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Strategic Elements uncover archived assays of 5,324.5g/t gold from NZ mine

Last updated: 15:46 18 Mar 2014 AEDT, First published: 16:46 18 Mar 2014 AEDT

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Strategic Elements (ASX: SOR) has turned its focus towards the Aorangi Gold Mine in New Zealand’s South Island after finding historic records highlighting grades of up to a whopping 5,324.5 grams per tonne gold.

Notably, the production records on the historic gold mine also highlighted an average head grade of primary ore of 46.9 g/t.

For context, the current average grade of a modern gold deposit is around 1.01g/t.

Aorangi, which produced over 26,000 ounces of gold before inadequate mining technology restricted its development, is located within the Golden Blocks Goldfield project.

In addition, the company’s exploration has highlighted the potential of the 131 square kilometre prospecting permit to host a high grade gold region that has not being previously explored.

“After reviewing over approximately 1000 pages of information, due diligence and field validation, investigation of the Aorangi mine at depth is the next step,” managing director Charles Murphy said.

“Work has also begun to understand any potential early mine development opportunities, including drilling and underground sampling requirements along with identifying optimal means of regaining access to the historic workings. The wider Golden Blocks goldfield truly is a forgotten, exceptionally high grade early 1900's goldfield.”

Forward exploration at Aorangi is likely to involve establishing access to the No. 3 Level to conduct underground sampling and mapping will be conducted.

This will outline the extension of high-grade gold mineralisation at depth beneath the Aorangi mine workings before assessing the potential to construct an underground winze to a depth of 60 metres below No. 3 Level to open a new No. 4 Level.

Murphy told Proactive Investors the company’s goal is to have a central high-grade operation with multiple satellite projects around it.

“With such a high historic average head grade at Aorangi, we believe we are at a really good starting point in terms of trying to get a project that we can get on the path to being a profitable mine,” he added.

“Aorangi is our absolute priority and investigating below the mine workings is at the forefront of that”.

Aorangi Gold Mine

Although Aorangi produced over 26,000 ounces of gold at an average recovered primary ore grade of 32.8 g/t gold, inadequate mining technology restricted development of the mine.

Each underground miner was issued with just one candle per day and there was no ability to geochemically sample or drill at all. Ultimately, old pumping equipment couldn't keep the No 4 Level dry enough to maintain operations beneath the water table.

Modern technology has no such issues with water.

Interestingly, the No. 3 Level of the Aorangi mine had 300 metres of completed underground development left unmined in 1914. 

Then in 1932, another gold mining company drove into this section, cutting through quartz veining, grading 663.8 g/t over 0.75m across the full width of the quartz, including the peak grade of 5,324.5g/t gold over 0.25 metres.

Importantly, the stone around the shoot was also said to be "exceptionally good".

Archived records contained in the Wellington Archives also increase support for gold mineralisation to extend beneath the previously mined levels.

Murphy added the company had already started underground sampling and investigating the upper levels of the mine.

Recent underground sampling has returned up to 13.2 g/t gold and grab sampling up to 16.5 g/t have been reported just from the easily accessible areas of the mine.

“We are working on a plan now for investigation of the No 3 Level, which we haven’t accessed yet and is above the water table. After that we intend to investigate down beneath the No 3 Level, beneath the water table into No 4 Level where mining stopped in a high grade shoot,”

Aorangi gold is free milling and easily recoverable according to an independent report from 1933, which further improves its prospectivity.

In addition, much of the native vegetation at Aorangi has been cleared and the area has been exercised from a proposed national park in the 1980s, mitigating one of the major risks of operating in New Zealand.

While the Aorangi mine is the priority target at Golden Blocks, the project also host four other previous producing mines along a 2.5 kilometre zone of gold mineralisation.

There has been no systematic modern exploration of the historic Golden Blocks goldfield.

SOR is the first modern explorer into much of this heavily vegetated area, which is 100% owned by subsidiary Strategic Materials.

Analysis

The historic results up to 5,324.5g/t gold highlight the potential for Strategic Elements to resume mining of a historic high grade gold mine that could potentially have low development costs due to the free milling nature of the ore.

Importantly, the high head grade of 46.9g/t gold and free milling nature of the ore compares well to Doray Mineral’s free milling Andy Well project, which is the highest average head grade producer at more than 12g/t gold.

Upside potential also comes from the other mines in the project, which the company has to conduct field due diligence of the records it has recovered from the archives as well as the greenfields potential of the prospecting permit.

Investors will also benefit from the company’s status as a registered Pooled Development Fund that invests into Australian small and medium enterprises. Most shareholders pay no tax on capital gains made or dividends received from SOR shares.

The Golden Blocks project is held by 100% owned investee company Strategic Materials Pty Ltd.

Strategic Elements' market cap. of circa $8 million is unchallenging and is leveraged to further exploration news.

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