Junior explorer Taruga Minerals (ASX: TAR) has signed a 12-month option agreement to acquire 100% of the Flinders project, regarded as a highly prospective iron oxide-copper-gold (IOCG)-style project in South Australia.
The company emerged from a trading halt today to announce the acquisition which, if the option is exercised, will be achieved through Taruga’s purchase of the current project owner, Strikeline Resources.
The move follows Taruga’s recent steer away from cobalt exploration in the Democratic Republic of Congo to IOCG targets in Australia.
Taruga director Mark Gasson said the company is hopeful that through a systematic exploration approach using updated technologies, it may be “well placed to potentially identify near surface, high-grade, gold, copper and silver mineralisation within breccias associated with the Mt Stephen thrust which transgresses the project area over more than 6km” at Flinders.
Terms of the deal
Under the terms of the option agreement, Taruga is required to make an initial $15,000 cash payment, with a further $25,000 payable in six months.
Subject to a minimum $250,000 exploration spend, the company is then entitled to exercise its option to acquire the full 100% ownership rights to the Flinders project.
Taruga will be required to issue 40 million fully paid ordinary shares to the sellers of Strikeline and make further payments upon the achievement of three performance milestones: the delineation of a JORC indicated resource of 150,000t copper equivalent ($400,000); the completion of a bankable feasibility study ($500,000); and the commencement of first commercial production (first concentrate sales) at the project ($500,000).
Taruga must also pay a 1% net smelter royalty in respect of all precious, industrial minerals and base metals produced and sold, but will have the right to buy back the royalty for a total consideration of $500,000.
To fund the proposed acquisition and planned work programs, the company said it has received firm commitments to raise $600,000 through the placement of 60 million shares at $0.01 each.
The 647sq km Flinders project is located 80km north of Port Augusta, SA and has access to power and rail.
The lease also lies 80km from Oz Minerals’ (ASX: OZL) Carrapateena underground copper-gold mine and its Fremantle Doctor and Khamsin IOCG deposits, and is in the same regional setting as BHP’s (ASX: BHP) giant Olympic Dam deposit.
According to Taruga, recent petrology and sampling undertaken at the project has revealed diverse mineralisation comprising high-grade copper, gold, hematite, cobalt, silver and vanadium, along with anomalous platinum group elements and rare earth elements.
Copper mining was undertaken in the area from the 1860s to the early 1900s and micaceous iron oxide (or Miox, commonly used in protective coatings and primers for its anti-corrosive properties) was mined in the 1980s from the Main Lode in the Warrakimbo Ranges.
According to Taruga, the Flinders project comprises a highly prospective portfolio of prospects – Woolshed/Metabase, Main Lode and Rambla – with existing IOCG-style mineralisation outcropping over a strike of at least 6.4km along the north-south trending Mt Stephen thrust on the margin of the Gawler Craton.
The Woolshed/Metabase prospects (two prospects separated by a creek) are associated with a single 2km long magnetic anomaly with grab samples returning significant grades of up to 14.9% copper, 4.73 grams per tonne of gold, 7.3g/t silver and 38.16% iron.
Recent sampling at the Main Lode reported significant grades of 50.2% copper, 12g/t silver, 0.293% cobalt, 47 parts per billion gold and 1.51kg per tonne of light rare earth elements.
Rambla, which sits to the west of the Mt Stephen thrust, represents additional copper potential in the region with a recent rock chip reconnaissance sample returning grades of 5.1% copper and 5.7g/t silver.
Mr Gasson said the Mt Stephen thrust and associated breccias was a “particularly interesting exploration target, considering highest gold values and significant high-grade copper was reported from one of these breccias, which are associated with a 2km magnetic anomaly”.
Taruga has planned an initial six-month exploration program at Flinders, which will include the reprocessing of government and company airborne magnetic and gravity data and magnetotellurics data, as well as detailed surface and soil sampling and mapping along the Mt Stephen thrust and the Rambla prospect.
The exploration program will also include a high-resolution gravity survey to identify new coincident gravity anomalies for priority drilling.
Taruga announced it has appointed experienced SA-based geologist and Flinders project vendor, Thomas Line, as the project manager.
New focus in Australia
Previously focused on cobalt and copper exploration in the Democratic Republic of Congo, Taruga recently announced it was moving its attention away from the central African nation due to continued issues with the granting of licences and the depressed environment for cobalt projects.
Last month, the company confirmed a decision to withdraw its interest from the Kamilombe copper-cobalt project in the DRC and reiterated its focus on the Yagahong North gold and base metal project in Western Australia.
It also said it had allocated part of its working capital budget to identifying and evaluating new mineral resource opportunities in Australia and overseas.