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28/09 - Majors Creek hot prospect for Cortona Resources

Majors Creek hot prospect for Cortona Resources
GARIMPEIRO / BARRY FITZGERALD
September 28, 2009

Perth-based Cortona is reviving some old gold mines near Canberra.

CORTONA RESOURCES Cortona Resources' (ASX:CRC) chief Peter van der Borgh was once part of a research team at the University of Western Australia that conducted the so-called Giant Ore Deposits or GODs project.

GODs was all about studying the geological controls behind the formation and settings of the world's biggest mineral deposits.

Perth-based Cortona does not have a GOD project in its portfolio, but for a company with a market cap of $18 million (18¢ a share), it's got the next best thing with its Majors Creek gold project, 60 kilometres east of Canberra.

Van der Borgh reckons Majors Creek is about to re-emerge as a gold camp. He can say re-emerge, as back in 1870-91 and 1914-16, more than 1.25 million ounces of gold was plucked by old-timers from alluvial workings and hard-rock operations.

In its revival plan, Cortona's initial focus has been on Dargues Reef where it has proved up a ''starter'' high-grade (6.2 grams of gold a tonne) resource of 286,000 ounces.

It can be called a starter resource because nothing below 450 metres depth has been included, even though the granite that hosts the mineralisation probably plunges on for at least another five kilometres or so.

A scoping study of the development of Dargues Reef released last week gave the sort of encouragement Cortona was looking for before committing to a feasibility study. It found an initial $30 million underground development would pull in 188,000 ounces of gold over 4› years at a cash operating cost of $A470 an ounce.

Using a gold price of $A1150, the starter project would throw off a $68.4 million pre-tax profit over the period. The projected internal rate of return at 68 per cent is as good as gets in the sector.

First production would be possible by the second quarter of 2011, by which time there is every chance that any one of a number of other development opportunities in the shadow of the Dargues Reef headframe will have come into picture.

One of those could be Tory Boy, two kilometres north of Dargues Reef, where Cortona has been pulling some exciting exploration results. Given the proximity to Labor-held Canberra, it might be advisable to name a future exploration site Whig Boy.

SANDFIRE RESOURCES It was another big week for Sandfire Resources (ASX:SFR) on the strength of exploration results from its high-grade Doolgunna copper/gold discovery to the north of Meekatharra in WA.

The stock marched from $2.72 a share to $3.31, a gain of 22 per cent for the week. It was little wonder then the Sandfire boss Karl Simich was more pumped than the Geelong and St Kilda footy teams combined on Friday.

Speaking at the Resources Rising Stars conference on the Gold Coast, Simich told the 450 in attendance that Sandfire was proceeding on the basis that Doolgunna will be a mine.

Simich said the only question now was, ''how big?''. To find out, a fourth drill rig is being brought on site so an initial resource estimate can be made before year's end.

Much of the excitement at Doolgunna is based on it being of the volcanogenic massive sulphide type. Where they occur elsewhere in the world, they tend to be in clusters. Simich passed on to the punters that Doolgunna was one of 18 bulls-eye magnetic targets identified from an airborne survey and that before it came to drilling any of them, Doolgunna was ranked the fourth most important by the group's geologists.

Simich also stopped just short of punching the air when he passed on the information that Bell Potter analyst, Stephen Thomas, upgraded his valuation of the stock from $4 to $6 a share.

And given Doolgunna's promise has turned the former spec stock into a $300 million-plus company, there should be no surprise that the project is to be the group's prime focus.

So much so that Simich said thought was being given to ''reassembling'' the company. That's another way of saying Sandfire could spin-off its other interests into separate companies, with its Borroloola project in the Northern Territory a likely candidate.

THUNDELARRA EXPLORATION Thundelarra Exploration (ASX:THX) has been getting plenty of support in the rising resources market of late, on the strength of its appeal as an asset play. Its 40 per cent share of the currently mothballed Copernicus nickel mine and its $19 million stake in iron ore junior UMC ensured that.

So isn't it a nice delight for shareholders that the group's other key focus, uranium exploration in the Northern Territory's Pine Creek region, is adding to the story?

Another super high-grade uranium hit at the Thunderball prospect put a rocket under the group's share price on Friday. By the close of trade, it was 10¢ or 29 per cent stronger at 44¢ a share.

The hits were high-grade all right. Best results included 15 metres grading 1.5 per cent uranium - including one metre at 20.3 per cent uranium - and 4.5 metres at 11 per cent uranium (visual estimate only).

In the uranium exploration game, mineralisation is usually reported in parts per million. Anything more than 500 parts per million (0.05 per cent) is considered interesting, even if it all seems a plot to make loads of low-grade stuff stand out.

Thunderball's high-grade hits are off the scale in parts-per-million measure. No wonder the stock went for a bit of a trot. But it is early days at Thunderball; way too early to say anything more than the results are interesting.

Garimpeiro attended the Resources Rising Stars conference as a guest of Read Corporate.

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