The Great Sandy discovery

Summary: A promising explorer, and three of our largest companies, have all staked their claims in a region at the northern end of WA.

Key take-out: It's not world-class yet, but the numbers are promising, with some going as far to say this could be the greatest Australian mineral discovery in decades.

A 40 per cent share price increase over two days is generally good enough for stock exchange regulators to issue a ‘speeding ticket’, but last week’s inquiry of tiny Antipa Minerals was also a clue to something big possibly happening in the most remote corner of Australia.

It is deep in the Great Sandy Desert of WA that Antipa has been joined by some of Australia’s biggest mining companies, including Rio Tinto, Fortescue Metals and Newcrest, in the search for world-class copper and gold deposits.

Inhospitable in the extreme, the region, sometimes called the Paterson Province, has suddenly become a magnet for explorers.

Located north of the iron ore country of the Pilbara and south of the Kimberly region of WA, the Great Sandy’s 285,000 square kilometres means it is bigger than Victoria but with only one sealed road along the Indian Ocean on its western edge.

There are no towns and only a handful of cattle stations around the fringe, with the interior an endless sea of sand dunes clearly seen in satellite photographs.

Its barren surface has kept all but the most intrepid explorers out of the region, despite indications of mineral wealth in the southern section where Newcrest operates the once prolific Telfer gold mine, Metals X has its Nifty copper mine, and Cameco an undeveloped Kintyre uranium mine that was discovered in the 1980s by Rio Tinto.

The latter, Kintyre, was a frustrating discovery because of the complex politics enveloping uranium, plus the metal’s erratic price movements. However, it did give Rio Tinto an early look at the potential of the Great Sandy – if only there was a way to ‘see’ beneath the surface.

Modern exploration technologies ranging from magnetic signals, to gravity readings, to seismic surveys and surface chemical sampling, are eye-opening developments in the mineral search. These technologies have all helped pinpoint targets buried under deep sand before calling for a drilling rig.

Antipa, a minnow with a stock market value of around $40 million, has been a pioneer in the Great Sandy copper hunt, outlining several promising discoveries such as Minyari and Chicken Ranch, none of which are big enough to justify the development of a mine, but could become so with more drilling.

It’s at the northern end of Antipa’s tenements where the international excitement starts, not simply because that’s where Rio Tinto is marshalling its troops, but also where Fortescue Metals has joined the hunt.

Another reason for the increasing interest in what’s happening thousands of kilometres from Australia’s major population centres is the news flow is virtually non-existent – a recipe for speculation. There are reports of prying overflights by rivals in light aircraft, some even using satellite imagery.

Formal reports by Rio Tinto about work in the huge area it pegged in its own name are rare. But a map of the region shown by Antipa in a presentation late last month at a Hong Kong mining investment conference show the serious commitment of the mining major to the region.

It’s in the joint venture area with Antipa, where Rio Tinto is earning a 75 per cent stake by spending $60 million, that there is some news, especially of a target known as Citadel.

Thanks to its minority partner, Rio Tinto shareholders know (if they read Antipa reports) that a significant copper discovery has been made at Citadel.

It’s not world-class, yet, but the numbers are growing, with the immediate focus being two areas of mineralisation within the 1335 square kilometre Citadel project.

Calibre and Magnum, the discoveries best understood so far, contain a combined resource of around 127,000 tonnes of copper in material assaying between 0.15 per cent copper for Calibre and 0.36 per cent for Magnum.

There are also useful grades of gold, silver and tungsten – a combination found in and around the Telfer mine located on a broad dome-like structure with an undeveloped tungsten resource called O’Callaghans, which is adjacent to the gold mine.

Antipa, perhaps significantly, refers to location of the Calibre and Magnum discoveries which are 2km apart, as lying within a broad area it calls the Magnum Dome.

Calibre is said to contain multiple commodities with a 1.3km strike (length) and 480m width, extending to at least 550m below the surface and most significantly open in most directions.

Magnum has the same general features but has a 2km strike, is up to 600m wide, and extends more than 600m below the surface.

The twin discoveries are said to be part of a large-scale mineral system.

The low grades of copper and gold are an issue, but the compensating factor is the potential for a very large amount of material with bulk offsetting low grade.

There is a very long way to go before Antipa and Rio Tinto know whether they have made what some people are calling Australia’s best mineral discovery in decades. But the signs are encouraging for several reasons.

Other explorers are rushing to the area in a classic outbreak of ‘near-ology’, an event that often follows the first whiff of a major discovery and becomes a stampede by other explorers into the region.

Sipa, a small explorer, has been active in the area for some time and holds a large tenement position immediately to the north of the Rio Tinto/Antipa joint venture area.

Fortescue has gone even further north, pegging a huge claim, while also hedging its bets by taking a position to the south.

Rio Tinto, however, is the elephant in the Great Sandy, claiming a vast amount of ground estimated to measure 11,000 square kilometres. Its tenement stretches north towards the strip of coast known as the 80-mile beach that lies south of the Kimberley pearling and tourist town of Broome.

Not far from the northern tip of Rio Tinto’s claim is the Admiral Bay zinc discovery, a huge resource too deep to be mined using existing technology. Its discovery was made by oil explorers drilling through the zinc zones.

Antipa will report what happens next in the Rio Tinto/Antipa joint venture area. The most recent filing to the ASX covered a 3050m drilling program managed by Rio Tinto at the Citadel project to test new copper/gold targets. No assays have been received yet.

Antipa added that Rio Tinto was continuing to review the Magnum Dome discovery.

For Rio Tinto’s own tenements, much less is being said. However, there have been several excited reports in mining trade publications about what Rio Tinto is doing in the Great Sandy.

One recent story claimed that aerial photographs revealed the construction of a landing strip for light aircraft serving the 40-man exploration crew from a base in Port Hedland.

There have also been reports that Rio Tinto drilled through a 140m intersection of visible copper mineralisation starting just 40m below the surface. The company has not confirmed that report.

The next few weeks are important for explorers operating in the Great Sandy. Cyclone season is not far away and that’s when everything stops because sand and rain quickly turns into mud.

It’s the imminent onset of the wet which could explain the construction of an airstrip, as much as it is to save workers driving 400km from Port Hedland over what once were camel tracks.

Whether anything comes of what Antipa and Rio Tinto have discovered will take time to prove, but it is certain that any development will have to be world-class for it to be commercially viable given the high cost of working in such a remote location.