Overview of Strategic Minerals

Strategic Minerals Corporation NL (Strategic) is an Australian based gold exploration company whose principal major gold exploration project is located at Woolgar, in Central Northern Queensland, Australia.

The Company has been publicly listed on the Australian Stock Exchange (ASX: SMC) since 1981.

Strategic's core objective is to become a significant gold producer through mine development at its 100% owned and managed Woolgar Project. The project, which includes all mining titles and exploration permits, is located 120 kilometres north of Richmond, in Queensland, (see Figure 1), an area of high gold endowment, where several multi-million ounce gold deposits have been developed over a number of years. The project hosts multiple gold resources in several styles of mineralisation, including epithermal and mesothermal vein-hosted, and intrusive related gold systems, shown in Figure 2. 

The Woolgar Gold Project

100% Strategic Minerals Corporation N.L.

The project incorporates five Exploration Permits for Minerals (EPMs) covering an area of 493 km² over prospective areas within an area 31 kilometres north to south and 26 kilometres east to west, along with eight Mining Leases (MLs) over resources and infrastructure. 

Gold was discovered at Woolgar over 100 years ago, although systematic exploration did not commence until the late-1970’s. Epithermal veins were discovered in the 1980’s and were the focus of exploration until the recent discovery of the mesothermal-style BVS deposit.

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Figure 1: Geological location map of the Woolgar Project showing principle road and rail infrastructure, and the regional geological provinces. The deposits shown are existing epithermal, mesothermal and IRGS gold deposits greater than 1Moz throughout Northeast Queensland, which are considered to be of comparable ages, styles and occurrences to the known mineralisation at Woolgar.

 

Alluvial and reef gold was discovered in the Woolgar District in 1888 and was the scene of a modest gold-rush. Small-scale mining continued intermittently until 1984 along fifteen kilometres of the Woolgar trend.

These deposits were first tested using modern methods by Billiton in 1978 and Strategic in 1979, after which time exploration activity focused on the newly-discovered, high-grade, near surface, epithermal veins in the Sandy Creek sector.

The high-grade, epithermal gold veins at Woolgar were first identified by Strategic in the Sandy Creek area in 1986. These were recognised as having the potential to host a major gold deposit and became the focus of exploration until 2008 through two consecutive joint ventures with Barrick Gold and Oxiana. By 2008, a 795,000 ounce gold resource (JORC 2004-compliant) had been delineated, comprised of 678 koz in epithermal veins in Sandy Creek and 95 koz in the Soapspar intrusive related system and the remainder in small mesothermal bodies, see. Table 4

Subsequent exploration programs have focussed on the mesothermal gold veining along the Woolgar Fault Zone, a major regional structure related to several other gold deposits including Kidston, (see Figure 1).

Project Geology

The project geology consists of Proterozoic metamorphic rocks, pale blue in Figure 2, which have been intruded by several igneous units. This has been overlain by several generations of sedimentary sequences, predominantly of Jurassic age, with extensive areas of recent (Quaternary) alluvial deposits.

The metamorphic sequence (schists, gneisses and migmatites) is exposed locally in an erosional window (inlier) within the regionally extensive sediments, and is considered to be a southern extension of the Etheredge Formation that occurs around Georgetown to the north, which hosts the Kidston, Mt Hogan, Georgetown and Chillagoe deposits amongst others. Most mineralisation is hosted within the metamorphic suite, such that exploration concentrates on this, but has also been effective at following the mineralisation under shallow sedimentary cover where it is not visible at surface.

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Figure 2:  Topographic map of the Woolgar Project showing the principle sectors, prospects and tenements. The most prospective ground is the exposed metamorphic basement of the Woolgar Inlier (pale blue) with further potential for blind mineralisation under the Jurassic and Tertiary sedimentary cover proximal to the inlier.

 
 

Mineralisation

There are three main types of mineralisation recognised at Woolgar: epithermal veins, shear-hosted mesothermal veins and intrusive related gold.

  • The epithermal mineralisation occurs in the eastern Sandy Creek sector with minor occurences along the Woolgar Fault Zone.
  •  
  • The mesothermal veins are concentrated along the Woolgar Fault Zone, trending north-northeast through the Lower, Middle and Upper Camps.
  •  
  • The intrusive related mineralisation is predominantly distributed across the northern and central prospects, with lesser occurrences in the Lower Camp.

These mineral styles are adjacent and locally coincident, although they apparently were formed by multiple geological events. They are apparently localised in the Woolgar district by the highly favourable occurrence of multiple, regionally important geological structures.

Exploration Overview

Strategic has enjoyed considerable recent exploration success in the Lower Camp, culminating in the recent resource estimations for BVS. This is due to the Company’s improved geological understanding of the mineralisation systems and the controls on their distribution. The Company is currently applying this improved geological understanding to both new targets and reassessing previous prospects across the broader project area.

From 2014, work has focussed on geophysics across the Lower Camp and drilling the Big Vein South (BVS) prospect. Additional programs have included geological mapping, ground magnetometry and IP Geophysics across the project area and an internal data review and re-assessment.

The BVS Success Story 

Strategic recommenced systematic exploration of the Woolgar Fault Zone (WFZ) deposits in 2007 in order to test for further mineralisation to augment their resources in Sandy Creek and Soapspar. Initial soil sampling along sections of the fault zone was followed up with successive drill programs testing. This commenced with the historic workings in the Lower Camp, then expanded to multiple targets along 16 kilometres of the WFZ, before focussing on the BVS prospect.

Table 1:  Drill metres on the WFZ only, within the Woolgar project 2008 to 2015.

Year

Method

No. of Holes

No. of Metres

Activity

Outcomes

2008

RC

11

756

Scout drilling in Lower Camp.

Initial intersections at Mowbray NE

2009

RC

16

1,148

Further reconnaissance with first holes in BVS area

Initial intersections at Big Vein and BV2 area

2010

RC

35

2,700

Follow-up over 5 Lower Camp prospects

Patchy, high-grade intersections identified over a broad area

2011

RC

106

8,363

Scout drilling along 16km of WFZ and shallow resource drilling at Big Vein

Small resource at Big Vein

2012

RC

133

8,770

Scout drilling along 16km of WFZ and follow-up and shallow resource drilling at Big Vein South (BVS)

Small resources announced at BVS

2013

RC

45

5,753

Moderate depth expansion at BVS

Bulk-tonnage, moderate-grade target potential realised

DDH

10

828

2014

RC

29

7,867

Deep expansion at BVS

Resource upgrade at BVS

2015

RC

13

2,968

Connecting resources at BVS

Resource upgrade at BVS

TOTAL

 

398

39,153

 

 

 

The BVS and BVC prospects were first identified through reconnaissance mapping and geochemistry, followed by scout drilling. These prospects have been the main focus of the Company’s exploration activity since 2012, culminating in the recently augmented resource estimates, see JORC-2012 Resources.

Encouraging drill results, with multiple high grade intersections were encountered in mesothermal vein systems within the main WFZ, led to follow-up drilling throughout the Upper and Lower Camp areas. This increasingly focussed-in on the Big Vein South prospect (BVS), at the southern limit of exposed basement rocks in the Woolgar Inlier where larger volumes of mineralisation were first discovered. 

At BVS, this follow-up drilling identified broader, high-grade mineralisation that has subsequently been extended progressively along strike and to depth, where it remains open. This work has delineated JORC 2012-compliant gold resources of 10.24Mt at 2.03 g/t, containing 667,000 oz. gold at a 0.75g/t cut-off, in three resource blocks over 1,500 metres of strike in shear-hosted mesothermal veins. These were initially thought to be two separate, sub-parallel deposits within the broader WFZ trend, but have now been proven to be a single continuous deposit, collectively known as the BVS deposit. 

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Figure 3:  Geological Interpretation of the BVS Mineral Zones, showing drillhole location and the base of partial oxidation.

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Figure 7: Grade thickness long-section of Big Vein South as at October 2015 highlighting the infill drilling in the cross-over sector. Compare this to Error! Reference source not found. (not to scale).

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Figure 8: December 2015 BVS Resource Estimate: - Gold Block Grade Distribution. Upper figure: View looking down to grid northwest. Lower figure: View looking down to grid south east. The majority of the resource seems to occur as a flattish east dipping zone at depths of 100 to 150m below surface. Compare with Error! Reference source not found. for the June 2015 resource. The additional ounces are located in and adjacent to the Crossover zone.

The mineralisation at BVS commences near surface, with the main lodes at moderate depths and a low complexity of distribution. Initial studies of this mineralisation indicates favourable metallurgy with high recoveries. Interpretation of the resource estimation still indicates significant exploration potential, an indicator that further mineralisation may be delineated with additional drilling. 

The success of the deeper drilling, especially the delineation of high-grade mineralisation beneath low or no grades near surface has renewed the potential of the prospects with mid to low-grade surface and shallow drillhole anomalies. The company is now testing further techniques to help identify those with most potential throughout the rest of the project. 

Grade-Tonage

A series of grade-tonnage values for a range of gold cut off grades for the global estimates are presented as a plot of the grade-tonnage curves.

GTfigure4
Figure 6 - Grade Tonnage Curves

Metallurgy

Strategic has conducted initial metallurgical testwork on the BVS deposit indicating 96% gold recovery in non-refractory ore.

Tests were run on six sample of representative material from BVS, including a range of gold grades and depths of occurrence.
 
Key results obtained from the program include:
  • Gold recovery averaged 96% across the six samples tested;
  • No refractory ore characteristics were observed in any of the tests, indicating the ore is suitable for gold recovery in a standard CIL processing plant;
  • The consumption of reagents is considered moderate; and
  • Silver, copper, lead and zinc values are moderate and are not considered to significantly affect the design of any future processing facilities, although a flotation circuit for the production of a base metal concentrate may be viable and will be examined later in the testwork program.  
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Table 2:  Summary of significant results. Note that Big Vein South and Big Vein Central have subsequently been amalgamated to BVS in light of the drill-proven continuity between these sectors.

The primary focus of these tests was on the gold recovery since this is the dominant metal of value in the system. Although silver, copper, lead and zinc also occur, these are relatively minor and are not expected to form a significant economic component of any project going forward. These metals were monitored for any potential effects that they may have on the leaching, recovery or consumption of reagents during processing. First indications from these tests suggest that such effects appear to be moderate and manageable within a normal processing circuit.

This is the first phase of metallurgical studies conducted on the mesothermal-style mineralisation encountered along the Woolgar Fault Zone and is not directly associated with either the epithermal or intrusion-related mineralisation in the Sandy Creek and Soapspar sectors, for which metallurgical studies have been conducted historically. 

Infrastructure and Mine Planning 

The BVS deposit now represents the largest single resource in the Woolgar Project and as a result the Company’s previous development plans are currently under review to optimise these for the modified size, distribution and metallurgy of the composite resources.

Significant factors to be assessed include the favourable geographic location and topography of the BVS deposit in the south in comparison with the incised terrain in the north of the project.

BVS is centrally located in the downstream portion of the main Woolgar river valley. Siting of processing infrastructure here would allow haulage from satellite deposits in the Sandy Creek and Upper Camp to feed down the valleys, rather than transversely across the incised drainages. The Lower Camp is also relatively open ground, amenable for development and potentially requiring less costly infrastructure.

Current Status

The project contains published JORC 2012-compliant gold resources of 10.24MT at 2.03 g/t, containing 667,000 oz. gold at a 0.75g/t cut-off, in shear-hosted mesothermal veins in the Big Vein South prospect of the Lower Camp, as well as JORC 2004-compliant gold resources of 25.4 MT at 1.09 g/t gold containing 795,400oz. at variable cut-offs between 0.4 and 0.8g/t, across a series of prospects, predominantly in the epithermal veining and intrusive related gold systems in the Sandy Creek and Soapspar sectors respectively.

Resource Inventory

The Woolgar Project contains multiple resources. Recent resources are published to JORC-2012 compliance, whilst older resources were published to the, then applicable, JORC-2004 code of compliance. These have not been updated to date on the basis that no further work has been carried out upon these and the information has not materially changed since it was last reported. These are expected to be updated to JORC-2012 compliance as and when required as part of the ongoing reappraisal of the project.

JORC-2012 Resources 

The current global resource for Big Vein South is 10.24Mt at 2.03 g/t, containing 667,000 oz. gold at a 0.75g/t cut-off. 

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Table 3: Summary of global resource table for the Woolgar Project for JORC 2012-compliant resource estimates. For full details of these results, please refer to “Resource Update for Big Vein South” issued on 8th December 2015, available at www.stratmin.com.au

For further details on the BVS deposit and resource, see Mineralisation

JORC-2004 Resources

Table4

Table 4:  Summary of the JORC-2004 compliant resource estimates for other deposits within the Woolgar Project, excluding the superseded resource estimates for the Big Vein South and Central areas. For the full resource statement (reported under the 2004 JORC Code & Guidelines) please refer to “QUARTERLY ACTIVITY REPORT FOR THE PERIOD ENDED 31st MARCH 2013” published 30th April 2013, available at www.stratmin.com.au

Note: This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

Uranium

Strategic, through its subsidiary company Alpha Uranium N L, has established a uranium exploration portfolio, which includes substantive targets within the Woolgar project area, where the potential for the discovery of significant uranium deposits is considered high. Exploration activity for uranium is currently in hiatus due to the state-wide prohibition on the mining of uranium, but may be resumed if legislative changes justify.