Minotaur steps out at Olympic Dam-style prospect

The geology and geochemistry of Minotaur Resources‘ discovery hole at a large gravity anomaly in the Mt. Woods area of South Australia suggests Olympic Dam-style mineralization and the makings of a potentially major discovery.

In November 2001, the Australian-listed company sunk a single hole on the Prominent Hill prospect, a large discrete airborne gravity anomaly that was slightly offset from a similar-size magnetic feature. The discovery hole returned significant intercepts of copper-gold mineralization in hematite breccias, including:

– 107 metres of 1.94% copper plus 0.65 gram gold and 1.6 grams silver per tonne (including 35 metres at the base of the intercept grading 3.86% copper, 0.82 gram gold and 4.5 grams silver) at a depth of 200-307 metres, followed by

– 152 metres of 1.1% copper, 0.61 gram gold, 2.6 grams silver and 267 parts per million (ppm) uranium from 429 to 521 metres.

The vertically drilled hole passed through 108 metres of younger sediments from surface, before intersecting a basement sequence of hematitic brecciated metasediments and volcanics. The upper 92 metres of basement sequence consisted of brecciated, fractured and hematite-veined metasediments and tuffs, which converts, at 200 metres of depth, to a hematite-silica breccia with highly altered hematite-sericite-silica clasts. The top 20 metres of the basement sequence ran 3.03 grams gold from 108 to 128 metres.

The copper mineralization begins at a depth of 200 metres with the appearance of the matrix-supported hematite breccia. Copper occurs chiefly as chalcocite to 450 metres, where it is replaced by chalcopyrite and bornite. Anomalous uranium (17 metres grading 1,398 ppm) and fluorine are present with the chalcopyrite.

Extending to a depth of 581 metres, the breccia is interrupted by an unmineralized, dolerite dyke and weakly brecciated metasediment over the interval from 307 to 429 metres. Interbedded volcanics, agglomerates and silica-hematite breccias, along with minor dolerite dykes, were encountered from 581 metres to the end of the hole at 720 metres.

The contact between the younger sediments and underlying basement rocks is interpreted to be horizontal, while those between the dykes and breccias are thought to be sub-vertical.

The results of a subsequent ground geophysical survey suggest that the gravity and magnetic anomalies are two distinct features, with the former striking east-west and the latter oriented in a northwest-southeast fashion. The lens-shaped gravity feature is just over 2 km long and ranges from 150 to 400 metres wide. The discovery hole was positioned on the northern edge of the gravity anomaly in an area where the feature narrows to about 150 metres. The gravity anomaly is interpreted by Minotaur to reflect the outline of the mineralized hematite breccia.

The company has begun a 6-hole program designed to test the continuity and level of mineralization of the Prominent Hill prospect. The holes will be drilled at 400-metre intervals along strike of the gravity feature. The first hole has been collared 400 metres southwest of the discovery hole in an area where the gravity anomaly intensifies and broadens. The planned depth of this new hole is 600 metres.

Carried interest

As operator, Minotaur is carried with a 19% interest through the first A$4 million in expenditures as part of a joint venture with BHP Billiton (BHP-N), which is earning 51%. The current tenement-holders — Normandy Mining (NDY-T), Sons of Gwalia and Sabatica — will dilute down to 23.9%, 3.8% and 2.3%, respectively.

The Mt. Woods joint venture covers 3,800 sq. km of exploration licences along a regional northwest-striking structure between Coober Pedy and Roxby Downs. The same structure hosts WMC‘s (WMC-N) Olympic Dam underground operations, 125 km southeast of the Prominent Hill discovery.

Ranked as the world’s six-largest copper deposit and largest uranium deposit, Olympic Dam is also Australia’s largest underground mine of any kind. In 2001, Olympic Dam’s integrated operations produced 200,523 tonnes of refined copper, 113,412 oz. gold, 912,859 oz. silver and 4,379 tonnes of uranium oxide concentrate.

Proven and probable reserves at the end of 2000 stood at 707 million tonnes grading 1.7% copper, 0.05% U3O8 and 0.5 gram gold. Total resources are estimated at 2.5 billion tonnes grading 1.3% copper, 0.04% U3O8 and 0.5 gram gold. Olympic Dam has a mine life of more than 70 years.

At the end of 2001, Minotaur had A$1.8 million in cash and roughly 21 million shares outstanding. The junior, which is currently trading at A$2.76, has arranged a A$6.1-million private-placement financing for the sale of 3 million shares priced at A$2.10 apiece. BHP will participate in the placement to maintain its current 6.6% stake in Minotaur.