Exco Resources (ASX: EXS) has begun an aggressive drilling campaign on its northwest Queensland tenements after outlining a $10 million exploration budget for 2012.
The Cloncurry Lineament, on which a considerable portion of Exco’s tenements lie, covers an area of prospective ground that runs from BHP Billiton’s (ASX: BHP) Cannington silver-lead-zinc mine to Xstrata’s (LSE: XTA) Ernest Henry copper-gold mine.
Drill rigs have been mobilised and begun drilling at the Salebury and Kangaroo Rat deposits.
The principal target for Exco in the Eastern Succession of the Mt Isa Inlier is Ernest Henry-style iron-oxide-copper-gold mineralisation.
The company has identified a number of targets with potential to host large stand-alone resources, known as tier one targets.
The Turpentine/Eight Mile Creek, Salebury/Tanbah and Canteen/Weatherly Creek areas have geological, geophysical and geochemical characteristics that suggest they are within an IOCG system.
Soil surveys at the Canteen/Weatherly Creek prospect have revealed strong copper-gold-iron-potassium-phosphorus-uranium at surface, with grades of about 0.27% copper and 0.43 grams per tonne (g/t) gold.
Current drilling, to a maximum depth of only 250 metres and covering less than 10% of the prospect, has intersected broad widths of mineralisation with peak values up to 4.43% copper, 2.46g/t gold and 830 parts per million uranium.
Initial rock chip sampling at the southern portion of the prospect area revealed copper greater than 1% and uranium up to 2,440 parts per million.
At the Salebury and Tanbah prospects the recent acquisition of sub-audio magnetic, gravity and soil geochemistry data has highlighted a number of additional targets to those already being tested by drilling.
The Turpentine/Eight Mile Creek area, located in the Hazel Creek Project, has widespread copper and gold mineralisation associated with magnetite.
Drilling to date has outlined several prospects that may provide additional resources. Previous work in these areas suggests there is the potential to host a large mineralised system.
New gravity data has outlined a very large gravity anomaly partly coincident with the magnetic zone to the south of Eight Mile Creek.
Exco plans to conduct detailed exploration of the large scale multi-component anomalies that cover these areas.
The company is also evaluating tier two targets that may be suitable for supply to third party processing facilities within the Cloncurry/Mt Isa region.
Exco has committed to a three year program over the whole of its northwest Queensland package to generate a pipeline of new targets.
The program will include systematic and widespread application of geophysics and soil geochemistry.
Northwest Queensland operations
Exco is focused on expanding exploration at the Northwest Queensland package in 2012, to maintain the company’s self-sustaining position and replace cash flow from the White Dam gold project.
At the Cloncurry project, Exco recently released an upgrade Resource of 1.26 million tonnes at 1.29% copper and 0.63 grams per tonne (g/t) gold for 16,220 tonnes of copper and 25,700 ounces of gold for the Kangaroo Rat deposit.
Importantly, the mineralisation is open along strike to the west and at depth, offering the potential to increase the Resource further.
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