This article is a sponsored feature from Mining.com.au partner Lodestar Minerals Limited. It is not financial advice. Talk to a registered financial expert before making investment decisions.
When Mining.com.au spoke to Lodestar Minerals (ASX:LSR) at the start of June this year, the company was “working hard to get all aspects of its strategy aligned”.
Exploration Manager Coraline Blaud had joined in December, followed by Managing Director Ed Turner in February, and the Perth-based explorer had its sights firmly set on a maiden 5,000m aircore drilling program at its wholly owned Earaheedy Base Metal Project in Western Australia.
Located northeast of Wiluna within the broader Earaheedy Basin, the 1,420km-square project is the star of a portfolio that also includes the Jubilee Well and Coolgardie West projects, the Ned’s Creek joint venture with Vango Mining (ASX:VAN), and — until recently — the Kangaroo Hills joint venture with Future Battery Minerals (ASX:FBM).
Now, with its strategic imperatives very much in order, Lodestar has completed its transition from alignment to execution — of which the sale of Kangaroo Hills was a key component.
Slimming down for success
Speaking again to Mining.com.au, Turner acknowledged that the sale of Lodestar’s 20% stake in Kangaroo Hills was part of a wider effort to trim the company’s portfolio to only the most essential of assets.
“A lot of junior companies make the mistake of spreading themselves too thin with projects, and it’s just a waste of money. If you want to be successful you need to focus on your best project,” he says.
“It’s a constant challenge. We have a very small but dedicated and specialised staff. We can bring in contractors and consultancies as required, but we have to be very efficient, and that’s always a balancing act for junior companies.”
“If you want to be successful you need to focus on your best project“
Finalised on August 7, the divestment netted Lodestar $3.5 million in cash and shares in Future Battery Minerals, plus another $3 million in performance rights. And while Lodestar will no longer be up for 20% of the exploration costs at Kangaroo Hills, its calculated decision to accept the majority of the proceeds in shares means it will retain exposure to future developments through its hefty stake in Future Battery Minerals.
But the performance rights, which expire in 5 years, are a different story. For Lodestar to enjoy that component of the deal, Future Battery Minerals will need to delineate a mineral resource at Kangaroo Hills measuring at least 10 million tonnes at 1% lithium oxide.
“The divestment was mutually beneficial, basically“
“Although we didn’t physically have to do any work on that joint venture with Future Battery Minerals, we still had to contribute funds, we still had to be part of the joint venture arrangement,” Turner adds.
“The divestment was mutually beneficial, basically. It’s good for them to own 100% from a promotional point of view, for the market, but also for them to get investors and potentially get financing for future mining operations.
“But we thought we’d get more value out of their growth, proving up an economic deposit, which we think they have a very good chance of doing within twelve months. We thought we’d get more benefit from our Future Battery Minerals shares potentially going up 4 or 5 times than holding on to our 20% and contributing to the exploration funds.”
Perhaps most important of all, the sale gives Lodestar the freedom to put all its time, effort and resources into the Earaheedy Project, where Turner believes “the potential for a very large copper-gold or zinc-lead-silver deposit is very high”.
All eyes on Earaheedy
In mid-July, Lodestar unveiled a number of gold hits from the aircore drilling campaign at Earaheedy, which was launched on June 26. Of the 7 targets drilled, 3 returned mineralisation in excess of 0.2 grams per tonne (g/t) gold, including 7m at 1.03g/t gold from 36m.
A few weeks later, at the start of August, Lodestar’s copper results were announced, with 5 of the same 7 targets yielding intercepts up to 12m at 1,462 parts per million (ppm) copper from 4m, including 4m at 3,674ppm copper.
“That was very successful,” Turner says.
“We found copper and gold in 6 of the targets — gold in 3 of the targets and copper in 5. It’s the same program, same 7 targets overall, but 6 of the 7 targets got us some good enough results to go back and do follow-up drilling.”
Importantly, that first-pass drilling program confirmed the geological models Turner and the Lodestar team had been working with. Excluding a few outcropping areas, the Earaheedy Project is covered with sandplain, meaning the rocks and structures of interest are hidden from view. As a result, the targets included in the aircore program were based on electromagnetic and geochemical anomalies.
“Everything we saw in the drilling backed up our geological model,” Turner explains.
“The results of the first-pass aircore drilling were better than expected. You don’t really expect to see too much, you just want to see indications of mineralisation with aircore drilling because it just goes through the soft rock. It can’t penetrate the fresh rock, so we don’t expect to see chalcopyrite or massive copper sulphide mineralisation. But we’ve seen those elevated numbers backed up by other things like cobalt and silver and nickel. They really show that we’re in a mineralised system.
“All the right ingredients are there, and that gives us a lot more confidence to go and spend a lot more money doing deeper RC and diamond core drilling“
“All the right ingredients are there, and that gives us a lot more confidence to go and spend a lot more money doing deeper RC and diamond core drilling.”
The beast across the basin
In Turner’s estimation, Lodestar potentially has a high-grade DeGrussa-style copper-gold deposit on its hands at Earaheedy. Located 900km north of Perth within the Bryah Basin, Sandfire Resources’ (ASX:SFR) DeGrussa Copper Operations produced up to 300,000 tonnes of high-grade copper annually from 2013 to 2022, when operations ceased.
“For a VMS” — volcanogenic massive sulphide — “system, you need volcanic rocks to be in part of the package. And the whole Earaheedy region we’re in wasn’t mapped as having volcanic rocks,” Turner says.
“But when we looked at the magnetics, we realised the potential was very high, and we did find some volcanic rocks in the field. That’s either a basalt or a dolerite — a dolerite is the intrusive version of a basalt. That’s what they have at DeGrussa and all the VMS deposits in the world. You need that volcanic component as the source of the copper.”
But if geologically similar projects can be used to deliver some insightful comparisons, those closest to home probably make the best candidates — like Rumble Resources’ (ASX:RTR) own Earaheedy Project.
Located 110km north of Wiluna, Rumble’s Earaheedy Project sits on the other side of the Earaheedy Basin to Lodestar’s Earaheedy Project. Forgetting for a moment any gripes we might have about the way we name things in this country, Rumble’s property is home to the Chinook deposit, which has become a source of envy among Western Australia’s zinc, lead and silver explorers.
Shares in Rumble Resources soared in April 2021 when the company unveiled promising results from drilling at Earaheedy, which eventually led to a ‘major zinc-lead discovery’ the same month. A $40 million capital raising was launched at the end of April to build on the hype, and Chinook now hosts a mineral resource estimate measuring 2.2 million tonnes of zinc, 700,000 tonnes of lead and 12.6 million ounces of silver, making it one of the world’s largest zinc sulphide discoveries in the last 10 years.
“Imagine the sedimentary basin is over 100-and-something kilometres wide, then it’s been folded up and where there’s an unconformable contact between these 2 particular rock types on that side of the base, that’s where they found their deposit,” Turner explains.
“On our side, we’ve got that same unconformity contact position, with the same rock formations, basically. We’ve got 100km of strike length of that contact within our tenement package now, so we’ve just started to test that position because that’s where the mineralisation gets trapped. You still need the faults and structures to concentrate the mineralisation, so we’ve just got to go through that process of testing with soil sampling first and then we then potentially follow up with drilling.”
“We’ve got 100km of strike length of that contact within our tenement package now“
If Turner is in touch with the potential at Lodestar’s Earaheedy Project, then he’s certainly in touch with the work required to get there.
“The hardest thing is really narrowing down, where do we spend the money? Because it’s a huge area and we’ve got so many targets,” he says.
“But you can’t look more than 6 months ahead, really, at this stage, until we do those next few phases of exploration.”
Nevertheless, Turner isn’t without some kind of vision. The next major goal, he says, is to make “a significant discovery” at Earaheedy — whether that’s copper and gold, or zinc, lead and silver — within the next drilling program, which is scheduled to begin in September.
“But these things can take years to prove-up resources and get into production,” he adds.
“Although, if you’re lucky enough to find a DeGrussa-style deposit, you can advance that really quite rapidly, compared to what Rumble Resources has got, which is a much larger deposit. The massive copper-gold deposits can be very rich, so they don’t have to be very big. If you discover one, you can quickly get in there and drill the hell out of it and advance quite quickly, if it’s not too complicated.
“But it’s all subject to the next round of exploration. Hopefully, we’ll also develop a lot of other targets which warrant first-pass drilling.”
“If you discover one, you can quickly get in there and drill the hell out of it and advance quite quickly“
Indeed, exploration success is achieved one step at a time, and Lodestar Minerals is a company that’s already demonstrated its commitment to doing what it said it would. The name of the game now — with a lean team and even leaner project portfolio — is to keep the ball rolling and see what happens. After all, as Turner so rightly noted: “Until we drill those holes, we won’t really know exactly what’s there.”
Write to Oliver Gray at Mining.com.au