lady Ada and Lady Magdalene mineralisation.

Structurally, the area is quite complex and is positioned near the intersection of several major breakages and flexures in the regional stratigraphy in this part of the Forrestania Greenstone belt. Numerous shear zones are evident throughout the area, particularly at changes of rock stratigraphy where there are rheological differences.

Narrow, stacked, flat-dipping shear zones are evident within the quartz dolerite unit and may have resulted from thrusting of the younger sedimentary sequence over the mafic package from east to west. A similar model is predicted for Van Uden (10km northwards) where mineralised quartz veins appear to 'stack'through a host ferruginous metasediments.

Sampling and Sub-sampling Techniques

All RC drillsamples for assaying were generated via an RC hammer, but for early holesit is not known whether this was a face-sampling or conventional hammer. Samples are presumed to have passed through a cyclone on the drill rig and a riffle splitter to provide a sample for analysis. The majority of RC holes were sampled as one-metre composites.

Recoveries from the historical drilling are not recorded, but visual inspection of plastic PVC sample bags in the field indicate that recoveries were probably good. Recoveries from the recent RC drilling programs were excellent due to an auxiliary booster being used to keep samples dry.

Halved diamond drillcore samples of various lengths up to one metre (determined by geology) were utilised by Normandy, Forrestania Gold NL and Classic Minerals. HQ-diameter diamond drillcore was sampled in whole metres for assaying and associated specific gravity and metallurgical test work. All diamond drillcore was photographed digitally after core mark-up and before sampling took place.

More recent diamond drilling by Classic was NQ-sized drillcore. One metre downhole composited sample points (with appropriate top cuts) were used in all mineral resource estimations.

Drilling Techniques

The deposit has been drilled using a combination of RAB, RC and diamond drilling. All RC drill samples for assaying were generated via an RC hammer, but for early holes it is not known whether this was a facesampling or conventional hammer. Samples are presumed to have passed through a cyclone on the drill rig and a riffle splitter to provide a sample for analysis. The majority of RC holes were sampled as one-metre composites. Recoveries from the more recent RC drilling programmes were reported as 'excellent' due to an auxiliary booster being used to keep samples dry. Diamond drilling was carried out using HQ and NQ coring methods.

Assay Data Compositing

Investigation of the sample lengths for the relevant drill holes showed that, in the zones of interest, sampling was conducted almost exclusively on one metre intervals. Based on this, composites were selected at one metre intervals and descriptive statistics calculated. This showed that one metre composites generated data sets with relatively low dispersion suggesting that the use of larger composites in order to 'smooth' the data was not necessary.

Composites were created from the samples if they fell inside the relevant interpreted mineralisation wireframe domain. Composites were accepted for use in estimation if they passed 75% of the target length, or 0.75 metres. Review of the number of 'short' composites for the Lady Ada deposit identified a total of 229 composites which fell below the 75% cut off (approximately 8%). These short composites were reviewed statistically against the accepted composites for the relevant domains, with no bias observed.

Domaining

The resource interpretation for Lady Ada was conducted in Surpac using a sectional approach, where strings were generated at regular intervals in line with the drill spacing across the deposit and joined together to create valid three-dimensional wireframes. Strings were generated using a nominal 0.5g/t Au cut-off grade. In some areas lower grades were included if it honored the overall continuity of the interpreted mineralisation.

The 8 domains defined were assigned in line with the individual wireframe objects generated through the interpretation. As each of these objects was a discrete body it was reasonable to treat them separately throughout the estimation process.

This flagged data was then composited at one metre intervals downhole, with a minimum acceptable interval length of 0.75m. Individual domain statistics for Lady Ada were then generated and top-cuts applied where necessary.

Material Types and Bulk Densities

The densities applied across the Lady Ada resource estimate were assigned based on reported historical values. They are constrained by a series of weathering surfaces representing topography, transported alluvial cover, saprolite, saprock and fresh material.

Resource Classification

Review of the drill hole database identified a number of areas of concern. While these were not necessarily so significant as to warrant the exclusion of the data altogether, they do have an impact on the assignment of resource confidence. Key attributes affecting the resource confidence can be summarised as: the minor discrepancies between hard copy assays and those listed in the respective databases; uncertainty regarding true collar locations; the assignment of nominal elevations to collar data; the absence of a detailed topographic surface; inconsistent down-hole surveying practice of the drill holes and the absence of any QAQC data for analysis. Based on this, the Lady Ada mineral resource is currently classified as being of Inferred status, beyond the immediate limits of the historical Blu Haze open cut pit shell.

Sample Analysis Method

All assays prior to the recent RC resource drilling at Lady Ada, appear to have generated by Fire Assaying techniques (typically FA50 method - 50g sample split). This method gives total gold content regardless of metallurgical considerations. The RC and diamond drilling work was analysed using a combination of aqua regia, fire assay and leachwell gold analyses.

Estimation Methodology

The resource was estimated using Ordinary Kriging after variograms were successfully obtained for the main 8 mineralised domains at Lady Ada. These kriging parameters were then utilised for the associated domains. Where a variogram could not be modelled, individual domains were assigned the variogram of a related domain. In all cases an ellipsoid search was employed. Estimates were run on cut composite assay data, after a review of the geostatistical data for each mineralised domain. Several passes were run at multiples of the range to ensure a complete population of the resource block model (parameters shown below).

Cut-off Grade

The mineral resource is reported at a cut-off grade of 0.5 g/t Au, which is considered appropriate for deposits of this nature and ties in with the original domaining of ore polygons defined for the ore deposit's gold mineralisation zones.

Model Validation and Review

A number of validation steps were completed in order to determine whether the resource estimates were providing a reasonable approximation of the local grades. The first of these steps was the visual check of the block model against drill holes to assess that higher block grades were generally associated with higher assays, and lower grades associated with lower assays. This assessment did not highlight any particular issues. The second step involved the comparison of the average block grades within a range of 'windows' against the average composite assays within the same window. These windows were created on variable slices based on the block model dimensions being estimated. The estimated block grades were then plotted on a chart against the raw composite averages, the number of composite samples and the block model tonnages contained within each of the slices.

This analysis did not identify any obvious issues, with the block model grade generally following the average cut composite grade, although with lower peaks and shallower troughs, given the smoothing effect of the kriging. Where there was a reasonable divergence between the block model and composite averages, this was generally due to a limited number of composites, or the presence of local clusters of higher assays.

Mineral Resource estimation Results

Mineral Resources that are not Mineral Reserves have not demonstrated economic viability. Inferred Resources have been estimated from geological evidence and limited sampling and must be treated with a lower level of confidence than Measured and Indicated Resources.

Interpretation and Conclusions

In reviewing the available data and preparing the mineral resource estimates for Lady Ada a number of concerns were identified. Principally this relates to the robustness of the drilling databases provided for use in the resource estimation process. While the identified discrepancies between the various data sources reviewed were generally minor, it raises some doubt on which set of data is ultimately correct. The description provided by the recent practitioner regarding the collation of all historical drill information seems at odds with the data records applied directly by the former operators of the projects. Whether this is due to 'early' data sets being provided to the DMIRS within annual reporting guidelines, or due to secondary corrections to assays and coordinates that were not subsequently provided is not clear. Limited coverage of accurate topographical surfaces across the project is not ideal. Of particular advantage in the Lady Ada prospect area, however, is that the terrain appears to be remarkably flat, with collar elevations varying only a few metres or so across the entire area.

The absence of any QAQC assays within the database precludes assessment of the accuracy and precision of the reported assays. Such a situation is not uncommon with historical projects, with QAQC data frequently stored and managed outside of the applicable drill hole databases. Regardless, the inability to assess the analytical check data has an impact on the confidence of the associated resources.

For Lady Ada, the application of down-hole surveying has been rather inconsistent, with even recent RC drill holes completed by Classic Minerals (MARC069 to MARC074) listed with only nominal or planned hole dips and azimuths. This will need to be rectified for all existing open holes that can be identified in the field and is critical for all future drilling at the prospect, particularly given the narrow widths of the gold mineralisation typically being modelled for the resource estimation.

Most of the exploratory and resource drilling at Lady Ada is on at least a 50m north x 25m east drill pattern spacing, with 25m sections northings more common in the area adjacent to the southeast of the Blue Haze pit (where grade control drill coverage was generally on 10-15m north spacing). Overall, resource drilling at Lady Ada needs to be brought down consistently to 25m section northings to improve confidence in the continuity of the lodes modelled here. All this new drilling should have rigorous QAQC procedures put in place beforehand, to improve confidence in the assay data being returned from such programs.

In fact, it could be argued that the present relatively wide drill spacing could actually be missing cross-cutting higher-grade, quartz-hosted shear zones at Lady Ada, as these are interpreted to trend WSW-ENE. At best, the drilling outside of Blue Haze has not penetrated the high-grade Sapphire shear zone with enough regularity to establish the grade and continuity of this important gold lode. In that respect, more definitive diamond drilling programs should be undertaken to decipher the orientation, width and gold grade of that narrow, but potentially lucrative shoot (with potential repeats targeted by deeper down-hole surveyed RC drilling).

In addition, it is recommended to complete a program of twin holes for critical drilling intersections which should also be combined with the above-mentioned QAQC protocols. Through the resource process the absence of detailed density observations at Lady Ada prospect was identified. Density values assigned were aligned with the historical values, and while they are considered to be in line with typical gold deposits in similar geological settings, some minor variations would be expected. Such measurements could be taken reasonably simply using the immersion method on competent drill core.

Recommendations

It is recommended that a number of activities be conducted across the Lady Ada prospect area to assist with increasing orebody knowledge and confidence in the respective reported resources. A detailed review of all historical drilling and sampling, together with records on drilling methods, sampling methods, analytical techniques applied, and QAQC regime and results should be completed. While it is unlikely the details for the historic drilling programs will be definitive, collation of information available will improve data confidence.

With the Lady Ada prospect now re-estimated with all new 2017 and 2019 drilling information, it is recommended that a series of check drilling, via twinning of existing holes, be completed in key areas of the resource. This will allow a level of validation of the historically reported assays, while any diamond drilling completed as part of this process could be used to determine bulk densities. A comprehensive program of infill drilling to bring the resource area down to a 25m north by 25m east drill spacing is strongly recommended to improve the interpretation in the continuity of the resource.

In addition, infill and extensional drilling specifically on the Sapphire shear zone is recommended, to determine the potential viability of investigating the quartz-vein hosted gold mineralisation, for its underground mining potential. Given the significant positive mine reconciliation of the historical Blue Haze (Lady Ada) open pit, based off the interpreted high-grade Sapphire shear zone 'feeding' that supergene-enriched ore system, these 'bonanza'-type shoots need more examination at depth.

Notably, there also appears to be a clear definition of higher-grade gold assays trending between WNW-ESE and WSW-ENE in the variography for Lady Ada in a number of separate lode domains at this prospect. Outside of the open pit area, the current drilling spacing remains too widely spread to define these 'shoots' with any certainty or continuity and in reality, even the 10m x 10m RC grade control drilling performed by Sons of Gwalia at Lady Ada on these same shoots, still under-called the ore reserve tonnages and gold grade here by a considerable amount, after ore had been milled.

Capture of a detailed topographic image across the project area will also support future exploration efforts, while also providing an accurate reference which the historic collars can be draped to. Efforts to locate and survey any existing drill collars should also be completed in order to validate the currently reported collar locations.

Contact:

Tel: (08) 6305 0221

Email: contact@classicminerals.com.au

(C) 2020 Electronic News Publishing, source ENP Newswire

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