Big-cap miner South32 (ASX:S32) has launched a diamond drilling program at fellow ASX-listed Encounter Resources’ (ASX:ENR) Jessica Copper Project in the Northern Territory as part of an earn-in arrangement.
Encounter, which has a $164.14 million market capitalisation, reports the drilling work will see 4 holes completed across 3,500m to test targets identified through seismic reprocessing and gravity surveys.
In collaboration with South32, Encounter reports the reprocessing of seismic data extending through Jessica was completed by HiSeis to provide greater detail of the geology and structure in the upper 1,000m. A 2km-spaced gravity survey was also completed, with 1km-spaced gravity infill data collected over a series of ‘high-priority’ magnetic targets.
These seismic reprocessing and gravity surveys identified a series of targets for drill testing, including the Zeta iron-oxide-copper-gold (IOCG) target.
Encounter says Zeta is a ‘significant’ and discrete gravity feature coincident with a prominent magnetic feature on the margin of a large interpreted intrusive body. Additionally, there is a discrete seismic reflector at depth immediately underlying Zeta.
Commenting on the drilling program, Encounter Resources Managing Director Will Robinson says: “We have utilised this widespread seismic coverage, together with a detailed gravity survey, to generate the drill targets for this program.
“We are delighted that South32 has commenced the 3,500m diamond drilling at Jessica”
Applied extensively by the oil and gas industry, seismic modelling techniques have resulted in a step change in exploration success. The application of seismic to hard rock minerals exploration has the potential to transform success rates for copper and zinc discoveries in the sedimentary basins.
We are delighted that South32 has commenced the 3,500m diamond drilling at Jessica. After this program, the rig will head to Carrara for a 3,000m program, with drilling expected to continue through to November.”
Under the farm-in and JV agreement, South32 can earn a 60% interest in Jessica by sole-funding $15 million of exploration expenditure over 10 years.
During the farm-in phase or JV period, South32 can earn an additional 15% interest in Jessica by completing a Scoping Study. Once South32 earns the initial interest or further interest in Jessica, a joint venture will be formed.
Encounter reports both parties will then continue to fund work based on their pro-rata interest, lest it dilute according to a standard dilution formula under this JV agreement.
If a company’s interest dilutes below 10%, that company’s interest will then automatically be converted to a net smelter return royalty (NSR). During the farm-in phase, South32 is the manager of the project.
Encounter Resources is a Perth-based mineral explorer focused on discovering major copper-dominant deposits in Australia. The company’s portfolio includes the Aileron and Lamil projects in Western Australia and the Sandover and Junction projects in the Northern Territory.
Along with its wholly owned projects, Encounter also holds farm-in agreements for the Elliot, Jessica, and Carrara projects in the Northern Territory, along with the Yeneena Project in Western Australia.
On 7 July 2023, Encounter received $1.25 million of its 2023/2024 tax losses through the Federal government’s Junior Minerals Exploration Incentive scheme.
Write to Harry Mulholland at Mining.com.au
Images: Encounter Resources Ltd