Chalice hunts for metal mother lode in forest near Perth
One of the great unknowns about Chalice Mining’s exciting Julimar project is whether its proximity to Perth is a blessing or a curse (reports The Australian Financial Review).
2nd July 2021
Resources Rising Stars
The PGE (platinum group element) discovery – which includes nickel, copper, cobalt, gold and palladium –- sits a little more than 70 kilometres north-east of the city in farmland and state forest.
Chalice is waiting for permission to drill in the state forest as it tries to establish just how big a deal it has on its hands with Julimar, and if it is of a size that supports one or more mines.
The company and its backers, including chairman Tim Goyder, suspect the state forest holds the mother-lode mineralisation in the 26 kilometre-long Julimar complex.
Chalice expects to gain drilling access and go hunting in the forest sometime in the September quarter.
There’s a long history of mining and related industries operating in state forests in WA, including Alcoa and South32 with their alumina refineries and Newmont’s Boddington gold mine.
Julimar is different in that it is a new project close to the picturesque town of Toodyay and its lifestyle hobby farms and serious farmers.
As serendipity would have it, Chalice made the discovery with a celebrated first drill hole on a farm part-owned by Barminco founder Peter Bartlett and was able to purchase the property from the mining services millionaire for cash and shares.
It acquired the first farmland in November and has since accumulated about 2300 hectares, paying about double the agricultural value to property owners happy to take the money and run.
Chalice is satisfied that gives it enough land to hold the Gonneville discovery at the south-west tip of Julimar and allow a 4-kilometre buffer for infrastructure and extensions.
The market is anxiously awaiting an official indication of the size of the resource at Gonneville expected around September. Chalice’s 6.5 kilometre-long Hartog target and others are in the state forest to the north.
It remains to be seen how the residents of Toodyay and surrounds and the Chittering Valley will react if Chalice has made a belt-scale discovery capable of hosting multiple mines.
The potential scale has mining majors keeping a close eye on Julimar. Some of them will see the proximity to Perth as a massive blessing.
There are none of the native titles issues that are starting to provide major headaches for BHP, Rio Tinto and Fortescue Metals Group in WA’s Pilbara, and no need to fly-in, fly-out a workforce. Power and other infrastructure is already in place.
Chalice managing director Alex Dorsch thinks Julimar is in a Goldilocks spot, sitting just right in its proximity to Perth and distance away from Toodyay and the Chittering Valley.
Chalice is still drilling at Gonneville ahead of the maiden resource announcement about three months away.
Macquarie analyst Hayden Bairstow says the company has two big signposts it needs to reach: the maiden resource announcement and gaining access to the state forest.
“If that drilling (in the state forest) is successful, then it potentially changes the story again depending on what the results look like,” he says.
“I think if the scale keeps growing and particularly if they have success in the state forest, and you start talking a multi-deposit outcome, then, for sure, it (Julimar) will get even more attention.
“The mining industry is not blessed with a lot of big projects like this.”
Macquarie has an outperform rating on the stock with a 12-month target share price of $9.90.
It says Chalice now has five key targets, including Hartog, within Julimar that justify drilling.
Chalice’s backers include Phil King’s Regal Funds Management, which bought into the company in April last year when the share price was $1.
Regal’s Campbell Chambers views Julimar as a globally relevant green metals discovery that is firmly on the radar of big miners.
“Chalice presents as an obvious acquisition target for a global diversified miner. These miners have signalled their intent to diversify away from old-world commodities, including coal, oil and iron ore, and towards new economy green metals,” he says.
What is known about Julimar suggests it is much bigger than the few PGE discoveries made in Australia. Purely on a metal ratio basis – rich in nickel and copper with a high proportion of palladium to platinum – it has drawn comparisons to the Norilsk province in northern Russia.
Chalice had a team of 14 employees at the start of last year but that has grown to 75, most of them geologists, with about 20 consultants also on the payroll. It recently added former Rio Tinto head of exploration Stephen McIntosh to a board that includes Northern Star Resources chief financial officer Morgan Ball and former Alcoa executive Garret Dixon.
Robert Willis, part of the Bell Potter institutional sales team behind Chalice’s capital raisings, says the company is only just getting started with Julimar.
“The penny is only just starting to drop with people on how big this may become, but the social licence to operate is going to be important,” he says.
“I think it (Gonneville) could comfortably be a standalone big open cut (mine). It is all about what is in the state forest to see if there are more.”
Dorsch says Chalice wants to retain its exploration DNA whatever happens with Julimar.
It has secured 8000 square kilometres immediately surrounding Julimar and thinks the Archean-age edge of the Yilgarn craton in WA could hold more discoveries.
The Chalice exploration team is applying the same techniques it used to find Julimar so close to home in Perth to areas near Geraldton to the north and Bridgetown to the south.
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