The high-grade gold mineralisation at the Christmas Gift Gold Project, which has historically produced 30koz at an incredible grade of 18 g/t Au and contains assays such as 8m at 17.23 g/t Au from 12m and 13m at 13.20 g/t Au from 68m – could stretch for 2,500m. The world class geology team at Tarrina Resources (ASX: TR8), which is listing today at 10am, is about to launch an exciting drilling campaign that will test this potential. TR8’s CEO Dr Greg Partington has done this all before, having previously managed the acquisition of the Bullabulling deposit at 410koz and turning it into a 3.7Moz monster at a discovery cost of just $5/oz. A 2.3Moz section of this asset is now being developed by $660 million market cap Minerals 260 (ASX: MI6), which counts Tim Goyder as a substantial shareholder. Greg also led the growth of the Tampia Gold Mine from 310koz to 695koz before it was taken over by Ramelius Resources (ASX: RMS), which then put it into production.
Analysis of the geophysics done in conjunction with the NSW government at Christmas Gift has clearly shown a strong connection between gold mineralisation and a magnetic low seen in imaging that has not been explored. When factoring this in with the 1,500m gold in soil anomaly above 200ppb Au, data from a total of 592 drill holes, and the structurally controlled nature of the low sulphide, quartz veining mineralisation – the most exciting parts of the project could be completely undrilled.
TR8 is hitting the boards with a relatively attractive valuation, at just $8.5 million market cap with $4.5 million in cash – a $4 million enterprise value has it almost priced as a shell. We initiated coverage on our other NSW gold portfolio company, Thunderbird Resources (ASX: THB) at $0.01/share in August – and it ran to a $20 million market cap at $0.034/share a couple months later. The key catalyst that drove this was the acquisition of a similar looking gold project in terms of historical production and solid assays over a small strike of 500m, but with serious extensions to test.
The orogenic gold system at Christmas Gift has strong potential to have a significantly larger scale that has not been discovered, simply because it has not been systematically tested with modern exploration methods. The historical workings are located along a N-NE-trending shear zone within silicified tuffaceous sediments that are close to a contact with dacitic volcanics. Gold mineralisation occurs in quartz-calcite veins with minor sphalerite, galena, and chalcopyrite, with the veins being interpreted as part of a Devonian orogenic gold system similar to other deposits in the region, such as Tomingley (406koz at 1.7g/t Au and 149koz at 2.5g/t Au), as well as Adelong (80.3koz at 3.07g/t Au and 44.8koz at 2.61g/t Au).
One of our favourite types of investments is a great Australian gold story that has potential to hit a gigantic deposit, but has something solid to fall back on in the event the exploration thesis doesn’t pan out – and the confirmed area of mineralisation at Christmas Gift already likely contains something of similar size and grade to Tomingley or Adelong.
TR8 also has another extremely exciting project – Walparuta in SA – where $7 billion market cap Sandfire Resources (ASX: SFR) has just entered into a $330 million joint venture with Haivanah Resources (ASX: HAV), to develop a monster deposit that contains 1.1Mt Cu, 3.1Moz Au and 23.2Kt of Co. The region is being touted as an incredibly prosperous district for these commodities – with SFR committing $30 million in regional exploration expenditure to find lookalikes – and TR8’s project has a very high priority geophysical anomaly that can be drilled immediately.
The assays surrounding the historically mined area at Christmas Gift can be seen below, which include the standout results of 13m at 13.20 g/t Au from 68m, 8m at 17.23 g/t Au from 12m, 9m at 11.54 g/t Au from 46m, 13m at 6.60 g/t Au from 30m, 4.5m at 16.53 g/t Au from 12m, 4m at 16.80 g/t Au from 12m and 7.0 m at 7.97 g/t Au from 55m. The initial part of the upcoming drilling campaign will be targeting this area and its close surroundings in order to delineate a JORC-compliant resource – so there is a pretty high expectation that it will record strong grades that are likely to excite the market:
Source: TR8
Below is the regional RTP magnetics and structural interpretation of Christmas Gift, which shows the low magnetic zone that hosts the historic mines, where TR8 will be testing the tuffaceous rocks to see if they contain significant gold mineralisation:
Source: TR8
The ground magnetic data over the regional RTP data can be seen below, which very clearly highlights the magnetic low that hosts the extremely high grade ore where Christmas Gift was mined:
Source: TR8
Below is a map of the soil sampling at the project. Drilling to the south doesn’t correlate with low mag geophysics, and as such has not hit significant mineralisation. TR8 will be following the trend North, where it has added a significant acreage to the project in order to capture what could be the most prospective part:
Source: TR8
Changing the Paradigm to Hit a Multi-Million Ounce Deposit
There is a huge amount of upside to be gained by taking data that has been collected and modelled in a 2D format, and turning it into a 3D model for a significantly improved exploration strategy. 3D Modelling allowed Greg to confirm the geology and grade continuity at Bullabulling, and helped explain the geological controls at the project – which provided new high-priority targets and significantly aided the ultimate development strategy. There’s 2,000m of historic core from Christmas Gift held by the government in Sydney that TR8 will begin reanalysing and relogging immediately, in the lead up to drilling campaign – which will all be 3D modelled.
Historical drilling indicates the potential for the mineralised zone to contain a few hundred thousand ounces at a decent grade, making the downside pretty limited around TR8’s current valuation. With a potential deposit of that size in an area with multiple under capacity mines, and gold at US$4,000/oz – it is certainly plausible for TR8 to achieve either a similar exit to what Strickland Metals (ASX: STK) did with its Millrose deposit, or set up a toll treating operation.
STK selling a 346koz resource at 1.8g/t Au deposit to NST for more than $60 million when gold was US$1,925/oz is always worth a mention when imagining how much value can be extracted from a small gold asset when an under-capacity mine needs to buy it, and what this means for the company after the sale. STK ran from a $65 million market cap to $309 million in the months after the deal was announced. Given Greg’s history with Bullabulling and Tampia, any sort of value crystallising event is likely to add a significant premium above the transaction value onto TR8.
Chasing Copper and Gold Near $150 million HAV
TR8 has assessed its Walparuta project in South Australia as being similar to HAV’s 12.5Mt at 1.5% Cu, 0.16% Co and 0.2g/t Au project 80km South, which is in the same region as its other monster project that contains a 100Mt ore reserve of copper, gold and cobalt. HAV recently pushed past $150 million market cap after the SFR deal, and the two decades of exploration at the project provides a large and valuable dataset for TR8 to factor into its exploration program. Interestingly, HAV developed a 3D exploration model and then drilled it out for only 2 years to delineate a 108Mt copper-gold resource, way back in 2007.
There are 8 drillholes that stand out at Walparuta, which reached a maximum depth of 230m, including 1.52m at 0.53% Cu and 1.37 g/t Au, 4.57m at 0.33% Cu and 0.34 g/t Au, 7.62m at 0.90% Cu and 0.62 g/t Au, and 4.57m at 0.73% Cu and 1.49 g/t Au. Copper and gold have correlated with magnetite, and there are over 100 samples that exceed 1000ppm Cu – there was even 66 tonnes of copper ore production early in the 20th century.
TR8 believes reinterpretation of geophysical data should better define drill targets to locate the main mineralised area. The project contains several prospects with mineralisation, alteration, geochemical, and geophysical characteristics that are consistent with IOCG mineralisation – with some high-priority zones that would be groundbreaking if they were to hit anything economic.
With TR8 kicking off its journey as a listed company on the ASX today, the robust newsflow over the coming months from a portfolio of highly prospective projects – which have been assembled by a team that have kicked some huge goals before – is sure to be eagerly awaited by the market.
Subscribe here to receive all of our coverage
Disclaimer: This article is for informational and marketing purposes only, and does not constitute financial advice or a recommendation to invest. All opinions expressed are our own. We may receive fees or other forms of compensation in connection with the publication of this content, and may own shares in any of the mentioned companies. Please do your own research and seek professional advice before making any investment decisions.