AAR
Mkt Structure
Shares
500m
Mkt Cap @9c = $45m Current
Cash
$5m + $10m from upcoming treatment of stockpilled Ore
Projects
Mandilla Gold, 100%, W.A.
The first thing to be said about this project is that it is a cash cow type project, ie when it was put into production it was never meant to be a company maker, so far it has netted about $5m in profit and this qtr should see another $10m be netted from the treatment of high grade stockpiles.
The operation is a Toll Treatment agreement and appears to be quite profitable and the company has been able to use these funds to conduct further exploration at Mandilla, Mandilla East and Manidilla West and has been able to find more open pittable Gold,
"High grade bedrock intersections achieved at East Mandilla including
1m @ 14.58g/t Au
1m @ 9.23g/t Au
1m @ 13.98g/t Au
• Structures extending for two kilometres south-east from the East Mandilla bedrockmineralised zone define large, untested, compelling exploration targets.
The central core of the East Mandilla mineralisation contains high
grade mineralisation which may be mineable by open pit methods. Drilling to date is currently based on 50m spaced sections, which are considered to be too widely spaced to estimate mineable reserves. Geological consultancy BMGS will review the new drilling data andundertake a pit optimisation to determine if infill resource drilling is justified."
So the gold mining at Mandilla is by no means over, in fact in my opinion the best
may be yet to come.
As I mention earlier on, Mandilla is actually 2-5kms East of
RMS's Wattle Dam gold operation, a quick histroy lesson on RMS, shows that it too was developing its Wattle Dam gold mine as a simple cash cow project, ie it was never meant to be a company maker, however some deep holes below the base of the open pit operation intersected some amazing hits of gold
48m's@154g/t Au from 148m's down with 1m@1783g/t Au
Another hole intersected 13m's@31.6g/t Au from 150m's down
RMS's share price went from 40c to $2+ so the fully dilluted mkt cap went from $70m to $350m+, all in the space of a week or so and the companies once "cash cow" project, all of a sudden became its Jewel in its Crown.
So given the proximity of Manidilla to Wattle Dam (ie 2-5kms) and given the fact that in the past AAR has had the following drill intersections at Mandillia
a spectacular result of 3m @ 250.07g/t Au (inc. 1m @ 739.76g/t Au).
This exceptional intersection is accompanied by other significant intersections
such as 1m @ 13.2g/t Au, 1m @ 11.2g/t Au, 1m @ 10.17g/t Au and 1m @
6.7g/t Au at depths of only 16 to 19 metres below surface. 3m @ 71.82g/t Au (inc. 1m @191.75g/t Au),
2m @ 38.95g/t Au, 2m @ 9.15g/t Au and 1m @ 11.8g/t Au
And these were all shallow holes, I firmly believe the
potential exists for deep drilling at Mandilla to uncover a
possible high grade gold section that would transform Madilla into the Jewel of AAR's projects, as it did with Wattle Dam to RMS.
In any event, the cashflows generated for this project should ensure that for the foreseable exploration future no fund raisings (ie Dillution) will be required.
Koongie VMS style Base Metals, 100%, W.A.
JORC 4.7Mt's@ 5.2%Zn + 1.2%Cu + 0.8%Pb + 30g/tAg
This project is made up of 2 parts, 1 appears to be shallow enough to be open pittable, the other which appears to be the bulk would best be accessed via underground mining.
The company has been undertaking metallurgical testing as well as Pre-Feasibilty Studies on the project.
To highlight the value of these VMS style deposits, its worthwhile considering JML as an example,
JML has a mkt cap of over $500m and its principal asset is the Very High grade underground Jaguar VMS deposit, which has a JORC 1.7Mt's@ 11.3%Zn +3%Cu + 0.7%Pb +115g/tAg
To compare we can use Zinc Eq grades,
JML $500m+ 1.7Mt's@ 20%+ Zn Eq
AAR $45m 4.7Mt's@10% Zn Eq
Now
obviously JML's project is in production now and thus there is very low development risk as opposed to AAR's etc etc, but the point I'm trying to make is not to compare the mkt cap's of the companies, but rather to show how valuable these VMS deposits can be
if and when they are brought into production.
The company has been undergoing PFS studies for awhile now, so I would expect an update which if positive should lead to a full feasibilty study.
Victoria Downs Zinc/Lead Base Metals, 100%, W.A.
The project area contains several historical lead and zinc prospects. Previous dating indicates the Victoria-Birrindudu Basin rocks are the same age as all the Proterozoic basins which host Australia’s largest base metal resources. Previous exploration in the area primarily focused on diamond exploration located large areas where stream sediments are strongly anomalous in zinc and lead (up to 9% Pb and 0.75% Zn). The Company considers Victoria Downs represents an exciting early stage base metals exploration project.
Two Exploration Licences have now been granted. A reconnaissance program following up geological and stream sediment anomalies is planned for the September quarter.
Feysville Gold/Nickel, 100%, W.A.
The Feysville Project consists of all mineral rights attached to two mining leases located 16km SSE of Kalgoorlie. The project is situated in the geological / structural corridor, bounded by the Boulder Lefroy Fault that hosts the world class deposits of Kalgoorlie and St Ives as well as other substantial deposits in the New Celebration, Kambalda and Hannans
South areas. The project also contains an extensive strike length of an ultramafic unit which may correlate with the ultramafic horizon that hosts nickel sulphide deposits at Kambalda 30km to the south.
Pinnacles Gold, 40%, W.A.
The wholly owned exploration licence of 4 sub-blocks is located immediately east of the Pinnacle workings 20km east of Cue. The area is interpreted to contain portion of the felsic unit that hosts most of the mineralisation at the Tuckabianna mine. Alloy Resources Limited may earn a 60% interest by expenditure of $150,000 over a three year period.
Summary
- Chart wise 8c seems to a strong level of support
- It looks to be on a breakout, once 10c is cleared I expect a run to re-test the all time highs of 13c, if broken lookout!
- Mandilla should continue to generate cash, however also has the potential to turn into a Bonaza gold mine given what occured next door for RMS
- Koongie offers alot of upside if it can be brought into production, also VMS deposits rarely occur alone hence, good potential would exist to find more satelite deposits, however until development options ar eput forward on Koongie it must be classified as speculative
- Gold is at record highs