This is the first in a two-part feature series.
This article is a sponsored feature from Mining.com.au partner Magmatic Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
When a magmatic eruption begins, it usually takes a while from the initial build-up until it reaches the climatic explosion. Magmatic eruptions range in the intensity, magnitude, explosivity, eruption rate, and amount of magma erupted.
Following a counter cyclical acquisition of an advanced gold-copper target portfolio in the East Lachlan Gold-Copper Province in New South Wales in 2014, Magmatic Resources (ASX:MAG) is a junior exploration company on the verge of erupting into the next big copper play in New South Wales.
The acquisition, which formed a part of a divestment by one of world’s largest gold mining firms, Gold Fields (NYSE:GFI), followed a phase of target generation across 4 main projects – Myall, Parkes, Wellington North, and Moorefield.
What has built up since 2014 is a series of drilling results at its 100% owned Myall Copper-Gold Project in particular that indicates Magmatic is on the cusp of discovering a large porphyry system.
With more than 60% of the world’s copper production coming from porphyry deposits, Magmatic Resources’ Managing Director Dr Adam McKinnon says the belt in which Myall is located is as exciting as it is ‘prospective’.
Additionally, hey says, it sits within a Tier 1 mining jurisdiction already the focus of several mining behemoths.
When speaking to the MD, one can only sense that a seismic shift is about to happen in this part of New South Wales. Located 25km southwest of the town of Narromine, the Myall Copper-Gold Project is exactly 60km north along strike of the ‘world-class’ Northparkes Mine, which is owned by CMOC Group (formerly China Molybdenum) and Japanese trading house Sumitomo.
Myall comprises a single exploration licence covering 244km-square, with Magmatic Resources starting its largest ever drilling campaign at the project in July 2022.
McKinnon says that while there are many unknowns in mineral exploration, much like forecasting a volcanic eruption, Magmatic Resources has more knowns than most juniors. For one, its nearest neighbouring comparable project Northparkes is the second-largest porphyry copper mine in Australia with a current combined Resource and Reserve base of 607Mt @ 0.55% Cu and 0.21g/t Au.
Comparatively, just down the road, Myall covers the northern extension of the Junee-Narromine Volcanic Belt, along strike from Northparkes. Multiple historic copper-gold-molybdenum intercepts at Myall, including 70m at 0.54% Cu, 0.15g/t Au and 62m at 0.27% Cu, 0.13g/t, highlight near-equivalent grades to the Northparkes global resource and indicate potential for a fertile porphyry cluster.
McKinnon explains: “The gold standard for us is Northparkes – that’s what we’re trying to replicate here. At the current rate of production, Northparkes’ Resources and Reserves would last another 90 years. They’ve already been operating for 30 years and if you just do the maths, they produce more than $1 billion worth of copper every year…and they’re just 60km down the road from us.”
McKinnon adds that having Northparkes just a stone’s throw away, Magmatic is targeting (and found) a similar style mineralisation and at similar grades. He says the key characteristics of a porphyry deposit like Northparkes is that they are typically very large although considered to have moderate grade. Some of the world’s largest known porphyry deposits range in the billions of tonnes, he says.
“So, the size of a porphyry deposit has the potential to grow very, very quickly and for us that’s really, really, exciting”
The MD explains that porphyry deposits can be quite difficult to discover although such systems tend to form in clusters. Northparkes, for example, has at least 20 separate ‘pipes’ or ‘pipelike orebodies’ with many of these discovered at different times over some 30 years.
“So, the size of a porphyry deposit has the potential to grow very, very quickly and for us that’s really, really, exciting.
I guess what differentiates us from other junior exploration companies a little bit, is this is a copper-gold discovery and I think there’s a big difference between copper in Australia and gold in Australia. Obviously there has been lots of gold exploration and mining in Australia over the years and there are a lot of gold projects in the works at the moment.
Copper is quite a different story. There’s actually not that many good Tier 1 or even Tier 2 copper projects coming online – they’re nowhere near as common in Australia than in other parts of the world as you may think.
In terms of New South Wales in particular, there are actually very few copper discoveries that have been developed in the last 2 to 3 decades. Queensland is a little bit different but in terms of New South Wales, there are a few very good copper mines, such as CSA but that’s been running since the turn of last century basically. And there is Cadia which produces a large amount of copper as a by-product and of course Northparkes is the really big one.
So, there’s not that many in New South Wales and that’s why what we have is really exciting. If we can develop this into a large porphyry copper discovery like we think we can, then we’ll be in a rare group of companies with a major copper project in New South Wales.”
McKinnon reiterates that Magmatic views Northparkes as the benchmark for copper in New South Wales and early indications suggest Myall is equally as attractive from a mining and investment proposition.
“It’s one thing for a company to try and chase developing a deposit similar to a nearby world-class project but what’s exciting is that we are directly along strike of Northparkes, only 60km away, with the same geology, same age rocks, and with what we’ve got now, very similar mineralisation.”
Casting its own shadow
While Magmatic’s Myall Project shares many similarities with Northparkes, for the most part the junior exploration company is casting its own shadow. It’s well-positioned to take advantage of the opportunities before it and has amassed a small war chest to capture these.
Firstly, the company ended the past quarter with $5.32 million cash at hand after an equity raising, with a further $1 million coming from a Share Purchase Plan (SPP) in January this year. It’s also a junior explorer rubbing shoulders with the larger end of town seeking a porphyry system.
McKinnon explains: “We’re in a little bit of a niche in that we’re a junior mining company exploring for a copper porphyry system. Other companies do it too, like Alice Queen and Kincora and they’re operating not far from us. Probably the next thing that really makes us different, is these tenements have been held by majors previously. Ours was picked up from Gold Fields and they were out here until around 2013 and 2014 and ours were picked up by our Chairman.
“Probably the next thing that really makes us different, is these tenements have been held by majors previously”
That’s significant because of the access to historical data. In terms of the data, whenever a major comes into an area, they generally pick up some great geophysical and geochemical data, and so unlike many junior exploration companies, we have that to work with.
The reason they (majors) were in these areas is, geographically speaking, these are the best, most prospective areas to be in. Newcrest, which owns Cadia, has drilled in the region and being surrounded by majors, for us it’s completely an opportunity. Our tenement at Myall is surrounded by majors, so obviously this offers the company many different avenues and opportunities for development.
The other thing is that, with the type of deposit we are exploring, it has a potential to be a Tier 1 deposit. That’s a key point because Tier 1 mining companies like the ones that surround us, obviously are interested in Tier 1 mining jurisdictions.”
Tier 1 mining jurisdiction
The East Lachlan Gold-Copper Province has an endowment of more than 80 million ounces of gold and 13 million tonnes of copper. It is home to Newcrest’s (ASX:NCM) Cadia Valley District, which includes the Cadia East Mine, Australia’s largest gold mine and one of the world’s most profitable. The Northparkes copper-gold mine (China Molybdenum/Sumitomo) and Cowal Mine (Evolution Mining) are also significant long-life gold-copper mining operations in the region.
Amid this backdrop, Magmatic has an impressive portfolio within this very neighbourhood.
Its 3 Wellington North tenements effectively surround the recent 10.1-million-ounce Au-Eq Boda discovery and encompasses the historic Bodangora Gold Field, where ‘high-grade’ gold mining occurred with recorded historic production of 230,000oz @ 26g/t Au.
The company also holds a strategic position in the Parkes Fault Zone.
With nearby neighbours including Newcrest, China Molybdenum, and Sumitomo, as well as Evolution Mining, McKinnon notes that in terms of Magmatic’s growth strategy down the line, the options to develop its assets are aplenty.
“In terms of our development strategy all options are open at this stage. Right now, we’re 100% focused now on making a discovery. In the long run, we’re committed to developing it (the Myall Copper-Gold Project) the best we can to the point where at some stage, there will be interest from other parties.
Our job as an exploration company is to make the discovery – where we go from there, we’ll do whatever is best for our shareholders. We know we’ve got a top tier project in a top location surrounded by majors, so we’ll see down the line what the best options are – and there are many – what they’ll be.”
In part 2 of this feature series, McKinnon outlines how within Myall, the Corvette prospect is racing ahead as the main focus for the company in 2023.
Magmatic started its high impact 2022 drilling program at Myall early in the September quarter, initially targeting the Corvette prospect area. Previous drilling completed in 2003 had established the presence of porphyry-associated copper/gold mineralisation and alteration at the prospect, which included historic intercepts of +1% copper in ACNMD090.
The MD also notes in part 2 that Magmatic is drilling at a faster rate now with fewer impediments from inclement weather and throughout 2023 the company will be stepping up exploration activity even further.
Write to Adam Orlando at Mining.com.au
Images: Magmatic Resources Ltd