Cazaly Resources: pulling the inorganic growth trigger

This article is a sponsored feature from Mining.com.au partner Cazaly Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

When Tara French, Managing Director of Cazaly Resources (ASX:CAZ), spoke to Mining.com.au in March, the pursuit of inorganic growth opportunities was the operative ethic.

“We’ve still got quite a bit on our plate, but we’re looking for new projects to add to our portfolio across a range of commodities, based on our strategic plan,” French said at the time.

Listed in 2003 by founders Clive Jones — who remains Cazaly’s Chair — and the late Nathan McMahon, the Perth-based explorer has nurtured an elegantly sustainable business model: with a strong history of project generation, assets are staked or acquired, explored to the point of economic viability, and monetised — via spin-out, joint venture, or outright sale.

Obviously, we’ll only add a project if we think it’s got potential, then we’ll do the appropriate groundwork to determine the next best step,” French says.

“Do we keep driving projects forward ourselves? Do we get it to a point where we potentially divest? Which is sort of what they did with the Parker Range Project.”

Prior to French’s appointment in April 2021, Cazaly sold the Parker Range Iron Ore Project to diversified mining giant Mineral Resources (ASX:MIN) in August 2019 for $20 million, keeping for itself a royalty worth $0.50 per tonne of iron ore produced once the project passes a 10-million-tonne production milestone. It forms the backbone of Cazaly’s royalties arm, which also includes the Hamersley Iron Ore Project purchased by Equinox Resources (ASX:EQN) in mid-2021.

Elsewhere, Cazaly is party to joint ventures at the McKenzie Springs and Mt Venn Gold projects, where it holds 30% and 20% stakes, respectively, and in which Fin Resources (ASX:FIN) and Woomera Mining (ASX:WML) own the remaining 70% and 80% interests as operators.

Then there are the company’s more primary assets: the wholly owned Halls Creek Copper Project in the Kimberley, the Ashburton Project in the Pilbara, the Abenab North and Kaoko projects in Namibia — of which Cazaly owns 95% — and the Lyons Project in WA’s Gascoyne region, which was staked and then expanded through an earn-in deal signed in early August.

But it was Cazaly’s foray into the Canadian sector that hinted at the gravity of its ‘inorganic growth’ desires, beginning with the Carb Lake Rare Earth Project in northwest Ontario.

O Canada!

Located in the Red Lake region, near the Manitoba border, Carb Lake was acquired in mid-June and features a magnetic anomaly at least 3km wide known as the Carb Lake Carbonatite Complex, which is prospective for rare earths and niobium.

Although the anomaly has been recognised as significant since its discovery in 1967, drilling at the project has been limited to just 4 diamond drill holes completed by Big Nama Creek Mines in 1968. But despite those holes returning ‘outstanding results’ of up to 7.1% niobium, the true nature of mineralisation at Carb Lake remains a tantalising mystery.

“For us, it’s a matter of getting on the ground,” French says.

“We need to see what we’re dealing with. Can we drill out here in summer? Is it a year-round project, or do we actually have to wait for it to freeze over? Because our first thought was that we’d have to wait for it to freeze and then we can get out there and do some drilling. But in the interim, it looks like we’ll be able to get a crew on the ground beforehand.”

“The idea is to get some early data to give us enough information to plan the next steps”

That crew sprung into action on August 21 with a mandate to traverse as much of the project as possible, carrying out prospecting and mapping activities as they go.

“The idea is to get some early data to give us enough information to plan the next steps,” French adds.

But Cazaly’s penchant for growth, its self-imposed order to expand its exploration horizon, became truly apparent when the company doubled down and acquired the Sundown Lithium Project in Quebec on August 7.

Located east of James Bay, the project covers 260km-square and is host to more than 200 outcropping pegmatites across 510 mining claims. It also holds a strategic position between Allkem’s (ASX:AKE) James Bay deposit, which features a resource measuring 110.2 million tonnes at 1.3% lithium oxide, and Patriot Battery Metals’ (ASX:PMT) Corvette deposit, with 109.2 million tonnes at 1.42% lithium oxide.

As with Carb Lake, Sundown is almost ‘totally untested’, with the exception of previous work by Quebec’s Ministry of Natural Resources and Forestry that originally uncovered the pegmatites.

“For Sundown, in particular, that will be boots on the ground,” French explains. 

“We’ll be doing as much rock chip sampling there as we can to follow up on those high-priority targets where there are documented pegmatites, and we have been able to see good exposures in satellite imagery of large outcrops. Then we’ll submit the samples for lithium and multi-element analysis. This will be the first time these rocks have been sampled for lithium.”

Indeed, Cazaly isn’t exactly an explorer afraid of hard work. And it would be a mistake to write off the company’s Canadian endeavours as mere moments of explorational hubris. The truth, in fact, is that it was a long time coming.

“We had spent some time looking in Canada — and Australia and other strategic jurisdictions — for more rare earth and lithium projects, because we believe the outlook for these critical minerals is strong as the demand for supply increases over the next 12 to 18 months,” French says.

“And because Cazaly has always been diversified, it’s relatively easy for us to be nimble. So we can have a number of strategic commodities in our portfolio and prioritise them accordingly.”

because Cazaly has always been diversified, it’s relatively easy for us to be nimble”

Merit over love

How, then, does a small team like Cazaly — “It’s Clive, who’s in the office a couple of days a week, and myself and our exploration manager full-time,” French explains — manage such a sprawling portfolio?

“That’s always going to be a management issue. You take on projects on merit, you don’t fall in love with projects,” she adds.

“To that end, it’s fairly easy to prioritise projects, because it has to be done on merit. And you do have to be ruthless. People may tend to fall in love with projects, but I think that can be a significant downfall sometimes because you don’t want to keep investing in something if it’s not going to give you a return. So our focus will be based on our strategic direction, which will change over time, and we’ll move to where we believe we can add the most value, which is why at the moment, our priorities are going to be lithium and rare earths in Canada.”

You take on projects on merit, you don’t fall in love with projects”

But that’s not to say Cazaly’s other projects will be neglected.

The Abenab North Project in Namibia, prospective for base metals and rare earths, is “a pretty exciting project as far as potential goes”, with several confirmed carbonatite pipes and a promising record of historical drilling. 

“The tenement’s under application and not yet granted, so we didn’t really see much reaction from the market on that one. Having said that, we’ve been in contact with our team over there, and while we know it’s progressing through the application process, it’s still probably a few weeks to a month away from grant.”

It’s a similar situation at the Kaoko Lithium Project, which was previously a copper-cobalt play but is now known to host a sizeable lithium-in-soil anomaly. Cazaly has already designated a 12km-by-10km portion of the tenement as a priority target area but, again, on-ground activities remain in limbo until the licence is renewed.

Meanwhile, in Western Australia, McKenzie Springs is managed by Fin Resources, which recently assigned a new technical geologist to the project to follow up on a number of promising targets. Mount Venn, on the other hand, has been operated for several years by Woomera Mining and is largely prospective for nickel and gold.

“We still think it’s a great project to have, it’s really well located — a large greenstone belt in the north-eastern goldfields, it would be unlikely for it not to be mineralised,” French says.

“Again, it’s that process of testing all your targets, and they’ve certainly got a few more there that can be tested for sure.”

At Ashburton, exploration has moved along “quite significantly” since the project was acquired in October 2020, but further work is required to assess a recently identified rare earths trend and determine the best path forward, while the Lyons Project is “another big landholding and another big greenfields play”.

“We need to conduct a field reconnaissance campaign to see what we’re dealing with here,” French explains.

“Can we get some rock chip samples or is it all undercover? It’s very early stage, but first-pass recon is the first step. And that one’s relatively close to home, so it’d be fairly easy for us to work relatively quickly.”

Rounding out Cazaly’s impressive pipeline is Halls Creek. Home to the Bommie deposit, for which a 262,000-tonne copper resource was unveiled in November 2022, and the Mount Angelo North deposit, which measures 23,000 tonnes of copper, 680,000 ounces of silver and 25,000 tonnes of zinc, it sits directly adjacent to AuKing Mining’s (ASX:AKN) Koongie Park Project.

A memorandum of understanding (MoU) was signed in December 2022, under which Cazaly’s Bommie and Mount Angelo North deposits would be included in a scoping study — carried out by AuKing — for Koongie Park’s Sandiego deposit.

“We’ve both got VMS deposits, we’ve both got porphyry copper deposits. In that light, we know that, separately, the deposits would not be economic to mine. However, if we pull those deposits together, we have a development proposal for a copper mining hub at Halls Creek. They’re all within a 10km radius,” French says.

“The positive scoping study, initially, as the first outcome, is the best first step you can expect. We’ve got a good relationship and an MoU with AuKing, but no binding agreement. There are no hard and fast terms there. We both know this is potentially the best way to progress the project, and we’ll pursue a number of options in order to get these projects into development.”

We both know this is potentially the best way to progress the project, and we’ll pursue a number of options in order to get these projects into development

Where to from here?

On the question of project development and potential production, French was unwilling to make any firm predictions. 

“It’s got to be the right project, it’s got to be the right commodity. And that would then have to be the company’s focus, moving forward,” she says.

“We would never say no, because we’ve got a good background in exploration, development and mining projects. However, at the moment, our current business model fits us pretty well. But having said that, if we do get a project and we think it would be a real game changer for the company and something we wanted to move forward with, then we certainly would build the team to push that project forward.”

It’s got to be the right project, it’s got to be the right commodity”

For now, though, French and the rest of the Cazaly team seem content simply doing what they said would be done. In our current age of grand plans and empty promises, the capacity to actually follow through often means the difference between success and failure.

“That’s really the key, to add value to the projects we’ve got, introduce new projects we think have real value to add as well, and then obviously prioritise how we work those projects,” French said back in March.

And by all accounts, they’ve done just that.

Write to Oliver Gray at Mining.com.au

Images: Cazaly Resources
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.