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Challenger Gold Mine - Calcrete anomaly exploration success

Challenger has been challenging but has produced over 1.1 million ounces of gold, which is a testament to the endowment of the mine.

Echo Resources Ltd - Challenger Gold Mine - Calcrete anomaly exploration success
The Challenger mine is in South Australia, 750 kilometres from Adelaide

The Challenger Gold Project is one of these forgotten projects that has more to give than people realise. The Challenger deposit is 750 kilometres north-northwest of Adelaide in Archaean rocks of the Gawler Craton and the Challenger Mine is the most significant gold-only discovery made in South Australia.

It took over three years of exploration to discover the ore body in 1995 by Dominion Mining Limited. They used what was then a new form of geochemical sampling called ‘calcrete’ sampling.

A regional sampling grid of 1.6 x 1.6 kilometres was used to cover the tenement area. The sampling anomaly was followed up with drilling to test the calcrete geochemical anomalies.

After the discovery continued reconnaissance and infill calcrete sampling has defined over 300 calcrete gold anomalies over an area of approximately 10,000 square kilometres. Drilling of 50 of these prospects has revealed numerous occurrences of gold mineralisation but failed to define any further mineable reserves.

Calcrete geochemical data, including the anomaly that led to the discovery of the Challenger deposit. (source: Peter Williams, David Frances, Jerome Gillman & Chris Bonwick (2003);  Geophysical characterisation of the Challenger gold deposit, Gawler Craton, South Australia, ASEG; Extended Abstracts, 2003:3, 19-27, DOI: 10.1071/ASEGSpec12_02)

One of the many hundreds of samples was the ‘lucky’ sample and recorded above background values of gold in calcrete. That lucky sample led to the discovery of what is now a mine that produced 1 million ounces of gold since mining started in 2002. Like many discoveries, the initial drilling intersected high-grade ore, but subsequent drilling was not consistent.

Infilling of the regional sampling grids occurred by progressively decreasing the size of the patterns down to 400 × 400 metres then 100 × 50 metres, eventually homing in on the Challenger gold and arsenic anomaly.

An initial RAB drilling program targeting the calcrete anomaly delivered an intersection of 28 metres at 5.8 g/t, which launched the Challenger project. (Androvic, P, Bamford, P, Sandt, M, The Challenger Gold Mine, 2008).

Cross-section and drill hole geochemical data across the Challenger geochemical anomaly showing anomalous values associated with the Challenger mineralisation. (source: Peter Williams, David Frances, Jerome Gillman & Chris Bonwick (2003); Geophysical characterisation of the Challenger gold deposit, Gawler Craton, South Australia, ASEG; Extended Abstracts, 2003:3, 19-27, DOI: 10.1071/ASEGSpec12_02)

More detailed drilling with detailed structural interpretation led to the discovery of a series of tightly folded linear shoots. Mineralisation occurred as discrete shallowly (30 to 45°) plunging shoots hosted by granulite-facies paragneiss, which lacks marker horizons to aid in geological and structural mapping. High-grade moderate to steeply dipping auriferous quartz veins occur within the shoots.

Geophysical signatures

What is interesting is that no significant structures are observable in the area in regional (400-metre line spacing) aeromagnetic data. Most of the people I have spoken to tell me that there are no visible geophysical signs of the deposit.

The diagrams below show the difficulties in using geophysics as a tool. There is some slight inference to the deposit, but like all hindsight theories, they are useless in real-life exploration.

Regional-scale geophysical data from the northern Gawler Craton showing locations of gold deposits and prospects. Co-ordinates are AMG zone 53. SAEI TMI aeromagnetic data. (source: Peter Williams, David Frances, Jerome Gillman & Chris Bonwick (2003);  Geophysical characterisation of the Challenger gold deposit, Gawler Craton, South Australia, ASEG; Extended Abstracts, 2003:3, 19-27, DOI: 10.1071/ASEGSpec12_02)

The gravity data show more detail but it is not a great use for identifying a target.

Regional-scale geophysical data from the northern Gawler Craton showing locations of gold deposits and prospects. Co-ordinates are AMG zone 53. AGSO Bouguer anomaly gravity data. White circles show locations of gold mineralisation. Imaging by Cowan Geodata Services. (source: Peter Williams, David Frances, Jerome Gillman & Chris Bonwick (2003); Geophysical characterisation of the Challenger gold deposit, Gawler Craton, South Australia, ASEG; Extended Abstracts, 2003:3, 19-27, DOI: 10.1071/ASEGSpec12_02)

The Mining of Challenger

Challenger started as an open pit in 2002 and was mined to a depth of 135 metres and completed in April 2004. A total of 120,000 ounces of gold was mined.

Due to the massive nature of the Challenger gneiss, the mining process was complicated. The poor natural fracturing and indistinct geology in the pit resulted in the problematic interpretation of ore zones. This led to poor geological control.

The actual structural geometry of the ore was not apparent during the open-pit mining period as no ore was exposed for mapping in the early part of the mining process.

The folded nature of the ore was known, but the complexity of the ore was not fully realised. What was suitable for the mine was the ‘free dig’ nature of the top 33 metres of the weathering profile.

Challenger is a structural monster and a laterally extensive shear zone defines the ore body with shoots plunging 30º to 030–035° (AMG) or 055–060° mine grid.

Cartoon showing the progressive shortening of psammitic beds (So) to produce tight to isoclinal folds that ultimately are transposed by the axial planar foliation (S1) and local shear zones along attenuated limbs (S2). The psammitic bed could also represent leucosome melt bands and quartz veins and is independent of scale (from Standing, 2003). (source: Androvic, P, Bamford, P, Sandt, M, The Challenger Gold Mine, 2008)

Speaking to some people who have worked in Challenger, they tell me the mine is called Challenger for a reason. The complexity would have caused a lot of dilution during the mining of the ore body. There are at least 10 different known types of ore geometry and I would not doubt that there would be even more that have not observed.

In 2001, Challenger had a reserve of 110,000 ounces of contained gold and the mine produced over 460,000 ounces up to June 2008. In the three financial years to June 30, 2008, the mine produced 325,600 ounces from 1.18 million tonnes at an average grade of 9.1 g/t. The average operating cost was $319/ounce (not sure if the author is quoting in AUD or USD). That is an incredible costing. Remember that the gold price was just over US$400 in 2005 and about US$800 in 2008.

Today, Challenger has produced over 1.1 million ounces of gold which is a testament to the endowment of the mine.

What’s the upside?

As my ‘devoted’ readers know, I am all about exploration and the opportunity to find new deposits.

I wrote about these opportunities many times such as Bellevue Gold Limited (ASX:BGL) and their Bellevue Gold Mine (Best Way to Find a Gold Mine: Bellevue Gold Project, an Exploration Success), Breaker Resources NL (ASX:BRB) and their Bombora Project (Best way to find a Gold Mine: A Mineral Exploration Success) and the recently taken over Echo Resources Limited (Echo Resources (ASX:EAR) – King of the Yandal Province).

These stories are what excites me about the Challenger area. The last concentrated exploration effort would have been the period up to the discovery of Challenger in the late 1990s. All exploration would have stopped post-2000.

During the search for Challenger, Dominion discovered several satellite prospects that were followed up by Southern Gold Limited (ASX:SAU). On February 24, 2010, SAU announced their maiden JORC-compliant gold resources of 102,600 ounces within the Challenger Area Gold JV.

Trafford Resources Limited, which is now Tyranna Resources Ltd (ASX:TYX), took over the leases and had more exploration success and announced a JORC 2012 resource of 319,000 ounces over the JV leases.

These two companies have made these discoveries based upon the work from the Dominion days while they were fine-tuning the discovery of Challenger. The lack of activity over the years is why I am excited.

That’s one mine, 1.2 million ounces mined and not much else. If you were to draw a 100-kilometre radius around challenger, you would not find anything. In the Kalgoorlie and the Menzies area of the Eastern Goldfields of Western Australia, you would find thousands of operations.

Comparing statistics (figure below), the same 100-kilometre radius around two well-known mining districts in the Eastern Goldfields, Kalgoorlie and Menzies, you get a very different picture. There is one mine at Challenger while you have over 4,000 'mining activities' around Kalgoorlie and over 2,000 around Menzies area (Mining Activities = Mines that are classified as shut, proposed, operating or care and maintenance. Mindex Data from Department of Mines, Western Australia.)

Challenger Project Area. Comparing the mining activities within 100-kilometre radius of Kalgoorlie, Menzies and Challenger. Tyranna is the last company that had blue sky projects around Challenger. Looking at the 100-kilometre radius that is compared, there is no comparison.

And when you look at Australia’s gold operations, it is even bleaker. The figure below does not even show Challenger as the big yellow circle is Olympic Dam.

As many would know, I am an exploration geologist, and I look out for projects that have long legs for opportunities and have a cheap entry. To me, the Challenger area has lots of potentials (comes with lots of money required to explore) and the supergene deposits that are being discovered by Tyranna and Marmota Ltd (ASX:MEU) are what is the cream.

These kinds of deposits were all the rage in the 1980s in the Eastern Goldfields and is now an extinct creature. All the supergene low hanging fruits would have been taken out in the 1980s and 1990s.

As one would expect, the concentration in activities is directly correlated to the quality of infrastructure. It is no secret that the mining infrastructure in and around the Eastern Goldfields are all an A-grade level.

For this reason, Challenger is still ‘untouched’ and the primary factor has been the remoteness and the lack of exploration funding since the 1990s. The Challenger area is remote and if not for the robustness of the gold price, we would not be even entertaining this prospect.

Recently, Tyranna has sold the Jumbuck project to Syngas Limited (ASX:SYS) for A$1 million. I am involved in the transaction and this is why I have tried not to make this into a promotional document. The fact is that it has been a hard place to work and very expensive over the decades.

Significant Gold Deposits in Australia, 2016. (source: Geoscience Australia)

The best example of a similar scenario is when Gold Road Resources Limited (ASX:GOR) took up practically the whole Yamarna Greenstone Belt. At a time not too distant away, it was felt that the greenstone belt in the Yamarna was of different age and tectonic sequence and hence would not be mineralised like the Norseman-Wiluna belt.

Well, a 6.6-million-ounce resource of which 3.9 million ounces are in reserve later, this belt is pretty well endowed with gold.

It is not too hard to think that this Challenger area could be that. There are more facts that there is more to find then there are facts to disprove this theory. Work by Tyranna Resources is factual evidence that the supergene mineralisation scenario is well and truly alive and well.

The Challenger Gold Mine from above.

Disclaimer: I am currently involved in the transaction with Syngas Limited and Tyranna Resources Limited.

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Samso has worked primarily in the mineral resources industry, capital markets and corporate finance. Noel Ong is the founder of SAMSO.

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