I am very surprised at these great, high-grade results for the first drill pass on the first target at Zonte's Cross Hills. Before seeing more details below, or if you skip down lower, come back for some detail on IOCGs.
What is an Iron Oxide Copper Gold (IOCG) mine? That is a very good and very important question that I have been grappling with and learning about for over a year. IOCGs are rare and often massive in scale. There are not any IOCG mines in Canada, but a few prospects exist. Therefore, junior mining investors have little knowledge about these. What I have learned, with some help from Zonte Metals Inc.'s (ZON:TSX.V) exploration, is that there never seems to be two alike. An explorer cannot use a known deposit effectively as a model, except as a general concept. Some deposits are located in magnetic highs and others peripheral to the magnetic highs. Each IOCG seems to have a different mixture of metals. With Zonte's Cross Hills it looks like mineralization is around or near the oxide zones and contains copper (Cu), silver (Ag) and gold (Au).
This is the technical geological definition, as provided by Natural Resources Canada: "IOCG deposits are polymetallic hydrothermal mineral occurrences that contain Cu and economic Au concentrations with potential enrichment in Ag, uranium, rare earth elements, bismuth, cobalt, nickel, niobium, etc., set in abundant low-titanium iron-oxide (magnetite, hematite) gangue minerals or associated alteration sulphide. The sulphide-deficient ore includes native elements and low-sulphur base-metal sulphides and arsenides, such as chalcopyrite, bornite, chalcocite, pyrrhotite and arsenopyrite (Corriveau, 2007; Corriveau and Mumin, 2010). All IOCG deposits are enclosed within regional scale-alteration haloes of intensely iron oxide-alkali-altered metasomatized rocks and breccias."
The most well known IOCG example is Olympic Dam in Australia, operated by BHP. It is simply the most massive mineral system in the world. In the past BHP has stated there are 500 years of mining life left and new discoveries could add centuries to this. Currently its proven reserves make it the largest uranium deposit in the world and fourth largest copper deposit, and they have only scratched the known system.
These are regional-scale systems and we know that Cross Hills has several more anomalies that exemplify this. For that reason and the large-scale potential of these systems, I am certain the majors are going to soon rush into the Cross Hills area.
The best know occurrences in Canada, before Zonte's Cross Hills, are in the Northwest Territories/Great Slave Lake region. It is remote and reserves defined to date are small. Fortune Minerals Ltd.'s(FT:TSX) NICO has 33 million tonnes at 1.02 g/t Au, 0.12% cobalt and 0.04% copper. Sue-Dianne is only 8.4 million tonnes at 0.80% copper with 0.07 g/t Au and 3.2 g/t Ag. There is also the Michelin project in Labrador. These deposits could be bigger, but in recent years it has been difficult to raise exploration funding for projects like these inremote areas. Read more in a 2018, 154-page IOCG publication.
Cross Hills is different. It can be worked year-round, has road access, a high-voltage power line through the property and is close to a sea port.
The major miners are very aggressively looking for copper and I expect that, before the end of the year, one or more of them will be all over Zonte and the Cross Hills region. Mining giant BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK) made a decision in 2016 to raise its annual exploration spending by 29%, allocating nearly all of its $900 million budget to finding new copper deposits to add to a portfolio that includes Escondida in Chile, the world's biggest copper mine, and the Olympic Dam.
Zonte Metals: recent price $0.33; entry price $0.15; opinion = strong buy
Zonte released the first drill results from the Cross Hills project in Newfoundland, and they definitely surprised me and came back way better than my best expectations. I was expecting lower grades over longer widths, and that any high grade would maybe be 5% or 6% copper and 2 or 3 g/t gold.
Zonte expedited assays on parts of drill hole 19-004 based on visual observations in the drill core. Here is a pic of the high-grade intersect. This ran 14.0% Cu, 15.8 g/t Au and 352 g/t within a 0.43 m interval sitting in a 2.76 m interval that averaged 2.89% Cu, 2.65 g/t Au, 73.3 g/t Ag.
This drill hole also had some more low-grade intercepts from 204.41 meters to 243 meters.
In first pass drilling the idea is to test different parts of the target and different theories. Drill holes 19-001 and 19-002 tested the magnetic highs in the anomalies and only intersected some anomalous copper values. It appears thus far that mineralization is in the transition zone from high to moderate magnetics.
Drill hole CH-19-004 was set up to test the eastern side of the Dunns Mountain magnetic anomaly, aiming to pass under the magnetic high, in the 'transition' from high to moderate magnetics. This was the only drill hole targeting the transition zone in the magnetic profile. The company noted a number of discrete visually mineralized intervals were noted throughout a 70-meter interval, between 168 and 243 meters, sitting directly below a magnetic high. The hole was initially drilled to a depth of 204 meters and later deepened to 283 meters copper mineralization was discovered in the last meter of core.
This graphic shows the orientation of drill hole 19-004. It went under the small anomaly, the larger one was not tested in this fashion.
This high-grade intersect is narrow at just under a half-meter but you don't get numbers like this in the drill cores unless there is a very significant source for this mineralization. This drill program has gone a long way in aiding Zonte in finding this source in the next drill round.
Key Points
- Waiting on results for drill hole 19-003 and 19-005;
- Very high grade for first results: 14.0% Cu, 15.8 g/t Au and 352 g/t within a 0.43 m interval;
- Drill sample much higher than any surface samples and system hidden at depth;
- Fertile IOCG system represents the early stages of defining a new copper belt in Canada;
- A new copper belt will get the attention from major miners;
- Zonte controls 25 kilometers of strike length in this new copper belt;
- Fertile IOGC system means other anomalies yet to be drilled are likely mineralized;
- Planning for a phase 2 drill program is underway and program expanding;
- Phase 2 drilling, further testing at Dunns and initial drill tests at Carols Hat or K6 or both;
- Planned gravity surveys will help pinpoint targets outside and near the magnetic highs.
"This is an exciting new discovery for Zonte Metals, adding to our growing portfolio of large- scale mineral opportunities. Early indications show a discovery that has all the geologic signatures of a copper-rich fertile IOCG target and possibly a new copper belt in Canada. The Company controls 25 kilometre strike length of the belt with the Dunns Mountain target located at the northern end. In light of these results Zonte will increase its exploration and drilling program at Cross Hills," states Terry Christopher, president and CEO of Zonte Metals.
On the drill map above, drill hole 19-005 looks like it might be crossing some magnetic transition zones and might see some decent numbers. Having been to the property and the Dunns target I can appreciate the sophistication of Mother Nature and her secrets. Hole 19-004 was on the other side of the large Dunns hill from where I looked at the target, and at the time it was not considered an area of interest. My, my, how things can change.
The press release also stated: "In preparation for phase 2 drilling at Dunns Mountain, additional geophysics will be carried out including ground magnetics, Induced Polarization (IP) and a gravity survey to first define the area to be tested around drill hole CH-19-004 and secondly aim to identify additional targets along the periphery of the magnetic anomaly. These surveys will also cover the anomalies 2.5 km to the south in the Carols Hat target area. In addition, the Company will complete a deep penetrating IP and gravity surveys, over the K6 target in preparation for phase II drilling. The K6 target sits 12 kilometres south of Dunns Mountain."
On the chart, I have been watching the wedge pattern and today we can clearly see a breakout from the wedge to the upside. I expect the stock will move much higher. Normally on breakouts with good news, a stock will go up 3 or 4 days in a row before consolidating.
Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.
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