This article is a sponsored feature from Mining.com.au partner Alchemy Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Alchemy is a form of speculative thought that, among other aims, has tried to transform base metals such as lead or copper into silver or gold and to discover a cure for disease and a way of extending life.
According to Britannica, in 12th-century Latin Europe alchemy was the name given to an aspect of thought that corresponds to astrology. ‘Both represent attempts to discover the relationship of man to the cosmos and to exploit that relationship to his benefit. The first of these objectives may be called scientific, the second technological.’
Junior explorer Alchemy Resources (ASX:ALY) is combining a modern technological and scientific approach to its portfolio of 5 main projects covering a range of commodities including gold, lithium, base metals, nickel, and cobalt.
The $13 million market capitalisation company’s assets are all located in ‘mining-friendly’ parts of Australia and each have the potential to host ‘company-making’ deposits.
As CEO James Wilson explains to Mining.com.au, Alchemy Resources has a growth strategy focused on building quality mineral resources through innovative exploration and strategic acquisition.
In particular, Alchemy has built a significant land package in the Karonie-Carosue Dam greenstone belt in the Eastern Goldfields region in Western Australia. It’s here that an important milestone was achieved this year with the execution of heritage protection agreements over its Karonie and Lake Rebecca tenure, which was signed with representatives of the Kakarra and Nyalpa Pirniku People.
“We have a team in Western Australia, we have a team in New South Wales as well, but most of the work has been focused on Western Australia because the chances of a discovery are quite high here. We already have evolved deposits over there, but we’ve been working on land access.
Land access takes a lot longer in New South Wales than it does in Western Australia, and we actually have all our land access done. We’ve got 5 agreements over here and they’re great, everybody’s really easy to engage. New South Wales is different, it’s a lot more protracted to get it done, and we’re at that pointy end. You’ve got to be solid in how you approach heritage agreements to get the best outcome for everybody at the outset and then that will judge everything else down the track.”
Within its portfolio Alchemy has a joint venture with Develop Global (ASX:DVP) where it has earned an 80% interest in the Lachlan/Cobar Basin projects in New South Wales. Both regions are well-endowed metal provinces with significant upside for lithium, gold, silver, copper, lead, zinc, nickel, and cobalt mineralisation.
The company maintains its interest in the Bryah Basin Project in the gold and base metal-rich Gascoyne region, where farm-in and JV partners Sandfire Resources (ASX:SFR) and Billabong Gold, a subsidiary of Catalyst Metals (ASX:CYL), are continuing to advance base metal and gold exploration, respectively.
During 2023, Alchemy reviewed historic core from the Yellow Mountain and Overflow prospects at the Lachlan Project. Yellow Mountain is a promising base metal-gold target which has not been explored since 1986. Overflow has delivered a maiden Mineral Resource Estimate (MRE) of 342,300 gold equivalent ounces, which establishes a solid base for growth in the centre of the Lachlan projects.
“Moving forward, our strategy is to conduct exploration to expand our resource inventory, commencing at Overflow North which has seen almost no modern exploration. We are also planning work to target the depth and down plunge extensions of the existing resource. The area has a lot of potential for high-grade mineralisation close to surface with many targets having not been followed up in nearly 20 years.”
“The area has a lot of potential for high-grade mineralisation close to surface with many targets having not been followed up in nearly 20 years“
The CEO says while a 12th-century alchemist may have tried to transform base metals such as lead or copper into silver or gold, Alchemy Resources is transforming into a verified diversified mining company with exposure to a broad spectrum of commodities.
It’s an exciting time for the company. In early September, a diamond core drill program at the Karonie Gold and Lithium Project, located 100km east of Kalgoorlie, focused on the Challenger prospect. Challenger was targeted following assessment of historic drilling and mapping in 2021. Previous drilling returned anomalous intercepts up to 16m @ 1g/t Au from 112m.
Challenger is an advanced gold target with mineralisation hosted within a thick high-iron quartz dolerite sill, similar to the host rock mineralisation at Ramelius Resources (ASX:RMS) Bombora deposit. It sits along strike from the French Kiss open pit to the north-west operated by Silver Lake Resources (ASX:SLR). A significant Au-Bi-Mo-Te-W-Sb anomaly – considered the best pathfinder for mineralisation – has been recognised from aircore drilling.
A Karonie reverse circulation drill program at Taupo North also returned up to 0.1% Li20 with associated pathfinder elements up to 45ppm Ta205, 4,480ppm Rb, and 40ppm Sn.
These results outlined a new zone that remains open along strike with associated lithium in soils anomalism which extends for 3km to the south-east. Infill soil sampling will gather more detail over the areas to the south and the east toward Hickory to fully define the geochemical anomalism over a 4km x 3km footprint. Heritage survey requests have been submitted to clear the areas adjacent to Taupo North for future drill programs.
Wilson says these results and having exposure to battery metals are significant for a variety of reasons.
“Obviously lithium gives you the entry point with a lot of investors at the moment“
“Obviously lithium gives you the entry point with a lot of investors at the moment. I’m sure that landscape will probably change in some time, but the interesting thing with lithium is that Karonie was always gold, and it was just like most other companies in Western Australia.”
He adds that most of the lithium discovered to date has been ‘sticking out of the ground’.
“So, when you’re looking for lithium, in terms of undercover lithium deposits, no one’s found one yet. When someone does, it’s going to be the first one in the whole world. That’s no joke. If someone does, it will be the first lithium deposit in the whole world discovered that is undercover. And that’s the trick. That’s the space we’re in at the moment because everything’s covered in sand – there’s bloody bugger all outcrop. Or if there is, there’s no lithium in that bit. But where it goes undercover, we’re completely blind.
That’s what I’m trying to relay to people – we can’t just walk up and drill 20m at 1% at surface. It’s not going to happen, largely because the high degree of weathering depletes the very mobile lithium metal at surface, but what where left with is the more durable pathfinders like rubidium, tantalum, gallium and tin which we have in spades over a big footprint. The anomalism is huge and we just have to zero in on that zone of enrichment…it’s got to be there somewhere nearby.
Basically, Alchemy is trying to bring people across technically to try and understand the difficulty, or not the difficulty, but how well we are doing in discovering lithium mineralisation in a region that has had no lithium exploration.”
Alchemy’s Karonie and Lake Rebecca projects are contiguous with Global Lithium Resources’ (ASX:GL1) Manna deposit. Global Lithium has now defined a total indicated and inferred mineral resource of 54Mt @ 1.09% Li2O at its Manna and MBLP Lithium projects.
Lithium learning curve
Like an alchemist, Wilson and his team are trying to understand through modern scientific and technological approaches, more about the lithium it has. The company will seek to vector in Global Lithium’s future results into its own data as work progresses.
However, this is within a new belt where the only lithium deposit is Manna, which Wilson notes was ‘found almost by accident’. He reiterates to Mining.com.au, the space is at an early and informative stage still in need of more understanding.
One aspect in particular that needs further investigation is identifying what the lithium pathfinders are, whether it’s tantalum, gallium, or some other element the company should be pursuing.
“We talk to a lot of the guys in the lithium space and we try and learn what’s learnable, but it’s different everywhere you go. Trying to explain to a smallcap investors that Karonie has always ever been explored for gold and we’ve got the right geology, the right rocks, the right chemistry, and we’ve even got lithium.
“We talk to a lot of the guys in the lithium space and we try and learn what’s learnable, but it’s different everywhere you go“
We only have a few metres of spodumene, but it’s there. And trying to bring these investors across and say, ‘look, if there’s metal there that means there’s going to be more metal somewhere else’, maybe. With the gold you get a little nugget and it’s an accumulation of the gold in the region and then you think, ‘there might be a few other nuggets around’, but there’s not going to be a 12-million-ounce gold deposit underneath these 10 nuggets because that would be found with the lithium.
It’s different, it’s crustal. So, you get a little bit of lithium, you go, ‘mate, there’s metal here, that means there’s going to be metal somewhere else’ and then we just need a trap, a right spot for it, so it’s really exciting. Nobody’s seen this stuff in 50 years of gold exploration in this area.
The fact that there’s even any metal at all here is really important. That’s what we’ve found. We’ve got to that point where we’ve found where the metal is, just got to find an accumulation of it. It might be tomorrow; it might be next week.
You wake up every day, and today might just be the day. We’ve had a few little bits and pieces like that where you walked out there and went ‘holy crap, there’s lepidolite there on surface’. We did that 10 weeks ago – it came back at 3,000ppm lithium, or 2,700ppm, and we released it.
You go, ‘oh wow look at that. There’s actually lepidolite at surface – that’s nuts’. So, you’re really excited and it’s just a function of just learning as much as you can. We’ve since discovered that the structural orientation of it is slightly different to what we thought. We drilled 2 holes and this was going this way and so we just started doing the numbers in our head and drawing pictures on the ground with a stick.
If you can find something, it’s amazing and there’s nothing better than the feeling you get when you walk out and you found something that no one else has seen before. When we found the lepidolite, albeit only 2,700ppm, but no one had ever seen that before there, so big high fives almost broke my hand. You just want to find a bit with 10,000ppm in it.”
Rock-chip assays at Karonie have indeed confirmed the presence of surface lithium mineralisation with results of 2,723ppm Li20, 167ppm Cs, 2,930ppm Rb, and 62.8ppm Ta205.
Pathways and pathfinders
Much like alchemy is a form of speculative thought, Alchemy Resources is using this approach.
The CEO suggests that given the abundance of tantalum, this could be a pathfinder for the battery metal as it’s very durable and is residual meaning it stays around longer. The company appears to also have plenty of beryllium and rubidium within its landholding.
“We’re still trying to make heads or tails of it.”
Wilson explains that given there is only one lithium deposit within close proximity and so few lithium discoveries have been made in Western Australia (compared to gold), it could take decades before “everybody learns all that’s learnable on this”.
“Is it a hard sell? Well time will tell when it comes to learning about the lithium but for us, lithium helps fund everything and that’s been the aim – if you have a lithium focus that gets people’s interest, but we also have some really great assets.
“Well time will tell when it comes to learning about the lithium but for us, lithium helps fund everything and that’s been the aim – if you have a lithium focus that gets people’s interest, but we also have some really great assets“
I mean, in New South Wales at Yellow Mountain, we have 7% copper sitting on the surface in stockpiles and that’s part of what we’re negotiating now to get access to and that’s amazing. It hasn’t been drilled for 40 years.
It’s amazing, but we just want to get the agreement right so everybody’s happy and everybody’s aligned going forward. We want to get there – we want to go and focus on it. We’re budgeted to go in there and do a few drill programs and whatnot but we need those access agreements all bedded down first and we’re at the very pointy end of that. We’re hopeful that it will actually be quite short-term.”
Leaving a legacy
With a range of projects and exposure to commodities, Alchemy has a de-risked and diversified portfolio. That means, it has a range of current and legacy shareholders each with different investment objectives. This is not unique by any stretch of the imagination but an aspect the CEO remains cognisant of in terms of its growth strategy.
As per Alchemy’s latest annual report, gold producer Northern Star Resources (ASX:NST) has a 6.63% interest in the company. To state the obvious, this significant shareholding is likely due to Alchemy’s gold assets.
However, Wilson spoke to one undisclosed investor the other day who, while their investment in Alchemy is for the precious metal, it was relayed to him they find the lithium story to be really interesting. The investor told him Alchemy should be worth multiples of its current $13 million market capitalisation, “even if the company can have half a win”.
“This investor said that that’s what they’re there for as you can’t really get most companies worth about $10 million with the portfolio we’ve got’. ‘So, if you find anything at all, you’re going to be $50 million’.”
While that is speculative thought, it appears Alchemy has all the right ingredients to achieve a re-rating down the line.
In Western Australia, work continues on the structural mapping, high resolution magnetics, and gravity surveys, soil sampling and RC drilling at the lithium targets at Cherry, Hickory, Mesquite, and Pecan and gold targets at Gilmore and KZ5.
In New South Wales, the focus is on a structural and historic drill core review of the Melrose, Yellow Mountain, and Overflow projects. As mentioned, New South Wales Land Access negotiations continue to progress access into the Yellow Mountain area for future drill programs. Heritage access agreements were completed in late 2022 over the majority of the Karonie and Lake Rebecca tenure, and multiple clearance surveys were conducted to facilitate drill access.
Meanwhile, Alchemy is waiting for permits for a lithium program and trying to figure out what the results of its neighbour Global Lithium looks like. It will then head back in and drill its own program and will try to leverage off their results.
“If they get any success, then we can vector in on our data a bit more. We have to come back and do it again so that’s exciting. You’re literally one drillhole away from discovery with this sort of stuff.
While we have plenty of opportunities before us, the biggest value-add for investors is generally at this early stage discovery and that’s the most exciting.”
Write to Adam Orlando at Mining.com.au
Images: Alchemy Resources