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GREENWING RESOURCES LTD Interim / Quarterly Report 2006
65029_rns_2006-07-23_9a54423b-a596-4d23-b536-fbf28a8289d6.pdf
Interim / Quarterly Report
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BASS METALS LTD ABN 31 109 933 995
24 July 2006
The Manager Companies Company Announcements Australian Stock Exchange 20 Bridge St Sydney NSW 2000
Dear Sir
JUNE 2006 QUARTERLY REPORT OF ACTIVITIES
Bass Metals Ltd is pleased to provide its activities report for the Quarter ending 30 June 2006.
HIGHLIGHTS
Que River Base Metals Project
- Positive cash flow of up to \$9.0 million indicated by scoping study on initial Mineral Resources at Oue River
- Mining Alliance agreed with experienced mining group, Mancala Pty Ltd providing the mining expertise and local industry experience.
- Further positive drill results extending copper rich mineralisation to shallower levels eg 3.2 metres grading 3.2% copper, 3oz./t silver from 32.5 metres downhole.
- Increase to Que River combined Mineral Resource inventory to approximately 500,000 tonnes of shallow, accessible mineralisation with addition of the Nico Lens resource.
Mt Charter Gold-Silver project
- Second drill programme well advanced and yielding further positive results such as:
- $\checkmark$ 20 metres at 2.9 g/t gold, 47 g/t silver (2.8 g/t gold equiv.) from 12 metres downhole
- ✓ 59 metres at 1.3 g/t gold, 31 g/t silver (1.9 g/t gold equiv.) from 37 metres downhole
- $\checkmark$ 28 metres at 1.2 $q/t$ gold, 41 $q/t$ silver (2.0 $q/t$ gold equiv.) from 7 metres downhole
- Resource potential for shallow, wide gold silver and zinc mineralisation firming with on going drill results.
Zinifex Hellyer Exploration Alliance
- Zinifex Exploration alliance has identified 13 target areas prospective for new world class Hellyer style zinc-lead-silver-gold deposits.
- Drilling started in July with a second rig to systematically test these targets.
Regional Exploration
- Sixty target areas emerging through regional targeting work to identify new base metal, gold, nickel and platinum group metals targets in the Company's extensive regional lease holdinas.
- Acquisition of the Saracen tenements (announced in July) gives Bass Metals increase to ٠ Mineral Resources, significant advanced targets and a dominant land position in the highly prospective Rosebery and Hellyer mineralised corridor.
1.0 Commentary
Que River is an important project for the Company; it has the potential to yield a meaningful cash flow and to grow into a substantial mining operation.
Early cash flow potential
The Snowden scoping study level mining plan completed during the Quarter demonstrated the positive cash flow potential of the current Que River Mineral Resources. Building on that outcome the Company finalised a Letter of Intent to form a mining alliance with Mancala Mining Pty Ltd, a well regarded and highly experienced mining group. The Principals of Mancala, who have direct operating experience at Hellyer and Que River, are currently optimising the Snowden mine plan and significant enhancements are expected.
Resource growth potential
Work is continuing to identify further resource targets to upgrade and incorporate into the Que River mining plan. During the Quarter the Company added the shallow Nico Lens JORC compliant Mineral Resource and identified an attractive resource target referred to as QR32 Lens identified through historic intercepts such as:
- 14 metres at 5.5% Zn, 3.5% Pb, 85 q/t Aq, 1.0 q/t Au ~120 m, below surface (QR1000);
- 8.8 metres at 3.8% Zn, 2.5% Pb, 69 g/t Ag, 0.9 g/t Au ~100 m, below surface (QR1096);
- 4.8 metres at 6.7% Zn. 4.6% Pb. 142 g/t Ag ~25 m, below surface (QR1084): Drill testing of QR32, Nico and other targets commenced in July.
Mt Charter is an outcropping gold-silver mineralised system occurring on the same mineralised trend that hosts Hellyer and Que River. Bass Metals has generated further positive drill results defining shallow, wide zones of gold-silver-mineralisation at Mt Charter. The objective of this current drilling programme is to generate sufficient data to enable a JORC compliant Mineral Resource estimate to be completed in the next Quarter.
The grades at Mt Charter intersected to date vary around 2 to 3 g/t gold equivalent (gold plus silver) with a significant zinc credit emerging. The deposit is within 2km of a sealed highway. central to several possible processing facilities and occurs over generous widths from surface at shallow depths. Along with possible zinc and barite credits, and subject to completing the metallurgical testwork currently in progress, these attributes make Mt Charter a very attractive target for potential development.
The Hellyer exploration alliance with Zinifex Limited is focussed on the Hellyer tenements, an area of 56km2 with major base metals deposits already discovered and mined at Que River and Hellyer. Drill testing of the 13 target areas identified commenced in mid July, and a drill rig will be dedicated to this drill programme for the rest of the year.
Regional Exploration targets are starting to emerge through the collaboration with Geoinformatics Exploration Inc. The volume of historic data compiled, reprocessed and modelled is awe inspiring and the opportunities identified are exciting. Subsequent to the end of the Quarter the Company announced the agreement with Saracen Mineral Holdings to acquire three Exploration Licences covering 138km2 of the highly prospective Hellyer-Rosebery corridor immediately south of the Hellyer project leases. The acquisition adds to the Mineral Resource inventory of the Company and provides several advanced exploration targets.
Bass Metals is the dominant tenement holder in the highly mineralised North West region of Tasmania and realising the mineral potential is the fourth, vital initiative to its Tasmania strategy. The Company is well advanced on securing an experienced geologist who will be dedicated fulltime to regional exploration activities.
2.0 Exploration Activities
2.1 ADVANCED PROJECTS - ACTIVITIES & RESULTS
Que River Project
Que River had a pre-mining endowment of 3.3 million tonnes at 13.3% zinc. 195 g/t silver 3.3 g/t gold 7.4% lead and 0.7% copper. Mining commenced in the late 1970's and all the ore was trucked to Rosebery for processing and the mine was closed in 1991 as the identified reserves were depleted and the Hellyer Mine came on stream. Bass Metals is building up a Mineral Resource inventory which forms the basis of its Que River Mining Study (QRMS). Subject to the QRMS findings the Company's aim is to get the Que River project into production as soon as possible.
Drilling results received during the June Quarter continued to provide positive results as summarised in Tables 1 and $\overline{2}$
| From (m) | To $(m)$ | Down hole | Horizontal | . Cu (%) |
Zn $(\%)$ | Au $(g/t)$ | Pb(%) | |
|---|---|---|---|---|---|---|---|---|
| Ag $(g/t)$ | ||||||||
| Interval (m) | Width (m) | |||||||
| QRD1231 | ||||||||
| 16.8 | 21.3 | 4.5 | 3.9 | 1.6 | 0.1 | 33 | 0.4 | < 0.1 |
| QRD1232 | ||||||||
| 30.35 | 31.20 | 0.85 | 0.5 | 2.3 | 0.1 | 121 | 0.3 | 0.2 |
| 38.65 | 39.70 | 1.05 | 0.6 | 2.5 | 0.1 | 32 | 0.3 | |
| 229.5 | 232.7 | 3.3 | 1.0 | 2.4 | $\blacksquare$ | 16 | $\blacksquare$ | $\sim$ |
| QRD1233 | ||||||||
| 18.50 | 18.90 | 0.4 | 0.35 | 2.4 | $\blacksquare$ | 83 | 1.5 | 0.2 2 |
| QRD1234 | ||||||||
| 32.50 | 35.70 | 3.2 | 2.1 | 3.2 | 0.7 | 103 | 0.5 | 0.3 |
Table 1: Summary of Que River Diamond Drilling Results (0.5% Cu cut-off).
Interval selection was broadly based on lower assay cuts of 0.5% for Cu and 1.0% for Zn and Pb over intervals greater than 1.0 metre and is designed to provide a guide to the width and tenor of the mineralised system.
Table 2 Que River June Quarter Diamond Drilling Programme
| Number | Grid North | Grid East | Hole Dip | Total | Comment |
|---|---|---|---|---|---|
| (m) | (m) | depth (m) | |||
| QRD1231 | 7375 | 5276 | $-30$ | 47.6 | Complete/received |
| QRD1232 | 7375 | 5276 | $-54$ | 63.7 | Complete/received |
| QRD1233 | 7325. | 5269 | $-30$ | 49.8 | Complete/received |
| QRD1234 | 7325. | 5268 | -58 | 65.8 | Complete/received |
| QRD1235 | 7324 | 5241 | $-59$ | 98.8 | Complete/pending |
The results are significant because they highlight the extension of the copper rich zones up to relatively shallow depths and in the case of QRD1234 and 1233, south outside of the current Mineral Resource envelope as shown in Figure 1.
The Que River resource inventory increased during the Quarter with additional Mineral Resources estimated at Nico Lens as tabulated in Table 3 and reported to ASX on 6 April, 2006. The Directors consider that there is significant potential to further increase this Mineral Resource through further evaluation of the historical data and new drilling. An example of this confidence is the recently identified new resource potential at the QR32 Lens. During the Quarter work commenced to systematically review the entire 900 metre strike extent of the Que River mineralised system looking for remnant ore positions and new drilling targets. QR32 was identified early in this process; it was partially mined from underground in the late 1980's but, as Figure 2 highlights, significant resource potential remains.
Significant true width intersections in the QR32 resource target include:
- ← 14 metres at 5.5% Zn, 3.5% Pb, 85 g/t Ag, 1.0 g/t Au ~120 m. below surface (QR1000);
- ← 8.8 metres at 3.8% Zn, 2.5% Pb, 69 q/t Aq, 0.9 q/t Au ~100 m, below surface (QR1096);
- $\checkmark$ 4.8 metres at 6.7% Zn, 4.6% Pb, 142 g/t Ag ~25 m, below surface (QR1084);
- $\checkmark$ 1.7 metres at 4.4% Zn. 3.3% Pb, 85 g/t Ag ~35 m. below surface (QR1084);
- ← 0.9 metres at 5.1% Zn, 2.2% Pb, 70 g/t Ag, 1.1 Au ~70 m below surface (QR1084);
Table 3: Que River Mineral Resource Summary
Nico Mineral Resource
| JORC Resource | tonnes | Density | MEAN GRADES | |||||
|---|---|---|---|---|---|---|---|---|
| Category | (g/cm 3 ) | $Zn$ (%) | Pb(%) | Ag $(g/t)$ | Au $(g/t)$ | Cu (%) | ||
| Indicated | 33,000 | 3.7 | 9.0 | 5.4 | 130 | 1.0 | 0.3 | |
| Inferred | 69,000 | 3.6 | 8.3 | 4.6 | 102 | 0.9 | 0.4 | |
| Total | 102,000 | 3.6 | 8.5 | 4.9 | 110 | 0.9 | 0.4 |
| S-Lens Mineral Resource | ||||||||
|---|---|---|---|---|---|---|---|---|
| JORC Resource | tonnes | Density | MEAN GRADES | |||||
| Category | (g/cm $^3$ ) | $\%$ Cu | %Zn | Pb $(\% )$ | g/t Ag | g/t Au | ||
| Indicated | 164,000 | 3.9 | 1.5 | 5.3 | 1.7 | 70 | 0.3 | |
| Inferred | 206,000 | 3.9 | 1.9 | 3.3 | 1.2 | -59 | 0.3 | |
| TOTAL | 370,000 | 3.9 | 1.7 | 4.2 | 1.4 | 64 | 0.3 |
Snowden Mining Industry Consultants completed a scoping level mining study for the Que River Mineral Resources indicating the potential to generate up to \$9.0 million in surplus cash based on parameters detailed in Table 4.
Table 4: Key Results from Que River Scoping Study - Initial developments.
| Item | Input / Result | Comment |
|---|---|---|
| Production Rate | 100,000 to 200,000 tonnes of ore | Limiting factors are vertical advance rate of a |
| per year. | small pit. | |
| Required ore delivery schedule of off take party. | ||
| In pit resources | Indicated and Inferred Mineral | |
| Resources occurring within the | ||
| stage 1 and stage 2 pit outlines | ||
| total approximately 250,000t. | ||
| Commodity | Copper US\$6,700/t | The revenue calculation used these "current" |
| prices | Zinc US\$3,000/t | commodity prices and assumed standard |
| Lead US\$970/t | industry smelter & refining charges. These are | |
| Silver US\$10/oz | currently the subject of negotiation with the | |
| Gold US\$565/oz | potential off-take parties. | |
| US\$:A\$ 0.74 | ||
| Estimated | Stage 1 - \$5 million | The average operating margin is approximately |
| operating | Stage 2 - \$4 million | 40% after all costs. |
| surpluses. | Total \$9 million |
Estimates were made for mining, haulage and processing costs based on local industry knowledge. Assumptions on revenue for "ore" sales were also based on standard industry returns and some local precedents. All of these input parameters need to be confirmed in the next phase of the study and at this stage all inputs and results should be considered to be within a $+/-30\%$ estimate range.
While the Company has reasonable basis on which to express these estimates, any forward looking statement is subject to risk. Risks include, without limitation; metal prices, foreign exchange rate movements, project funding capacity, concentrate off take contracts and estimates of future capital and operating costs.
Mt Charter Gold Project
In its first drill programme in November 2005, the Company recorded several outstanding drill results on the Mt Charter project warranting a second drill programme which commenced in the June Quarter. In June further positive results were received for the first three drill holes, MCD25 to MCD27 and are presented in Tables 5 and 6, as well as the results from Bass Metals' initial programme (MCD20-MCD24) and several historic drill holes. A drill hole location diagram is presented in Figure 3.
| From | To | Down | Gold | Silver | *Gold | Zinc | Lead | Insitu | |
|---|---|---|---|---|---|---|---|---|---|
| hole Interval |
Equiv. | (%) | (%) | Bulk Density |
|||||
| (m) | (m) | (m) | (g/t) | (g/t) | (g/t) | $(g/cm^2)$ | |||
| MCD 20 | |||||||||
| 1.7 | 54.2 | 52.5 | 1.9 | 39 | 2.7 | nsr* | nsr | 2.8 | |
| MCD21 | |||||||||
| $\overline{0}$ | 80.0 | 80.0 | 1.6 | 61 | 2.8 | $nsr*$ | nsr | 3.2 | |
| MCD 22 | |||||||||
| 56.0 | 71.4 | 15.4 | 2.1 | 38 | 2.9 | 4.8 | 1.9 | 3.6 | |
| 83.9 | 91.9 | 8.0 | 2.1 | 27 | 2.6 | 2.9 | 1.0 | 3.7 | |
| Within a broader zone defined at a 0.5 g/t Au cut-off | |||||||||
| 49.2 | 98.6 | 49.4 | 1.4 | 22 | 1.8 | 2.6 | 1.0 | ||
| MCD23 | |||||||||
| 84.0 | 85.0 | 1.0 | 4.6 | 16 | 4.9 | nsr | nsr | 3.0 | |
| Within a broader zone defined at a 0.5 g/t Au cut-off | |||||||||
| 83.0 | 88.6 | 5.6 | 1.4 | 8 | 1.6 | nsr | nsr | 2.8 | |
| MCD24 - No significant intercepts | |||||||||
| MCD25 - No significant intercepts | |||||||||
| MCD26 | 3.0 | ||||||||
| 12.0 | 32.0 | 20.0 | 2.0 | 47 | 2.9 | 0.8 | 0.5 0.3 |
3.0 | |
| 37.0 | 96.0 | 59.0 | 1.3 | 31 | $\overline{1.9}$ | 0.9 | |||
| Within a broader zone defined at a 0.5 g/t Au cut-off 92 |
1.3 | 33 | 1.9 | 0.3 | |||||
| 4.0 | 96.0 | And includes a zinc rich zone of >1% Zn | 0.8 | $\overline{3.0}$ | |||||
| 37 | 52 | 15 | 1.5 | 40 | 2.3 | 2.3 | 0.7 | ÷. | |
| MCD27 | |||||||||
| 7.0 | 35.0 | 28.0 | 1.2 | 41 | 2.0 | 2.0 | 1.0 | 3.2 | |
| 40.0 | 49.0 | 9.0 | $\overline{1.3}$ | 32 | 1.9 | 0.6 | nsr | 3.1 | |
| Within a broader zone defined at a 0.5 glt Au cut-off | |||||||||
| 3.0 | 54.0 | 51.0 | 1.1 | 33 | 1.7 | 1.3 | 0.6 | 3.1 | |
| And includes a zinc rich zone of >1% Zn | |||||||||
| 15 | 35 | 20 | 1.3 | 47 | 2.2 | 2.6 | 1.3 | ||
| MC1 | |||||||||
| 77.0 | 84.0 | 7.0 | 1.2 | 6 | 1.3 | 0.3 | nsr | 2.6 | |
| 108.0 | 133.0 | 25.0 | 1.0 | $\overline{10}$ | $\overline{1.2}$ | 0.5 | nsr | $\overline{3.1}$ | |
| 163.0 | 177.0 | 14.0 | 1.2 | 63 | 2.4 | 0.2 | nsr | 3.1 | |
| MC2 - no significant intercepts | |||||||||
| $MC3$ – no significant intercepts | |||||||||
| MAC26 | |||||||||
| 3.0 | 58.4 | 55.4 | 1.5 | 36 | 2.2 | 1.0 | 0.5 | 3.2 | |
| And includes a zinc rich zone of >1% Zn | |||||||||
| 23.5 | 57.0 | 33.5 | 1.9 | 43 | 2.7 | 1.4 | ÷ | $\overline{\phantom{a}}$ |
Table 5: Summary of assay results for Mt Charter Drilling Programme (1.0 g/t gold cut-off)
* Gold equivalency is based on only gold and silver using current prices. ** nsr indicates no significant result
| Hole | Grid North | Grid East | Depth(m) | Inclination | Progress/results |
|---|---|---|---|---|---|
| as at 30 June | |||||
| MCD 025 | 4590 | 4261 | 134.8 | -60 | Complete/received |
| MCD 026 | 4690 | 4342 | 119.8 | -60 | Complete/received |
| MCD 027 | 4690 | 4342 | 106.6 | $-35$ | Complete/received |
| MCD 028 | 4790 | 4282 | 188.8 | -52 | Complete/pending |
| MCD 029 | 4790 | 4355 | 131.8 | $-43$ | Complete/pending |
| MCD 030 | 4840 | 4352 | 89.8 | $-45$ | Complete/pending |
| MCD 031 | 4740 | 4353 | 110.3 | -44 | Complete/pending |
| MCD 032 | 4729 | 4274 | 186.9 | -58 | Complete/pending |
| MCD 033 | 4687 | 4261 | 134.8 | -63 | Complete/pending |
| MCD 034 | 4626 | 4318 | 142.2 | $-33$ | Complete/pending |
| MCD 035 | 4690 | 4301 | -62 | In progress |
Table 6: Mt Charter Drilling Programme Hole details
All holes are drilled grid (local) east.
2.2 Zinifex Hellyer Exploration Alliance
During the Quarter Bass Metals and Zinifex developed a detailed drilling programme to test the new base metal and gold targets generated. The drill programme comprises approximately 7,000 metres of drilling and aims to test 13 of the new targets identified. A second drill rig has been contracted and commenced on the programme in mid July.
It is an exciting development to activate the drill programme for this important 3rd initiative of the Company's Tasmanian exploration strategy.
2.3 Regional Exploration
Over the past 8 months, Bass Metals in-collaboration with Geoinformatics Exploration Inc. (TSX.V:GXL) is close to completing:
- compilation, capture and integration of geology, geophysics, geochemistry, mineral occurrence and drill data from over 1300 historic open file reports;
- integration of this data into a 3 dimensional spatial dataset: $\bullet$
- construction of 3 dimensional geological models of each of the 14 project areas; and,
- application of contemporary Monte Carlo style mineral deposit targeting techniques to identify and rank target areas.
Already approximately 60 targets prospective for large scale gold, base metals, tin and nickel deposits have been identified.
The acquisition of the Saracen tenements announced on 3 July 2006 boosts the Company's Mineral Resource inventory and consolidates a highly prospective corridor extending from north of the Henty Gold Mine to just south of the Hellyer-Que River tenements. The Company has the largest tenement position in the highly mineralised Mt Read Volcanic belt, which hosts large scale ore deposits such as the Hellyer, Que River, Avebury, Rosebery, Mt Lyell, Renison Bell and Henty deposits with exciting potential for further similar discoveries.
The Company has a QA/QC procedure for all assaying runs which involves submission of "blank" samples, assay standards and repeat samples at a frequency of approximately 1 per 25 samples submitted comprising approximately 10% of samples submitted. To date all results returned have been within acceptable limits.
All the drill samples submitted during the Quarter are half core and all sample preparation and analyses were carried by Ammtec Laboratories at its Burnie Research Laboratory. Gold and silver were analysed by fire assay using a 50g charge with base metals analysed using a triple acid digest and AAS finish.
The information within this report that relates to exploration results is based on information compiled by Mr Mike Rosenstreich who is a full time employee of the Company and is a Member of The Australasian Institute of Mining and Metallurgy. He has sufficient experience relevant to the styles of mineralisation and types of deposits under consideration and to the activities currently being underfaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and consents to the inclusion of this information in the form and context in which it appears in this report
CORPORATE
At the end of the quarter the company's financial position stands at \$1.28 million cash at bank. Total exploration expenditure for the Quarter was \$0.57 million. The Company is looking to maintain its accelerated rate of exploration activity for the next quarter. To achieve this a Notice of Meeting has recently been sent to Shareholders requesting amongst other items approval for placement capacity to undertake a capital raising.
The Directors would like to welcome Mr Tony Walsh as Company Secretary/Chief Financial Officer effective 6th June. Tony brings a wealth of capital raising and financial experience to the Company.
During the Quarter the Company issued 300,000 shares and 100,000 options as part of its ongoing obligations under the Geoinformatics Alliance agreement.
Yours sincerely
Mike Rosenstreich Managing Director
Figure 1: S-Lens Long section illustrating new drill results.
Suite 5/2 Richardson Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au
Figure 2: Long section projection of QR32 Resource Target
Figure 3: Drill hole location plan for Mt Charter Project, updated to include results to date.
