Cohiba Minerals: building up an exploration portfolio with intentionality

By any measure, the last few months have been busy for Cohiba Minerals (ASX:CHK).

The Melbourne-based explorer forked out $200,000 worth of shares in April to acquire the remaining 20% of its Olympic Domain Project in South Australia before snapping up 4 lithium and rare earth element properties — Big Rock, Rogers Creek, Ottertail and Gathering Lake — in Ontario, Canada, in July.

Those deals were in addition to ongoing exploration work at Cohiba’s other projects, including the Pyramid Lake Gypsum Project near Esperance in Western Australia, the Wee MacGregor Project near Mt Isa in Queensland, and the Mt Gordon, Success, and Mt Cobalt exploration licences, also in Queensland.

“We have tenements in South Australia in what’s called the Gawler Craton, and those projects are geared largely around what we call IOCG — iron oxide copper-gold. Very similar to what people would know as Olympic Dam-style deposits,” CEO Andrew Graham says.

Very similar to what people would know as Olympic Dam-style deposits

“We also have copper and cobalt assets in northern Queensland, up in the Mount Isa region. One of those is the Wee McGregor project, which has an existing JORC resource on it. Those projects are probably secondary at the moment, but we’re starting to move to a position where we’ll focus a bit more on those. 

“In Western Australia, we have Pyramid Lake, which is an agricultural-grade gypsum project. It was originally picked up as a lithium project, but the lithium results were not very good. But it’s been developed into a gypsum project, and we’re going through the process of getting a mining lease over that currently. 

“And then we’ve got our projects in Canada, which was an acquisition of 4 significant parcels of ground in Ontario, in areas which have existing lithium projects with other companies.”

Indeed, Cohiba Minerals has done a lot of work, with even more to come. But as far as Graham is concerned, run-of-the-mill exploration techniques just aren’t going to cut it. For the company to enjoy the sort of success for which it’s shooting, it needs to meet its exploration ambitions with “intentionality”.

A foot in the Canadian lithium door

There were, according to Graham, a number of factors behind the acquisition of the Canadian lithium properties.

The first was the need to expand the footprint of Cohiba’s asset portfolio. 

“Part of that was driven off the basis that we hold 564km-square over Lake Torrens in South Australia,” Graham says.

“Lake Torrens, there’s no native title over it currently, but it’s been an absolute hotbed. Four Aboriginal groups have come, all claiming they have significant heritage over Lake Torrens. As a result, we were going to do a lot of work there but we’ve actually stepped away from that at the moment. That’s 564km-square that’s basically annexed out on what we call ‘retention lease status’, because we’re waiting to see how that whole thing works out.”

The second was Graham’s association with Loyal Lithium (ASX:LLI) as a Non-Executive Director. Originally a Western Australia-focused gold company, Loyal Lithium had been shopping around in Canada for a suitable lithium play. A broad selection was put forward — some were picked up, others were passed-on, but either way, Graham had a key hand in the due diligence process.

“I already had a walk-up knowledge of the fact that these were lithium projects in a good jurisdiction,” he explains.

“So I said to the Cohiba board: Look, we could get into this space. We know the critical minerals space is a really good place to be. In the end, we were able to strike what I consider to be a really good deal to land us in a very, very good lithium-prospective area.”

I already had a walk-up knowledge of the fact that these were lithium projects in a good jurisdiction

Cohiba has since engaged Edmonton-based Dahrouge Geological Consulting to undertake a detailed desktop study across the 4 properties. An initial study was carried out in the lead-up to the acquisition, but Dahrouge has the capacity to “squirrel down a lot deeper” and more accurately inform the target generation phase to follow.

After all, these are greenfield properties. The bulk of the work historically carried out was through the Ontario Geological Society, and from more of an academic point of view than one set on resource discovery.

“There was a lot of what I would call academic work done around the fact that there are pegmatites present,” Graham says.

“So we knew it was prospective from that point of view, but that was purely academic. There was nothing done in terms of grades or volume or anything of that nature. But where all 4 of these prospects are, they’re also in areas where there are companies that are already doing work, have already done substantial amounts of drilling. Some have already defined resources. From that perspective, we don’t have anything that’s absolutely definitive in terms of tonnes or grade, but we’re in the right environment.”

Cohiba may well be in the right environment in Canada. Its Big Rock, Rogers Creek, Ottertail and Gathering Lake properties may well hold vast amounts of untapped potential. But it’s the Olympic Domain Project in South Australia that remains the “absolute priority”.

Hunting down big hits at Olympic Domain

While Graham acknowledges the acquisition of the final 20% stake in Olympic Domain “came at some cost”, it was a deal that gave Cohiba a far greater degree of operational freedom.

“We needed to be able to act more quickly than we could under the 80-20 ownership, and we needed to be able to move through decision-making processes without having significant internal delays. Communication was not good and we’ve removed those barriers,” Graham says. 

What we’re doing in South Australia and the Gawler Craton is absolutely our number one priority, still our flagship project, and will remain that way

“Part of that has been the fact that the South Australian tenements — Lake Torrens, Horse Well and Pernatty C — are still an absolute priority for us. The Canadian projects are a bolt-on, that was a strategic acquisition. What we’re doing in South Australia and the Gawler Craton is absolutely our number one priority, still our flagship project, and will remain that way.”

But exploration work at Olympic Domain has been in a bit of a lull. No drilling work has been carried out since a program concluded in September last year, which returned promising results up to 111.6m at 0.27% copper, 0.05 parts per million (ppm) gold, and 0.35ppm silver.

And here is where Graham’s penchant for intentionality comes in. Drilling is expensive, and the next campaign on which Cohiba sets its sights will require fervid attention to detail. Such an emphasis on targeting has already unveiled dilational structures at the central Horse Well prospect and to the east near Oak Dam West, which Graham says are of “paramount importance” in the formation of an IOCG deposit.

“You need to not just have the chemistry, you have to have the structure, you have to have the right host material and the right environment,” he explains.

“So we’ve spent a lot of time really scrutinising our technical information to the ‘nth degree’ to extract every piece of information. Because when you’re drilling at 1500m-plus, you want to make sure that you’re optimising those drill holes. Now we’ve got 2 areas where we’ve got really good structure, really good geology, really good mineralogy, and persistent — albeit low-level — mineralisation. All of these are hallmarks that we’re in the right system.”

But while some holes have hit high-grade ore, it’s only ever been over short intervals. What Cohiba needs now are those big intersections of very high-grade mineralisation — which could mark a significant turning point for the company.

“We’ve done this step-out approach with intentionality, knowing it represents the greatest likelihood of us actually nailing one of these deposits

“What we need is persistence in high-grade mineralisation, but I’m extremely buoyed by what we’ve found so far,” Graham says.

“We’ve probably taken one of the most systematic approaches to exploration. Not just a hole here, a hole over there. We’ve gone into an area that we’ve targeted based on our technical resources and we’ve drilled a hole, we’ve analysed that and said: Look, this is what we understand about IOCG deposits. Now we need to move further in this direction in order to target what we think will be the next step closer to mineralisation. 

“We’ve done this step-out approach with intentionality, knowing it represents the greatest likelihood of us actually nailing one of these deposits.”

But until Cohiba does, there’s plenty to be getting on with elsewhere, too.

Rounding out an impressive portfolio

At Pyramid Lake in Western Australia, exploration efforts to date have outlined a ‘very good’, grade-one gypsum resource. Once the project has been converted from an exploration licence to a mining lease, Cohiba intends to set up a small-scale production operation catering to the agriculture sector. Though it’s not likely to be a ‘company maker, such a project “could certainly produce good revenue,” Graham says.

At the Wee MacGregor Project in Queensland, which hosts a JORC 2004-compliant resource measuring 1.65 million tonnes at 1.6% copper, Cohiba has been fielding some ‘significant approaches’ from third parties regarding potential investment, joint venture, and other partnership arrangements.

“Because copper is obviously a very hot commodity, and there’s a lot of banter out in the marketplace about the fact that copper just isn’t going to keep up in terms of development with the green economy, we’re getting quite a lot of approaches, so we’re filtering through those,” Graham explains.

We’ll finish these discussions around investment potential and opportunity before we decide what we’re going to do next.

“There’s an extension to the resource and we do need to understand that. So we’ve put a program of work together and our intention at Wee McGregor is to, firstly, see if we can partner with somebody to co-develop it. If not, we would look to at least drill out the extension of the existing ore body to try and increase the resource base there. 

“We’ll finish these discussions around investment potential and opportunity before we decide what we’re going to do next.”

The remaining projects — Mt Gordon, Success and Mt Cobalt — are more of the ‘mid-greenfields’ type. Cohiba is by no means starting fresh there — some exploration activities were carried out in the past, and small areas were even mined for copper and cobalt. But Graham says the company now needs to demonstrate its capacity to do some real work on the ground and is currently engaged in discussions regarding potential partners for future development.

Looking ahead

It’s because of his faith in intentionality that Graham, when asked where he’d like Cohiba to be 6 or 12 months from now, has a clear and considered response ready to go.

“In 6 to 12 months, I would like to have Pyramid Lake actually producing agricultural-grade gypsum and selling into the marketplace,” he replies.

“I would dearly love to have an identified resource, not necessarily a JORC resource because that’s a bit of a hard ask, but I’d like to make an IOCG discovery in the Horse Well region. I also would like to more fully define what’s going on at Pernatty C with these lead-zinc-silver intersections that we’ve hit, because there was no expectation of hitting lead and zinc and silver there.”

In 6 to 12 months, I would like to have Pyramid Lake actually producing agricultural-grade gypsum and selling into the marketplace

Shareholders were surprised in July last year after a drilling program at Olympic Domain’s Pernatty C prospect — designed to target Zambian Copper Belt-style mineralisation — instead returned assays for lead, zinc and silver. A technical review of those results earlier this year pointed to the potential for a sizeable zinc deposit in the area, and that the drill hole in question had likely intersected a small part of a much larger mineralised system.

“The likelihood there is that if we find something significant in the lead, zinc, silver space, that is not an expertise that we carry. So we would probably look to partner with somebody to see how we could develop that,” Graham adds.

At Wee MacGregor, Cohiba is aiming to expand the current resource and also upgrade it to the JORC 2012 code.

“I’d like to be able to at least double the current contained copper resource, which is around 25,100 tonnes. I’d like to get that to at least a 50,000-tonne copper resource in the next twelve months.”

And in Canada, it’s simply a matter of getting the detailed desktop study finished before boots hit the ground for some hands-on exploration.

“One of the things that’s really key is that Cohiba has approached its work with intentionality. You can go to the market with, say, 15 potential targets, but a junior is never going to be able to drill 15 targets,” Graham says.

“What we’ve done with our intentionality is go: Okay, we’ve got lots of targets, but let’s squirrel this down using all of our best technical endeavours to get to one or 2 areas, and let’s go at those really, really hard. Because we see the greatest potential for exploration success is to get into a high-priority area and drill it to an extent where we have a great understanding of what’s there. 

“Because we know that, most of the time, decent ore bodies are found where ore bodies have already been found. Or they’re in an area where people have already done work before, but they maybe have not quite fully understood what it is that they’re looking at. We want to make sure that when we go into an area, we’re going into it on the right technical basis, and if we leave an area, we’ve not left anything on the table. Exploration success is never guaranteed. But the one thing I can say is we have absolutely optimised every single dollar that’s gone into the ground.”

Exploration success is never guaranteed. But the one thing I can say is we have absolutely optimised every single dollar that’s gone into the ground

Write to Oliver Gray at Mining.com.au

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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.