Quarterly Report
March 2012
Highlights:
• Completed successful merger with Inca
Minerals Limited
Date: 26 April 2012
ASX Code: CNK www.condormetals.com Share Capital
188 million ordinary shares
Market Capitalisation: A$7.5 million
Share Price $0.040
Board
Laurence Freedman AM, Chairman Ross Brown, Managing Director Ross Gillon, Non Exec Director
Robert Schuitema, Company Secretary and Non Exec Director
Laurie Ziatas, Non Exec Director
Senior Management
Ross Brown, Managing Director Mobile: 0407 242 810 ross.brown@condormetals.com Mailing Address
GPO Box 2567
Perth WA 6001
Media & Investor Relations
Ron Cameron
Radar Group / Mercury Consulting
+61 2 8256 3308
ron.cameron@mercuryconsulting.com.au
• Acquired exciting Peru portfolio including
Chanape Gold-Copper Porphyry Project
• Completed $1.0M capital raising
• Striking geophysical results confirms porphyry potential at Chanape
• Commenced drill target generation exploration at Chanape
Condor Metals (ASX: CNK) has entered a new phase of
exploration development through a merger with Inca Minerals
Limited.
The merger was successfully completed this quarter and has
resulted in the acquisition of two highly prospective
projects - the Chanape Gold-Copper Porphyry Project located
in the Pierina Gold Belt of Peru (Figure 1), and the Moquegua
Copper- Molybdenum Project located in the Southern Copper
Porphyry Belt (Figure 1).
Condor is continuing its project appraisal and valuation
programs for its Western Australian projects.
Chinalco's Toromocho
1970Mt @ 0.69% Cu eq
Nyrstar's Coricancha
Au,Ag,Cu, Pb,Zn mine
Figure 1: Condor's projects are located within the prolific Peru porphyry belt, which hosts many world class economic deposits
Peru Operations
Peruvian Projects acquired this quarter
Through its merger with Inca Minerals Limited, successfully
completed this quarter, Condor has acquired two highly
prospective projects in Peru; the Chanape Gold-Copper
Porphyry Project and the Moquegua Copper-Molybdenum Porphyry
Project. Both projects are located within Peru's prolific
porphyry belt (Figure 1).
Chanape Porphyry Project
Condor's newly acquired flagship project, Chanape Gold-Copper
Porphyry Project, is located in the Pierina Gold porphyry
belt, and comprises 20 mining concessions, covering an area
of approximately 805ha. Chanape is located approximately 90km
east of Lima, and is well- positioned in close proximity to
existing mining operations - approximately 35km south-west of
Chinalco's Toromocho porphyry deposit, and approximately 10km
south from the Nyrstar-owned Coricancha gold, silver, zinc
and lead mine, within the Viso Aruri mining precinct.
Figure 2: Chanape is located in a mining area that hosts numerous mining operations, including the giant Toromocho porphyry mine development, owned by Chinalco, and the Coricancha gold-base metals mine operated by Nyrstar
The Chanape Porphyry Project (Figures 2 & 3) hosts a number
of spatially coincident geological, geochemical and
geophysical features that make it highly prospective for
gold- copper porphyry mineralisation:
A Large breccia zone, with over 50 individual breccia bodies
(pipes and vein-fill structures), occurs within the project
area. Breccia pipes and breccia veins are characteristic
geological features of porphyry systems (Figure 4)
Some breccia veins were the subject of small scale mining
operations in the past
Many of breccia bodies are hydrothermally altered
Only approximately 25% of the breccia bodies have been
accurately mapped and rock- chip sampled. Several breccias
have elevated levels of gold
An Induced Polarisation - Self Potential ("SP") anomaly is
coincident with the breccia zone. SP anomalism is commonly
associated with phyllic alteration (high pyrite zone)
above porphyry systems
Geophysical data acquired this quarter has revealed the
presence of a ring-like, magnetic high anomaly around the SP
anomaly. Magnetic anomalies such as this, are commonly
associated with propylitic alteration (magnetite - at depth)
lateral to porphyry
systems
Only one breccia pipe within the geophysics-defined target
zone has been drilled (Table
1). Gold, silver and copper mineralisation occurs from the
surface and the breccia pipe is open at depth.
Start (m's
Finish (m's
Total Interval
Grams per tonne %
Drill Hole
Geology
down hol e)
down hol e)
m's
Au Ag Cu
CH002 Brecci a # 8 0.14 100.96 100.96 1.19 16.12 0.10
CH003 Brecci a # 8 0.00 101.30 101.30 1.23 35.87 0.16
CH004 Brecci a # 8 0.00 116.00 116.00 1.43 24.59 0.23
Table 1: Gold, silver and copper mineralisation in drilling at Breccia #8. This drilling was
completed in 2009
All previous exploration points to a large porphyry being
present at Chanape
Condor has the right to secure 100% of Chanape through a five
year "Mining Option and
Assignment Agreement." The principal terms and conditions are
listed below:
• Payment of US$1.5M by US$25,000 monthly payments for five
years
• Payment of US$2.5M at the expiry of the five years
• Issue of US$0.5M Condor shares after first year (if
proceeding)
• Net smelter return (NSR) of US$20 per ounce of gold
equivalent (oz Au eq)
• Exploration commitment of US$3.6M over five years
• Right to purchase in full at any time
• Right to withdraw at any time (no separation penalty)
Figure 3: The Chanape Project area. The drill access track that was used during a program in
2008/09 by the previous owner is just visible. The approximate location of Breccia 8, which contains +100m of +1g/t Au (from surface and open at depth), is indicated by the arrow
Breccia #8
SP anomaly
Mag anomaly
Figure 4: Schematic model of a porphyry deposit, porphyry geology and associated mineral occurrences (top); alteration zones and geophysics associated with a porphyry (bottom)
Field work to commence at Chanape next quarter
Following the success of the geophysics, field work is set to
commence at Chanape ahead of a drilling program planned for
mid-year. Field work will seek to locate priority drill
platforms for the holes designed to intersect porphyry-style
mineralisation at depth.
Among other activities, the work will include core re-logging
and sampling, detailed mapping of the breccia bodies,
underground mapping of the extensive mine shafts that exist
at Chanape and rock chip contour sampling.
Moquegua Porphyry Project
Moquegua is located within the Palaeocene Southern Peru
Copper Porphyry Belt (Figure 1), approximately 60km
south-east of Arequipa. Moquegua comprises four separate
concession areas: Virgen De Chapi, Oscar Alberto, Jose Alonso
and Agua Blanca.
Virgen De Chapi, Oscar Alberto, Jose Alonso and Agua Blanca
occur within a rectangular area of approximately 40km x 15km,
in close proximity to many substantial operating mines,
including Freeport McMoran's Cerro Verde Mine and Southern
Copper Corporation's Cuajone porphyry mine.
Condor has secured the Virgen De Chapi, Oscar Alberto
concessions through a legally- binding Mining Option, Mining
Assignment and Option of a Future Asset Agreement. The total
acquisition cost is US$6M, comprising a combination of
back-ended cash payments and an expenditure commitment.
Condor has secured Jose Alonso and Agua Blanca concessions in
its own name for a consideration of 1.3M shares,
payable to a Mr Daniel Chavez.
Figure 5: Location plan of the Moquegua Project
Peru is a globally important mining destination
Peru plays an important role in the global minerals
exploration and mining sector, and is currently ranked fifth
in the world in terms of committed exploration budgets
(accounting for 5% of global exploration expenditure). Many
of the major global mining houses are present in Peru,
including Aluminium Corporation of China Limited (Chinalco),
Anglo American Inc., Barrick Gold Corporation, BHP-Billiton
Limited, Freeport-McMoran Copper & Gold Inc., Gold Fields
Limited, Newmont Mining Corporation, Nyrstar N.V., Rio Tinto
Group and Southern Copper Group. These companies either
currently operate mines, or are proceeding through
feasibility stages for project development, or both.
In terms of world mineral production, Peru ranks first in
global silver production, second in global zinc production,
fourth in global copper production and sixth in global gold
production - In
2010, Peru produced 5.25 million ounces of gold.
It is interesting to note that the majority of mineral
production in Peru is derived from porphyries and
porphyry-related deposits. With over US$40 billion dollars
earmarked by major mining players for investment in Peru over
the next 10 years, the importance of continued effort to
develop Peruvian porphyries is apparent.
Figure 6: General landscape of the Oscar Alberto Project area - southern Peru
Western Australian operations
Western Australian projects have been reviewed this quarter
as part of an ongoing strategy to maximise value and the
exploration dollar. While a number of early-stage exploration
projects have been released, some of the more mature projects
warrant further investigation.
Dingo Range
The Dingo Range project consists of 11 tenements covering a
combined area of 411km2 in the
Dingo Range Archean Greenstone Belt.
During the site visit in the previous quarter, four rock chip
samples were taken from the Johnnie Walker Cu prospect and
one from an area of gossanous outcrop 300m to the west. The
Johnnie Walker Cu prospect consists of two shallow pits which
have exposed malachite mineralisation in a siltstone. The
four rock chip samples returned 20%, 14.45%, 12.05% and 8.52%
Cu, while the gossanous sample to the west returned 0.32% Cu.
In addition, the samples returned highly anomalous levels of
the Rare Earth Elements cerium (Ce) and lanthanum (La) with
the highest levels from sample ADR4 of 9,954ppm Ce and
3,524ppm La.
Detailed field mapping and surface geochemistry is planned
for the Johnnie Walker Cu prospect in the coming quarter.
Wyo Well
Wyo Well is located approximately 100km north-east of
Kalgoorlie. Condor previously identified an area of zinc soil
anomalism (peak 2,099ppm Zn) (Figure 7) with a copper soil
anomaly (peak 590ppm Cu) within the project area. Geological
mapping of the same area in the previous quarter, identified
iron- rich rock units, some of which have returned elevated
zinc (peak 0.3%) and silver (peak
4.8 g/t). As a follow up, a program of nine
200m-spaced moving loop electromagnetic (MLEM) traverses for
14 line km was also completed during the previous quarter.
Preliminary results, available this quarter, indicate the
presence of a discrete EM anomaly on the eastern side of the
soil anomaly, along with a longer strike anomaly. The longer
strike anomaly probably represents the pyritic black shale
unit present in the area.
A mapping program was completed this quarter in the vicinity
of the MLEM/soil coincident anomaly. A gossan has been
identified and samples were taken. Results are pending.
A two-hole drilling program is scheduled for completion later
in the year to test the occurrence of metal sulphides in the
target area.
Figure 7: Soil and MLEM anomalism at Wyo
Well
Grey Dam
The Grey Dam project is located approximately 90km north-east
of Kalgoorlie. The project contains a JORC-compliant inferred
nickel laterite resource defined in 2008 by RC and diamond
drilling (14.5Mt @ 0.7% Ni). The 2008 drilling also
identified the presence of nickel and copper sulphides
between depths of 130-150m in a limited number of drill
holes. These sulphide intersections were not followed up.
Previous deeper drill holes returned thin nickel and copper
intersections at the contact between komatiitic, ultramafics
and dolerite. Although the recorded drill intersections are
thin, petrographic analysis has confirmed that the nickel
minerals present are millerite and violarite, and the copper
mineral present is chalcopyrite. It appears that these
intersections are not
related to the laterite style nickel mineralisation.
Hole ID | Interval | Ni (%) | Cu (%) |
GDRC52 | 2m (from 136m) | 1.76 | 0.4 |
GDRC55 | 1m (from 150m) | 1.23 | 0.01 |
GDD03 | 0.32m (from 137m) | 1.29 | 1.5 |
GDD06 | 0.5m (from 135.5m) | 1.94 | 0.08 |
Table 2: Previous encouraging nickel intersections
During the previous quarter, a 25 line km moving loop
electromagnetic (MLEM) survey was completed to test for
conductive bodies that may be related to primary nickel
sulphide mineralisation. The MLEM survey consisted of initial
200m-spaced traverses and covered the area of anomalous drill
intersections and the ultramafic-dolerite contact along
strike, 1.2km to the north-west and 1.2km to the south-east.
Surveying identified areas of conductive response and three
areas were in-filled, or had lines extended.
Raw data from the ground EM and downhole EM surveying has
been processed by the company's geophysical consultants and
results have been plotted on prospect-scale geological maps.
During the quarter, follow-up RC holes were marked on the
ground and access surveys planned. Testing of these MLEM
anomalies is intended for the upcoming quarter.
Southern Cross
Condor's Southern Cross Project was granted in the previous
quarter. It is a single tenement project (E77/1898) located
between the townships of Southern Cross and Marvel Loch,
350km east of Perth. The project covers part of the Archean
Southern Cross Greenstone Belt which hosts a number of gold
mines in close proximity to the Southern Cross project
area.
During the previous quarter, an exploration database
containing historical drilling and soil sampling data was
obtained for the project area. This database contains 231
aircore drill holes,
225 RAB drill holes, four RC holes and 6,100 soil sample
points, all from within the area of
Condor's exploration licence.
The exploration database, along with open file exploration
reports, was reviewed last quarter and a three day field
visit to the area was completed in December 2011. Gold
deposits in the Southern Cross region generally have a strong
structural control. The company is now acquiring closely-
spaced airborne magnetic data over the project area to allow
a structural interpretation to be completed. The structural
interpretation, in conjunction with soil and drilling data,
will assist with further target generation.
The proposed soil sampling program is intended to identify
zones of elevated gold and path-finder elements in
association with previously un-sampled high-mag zones within
the project area. Land access is
currently being sought (Figure 8).
Figure 8: Soil sampling at Southern Cross
Corporate and Finance
Headline corporate activity this quarter includes the
successful merger with the public unlisted company, Inca
Minerals Limited; the appointment of Ross Brown as the new
Managing Director of Condor; and the appointment of Laurie
Ziatas as Non-Executive Director of Condor.
A geologist by profession, Mr Brown has over 26 years of
experience in mineral exploration in Australia, Africa and
South America, and has worked in a broad range of commodities
including gold, base metals, uranium, phosphate and diamonds.
Ross has been a member of AusIMM since 1988, and is also a
member of GSA, SEG and AICD.
Headline financial activity includes the successful raising
of $980,000 via the placement of
24.5M shares to sophisticated investors.
Expenditure for the quarter was $785K, compared with the
previous quarter's expenditure of
$845K (excluding income from interest). Of this, $232K was
spent on exploration activity. At the end of the quarter CNK
had $1.52M cash (previous quarter $1.27M).
Expenditure for the current quarter is budgeted to be $280K.
This budget does not include
expenses related to the Inca takeover offer.
Current Quarter activities
Activities in the current quarter will include:
1. Continuation of exploration at Chanape, including logging
and sampling of existing core (from previous owner's drilling
campaign), project scale mapping (geology and alteration),
rock chip sampling
2. Delineation of drill targets at Chanape (proposed 3,000m
diamond core program)
3. Commencement of a diamond drilling program at Chanape
4. Environment and social approvals of drilling programs and
Chanape
5. Various field programs in Western Australia, including
soil sampling at Southern Cross, rock chip sampling and
mapping at Dingo Range, and target drilling at Wyo Well and
Grey Dam.
Comment on the Quarter from the Managing Director
Newly appointed Managing Director, Ross Brown, said of the
quarter:
"The March quarter has proven to be a defining period in
Condor's history. The successful merger with Inca Minerals
has diversified the asset base of the company by extending
into the Peruvian mining hub. It has also given shareholders
exposure to high impact, and profile- boosting exploration
targets.
I was particularly honoured to accept the invitation to join
the Condor Board of Directors as Managing Director, and I
wish to recognise the tremendous efforts of the previous
management, in particular COO John McKinstry. I look forward
to the continuing support from our new and existing
shareholders as we advance our exploration efforts, and
hopefully add significant value to all of our assets.
Through its merger with Inca, Condor has acquired a very
special project, Chanape. Through investigation of hundreds
of projects in South America over a two year period, Chanape
stood out to me as among the best exploration projects
available. Now it sits comfortably as a flagship project in
the Condor portfolio of assets.
This past quarter has been one of adjustment. The Western
Australia projects have been reviewed in the context of the
broader geographical and commodity portfolio and many of
those projects warrant further investigation.
I would like to thank all shareholders for their continued
support in what promises to be an active and exciting year
for the Company."
Drilling platform of Breccia #8 with the Condor geologists and new MD
Ross Brown
Managing Director
The information in this report that relates to Exploration Results is based on information compiled by Mr. Ross Brown, Managing Director, Condor Metals Ltd., who is a Member of the Australian Institute of Mining and Metallurgy. Mr. Brown is a full time employee of Condor Metals Ltd. He has sufficient experience, which is relevant to the style of mineralisation and types of deposits under consideration, and to the activity which has been undertaken, to qualify as a Competent Person as defined by the 2004 edition of the "Australia Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Brown consents to the report being issued in the form and context in which it appears.
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