Follow-up drilling by
Diamond drill hole LWDD 462, collared 50 metres north of the discovery hole LWDD 452 (4.83% nickel and 0.49% copper over 10.68 metres, starting 153 metres down-hole, including 5.82 metres averaging 7.68% nickel and 0.81% copper) returned 19 metres (from 140 metres below surface) running 5.27% nickel and 0.42% copper, including 4 metres (from 141 metres) of 11.1% nickel and 0.78% copper and 7.6 metres (from 151.5 metres) averaging 5.5% nickel and 0.42% copper.
About 50 metres south of the discovery hole, hole LWDD 455 returned 0.4 metre of 8% nickel and 0.49% copper starting at 161 metres below surface.
Two reverse-circulation holes were also collared about 50 metres south and 80 metres north of hole 452. Hole LWDC 460, to the south, surrendered 4 metres (from 148 metres) grading 1.08% nickel and 0.11% copper. To the north, hole LWDC 461 cut 13 metres (from 115 metres) of 3.45% nickel and 0.17% copper, including 7 metres (from 115 metres) of 4.84% nickel and 0.2% copper.
Six other holes came up barren, and assay results from another six holes are pending.
Mineralization at Waterloo is mostly high-grade matrix to disseminated sulphides with associated, structurally controlled massive sulphides zones. The disseminated sulphides grade up to about 3% nickel; the matrix sulphides, between 3% and 9% nickel; and the massive sulphides, between 9% and 15% nickel.
So far, drilling has outlined a 50-by-200-metre lenticular nickel-sulphide zone. The northern portion of the zone is sub-horizontal while, to the south, the zone is folded with a sub-horizontal eastern limb and a sub-vertically dipping western limb.
The zone remains open to the north, and electromagnetic geophysical surveying and drilling suggest that the sub-vertical mineralization may continue at depth to the southwest.
EM conductors
LionOre plans to carry out exploration at Waterloo and wants to examine several electromagnetic conductors in the surrounding region.
LionOre owns 60% of the Wildara project and manages exploration. Dalrymple holds the remaining stake.
Waterloo lies about 6 km from the companies’ developing Thunderbox gold project, which is slated to pour its first dore bar in the fourth quarter, following a positive production decision in December. Thunderbox, too, is held 60% by LionOre and 40% by Dalrymple.
Construction at Thunderbox is expected to take nine months, with a price tag of US$33 million. A proposed open-pit operation is projected to produce 220,000 oz. in the first year of commercial operations and 150,000 oz. per year thereafter.
Over its 5-year lifespan, the mine is expected to produce 800,000 oz. at an average cash cost of US$157 per oz. During the first year, cash costs are pegged at US$110 per oz. thanks to higher grades and softness of the oxide material.
About half the mine’s production has been hedged through Macquarie Bank at a flat forward price of US$293 per oz., or about US$35 per oz. more than was used in the bankable feasibility study.
Thunderbox’s reserves stand at 10.9 million tonnes averaging 2.43 grams gold per tonne, based on a gold price of US$254 per oz. and a cutoff grade of 0.7 gram per tonne for oxidized material and 1.1 grams for primary material.
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