Prospect Ridge

PROSPECT RIDGE PROJECT

Exploration Licence EL5/2016 covering the Arthur River and Lyons River magnesite deposits (“Project”) in north-west Tasmania was granted in September 2016.  Geoscience Australia’s website notes that the Arthur-Lyons River area now covered by EL5/2016 contains the third largest inventory of magnesite Economic Demonstrated Resources (EDR) in Australia (refer www.ga.gov.au).

Magnesite is the primary source of magnesia (MgO), which is mainly used in agriculture, mineral processing, paper manufacture and refractory industries.  Magnesia is also used to produce magnesium (Mg), a light metal widely used in the aerospace, automotive and electronics industries.  Both magnesite and magesium are included on the EU’s latest list of 20 critical materials.

Jindalee recently reported a JORC 2012 compliant inferred resource of 25Mt @ 42.4% MgO, for the Arthur River deposit and an Exploration Target Range (ETR) for the Lyons River deposit, both at a 40% MgO cut-off.

Jindalee holdes a 100% beneficial interest in the Project, with the consultant who introduced the Project to Jindalee retaining  a 1% gross royalty.

Prospect Ridge Project – Location Plan & Simplified Geology

Background

EL5/2016 is centred approximately 55km SW of Burnie, Tasmania. Magnesite was first discovered in the area in 1925 with exploration in the 40 years from 1970 to 2010 undertaken by companies including Mineral Holdings Australia, CRA (now Rio Tinto), TasMag and Crest Magnesium significantly advancing the Project to the point where, in September 1999, Crest Magnesium rejected an offer from Xstrata (now Glencore) to purchase the Project for $105M in cash and royalties.

African coal miner Beacon Hill Resources Plc (AIM: BHR, ASX: BHU) (“Beacon Hill”) purchased the leases covering the Arthur River and Lyons River deposits in September 2009 and in the period to 2014 completed extensive pre-development activities at the Arthur River deposit including drilling, hydrological studies, environmental and Aboriginal Heritage studies, metallurgical testwork and resource estimates.

However, the slump in coal prices, which began in 2011, impacted on Beacon Hill’s African coal operations and the company was unable to service its high level of debt. In January 2015 Beacon Hill was placed into administration and the leases covering the Arthur River and Lyons River deposits lapsed.

On 2 May 2012 Beacon Hill released estimated Inferred Resources of 25Mt @ 42.4% MgO (40% MgO cut-off) for the southern part of the Arthur River deposit only.  These resources were reported in accordance with the JORC Code (2004) and were estimated by Stewart Capp from Derwent Geoscience Pty Ltd.  No resources were estimated for the Lyons River Deposit.

Jindalee engaged Stewart Capp to review this earlier resource estimate and to report the resource estimate in accordance with the JORC Code (2012) if possible.  As a result of this review, at a lower cut-off grade of 40% MgO, an Inferred Resource was estimated which totals 25 million tonnes of fresh magnesite grading 42.4% Mgo, 4.8% SiO2, 1.4% Fe2O3 and 2.6% CaO to an average depth of 100m below the surface.  This estimate assumes that fresh magnesite can be easily separated from zones of internal weathering.

The resource estimate is summarised at a series of cut-off grades in the table below:

Table 1: ARTHUR RIVER DEPOSIT RESOURCES (INFERRED)

MgO Cut-Off
(%)
Tonnes

MgO
(%)
SiO2
(%)
Fe2O3
(%)
CaO
(%)
36 36,817,508 41.1 5.9 1.7 2.9
38 32,090,037 41.7 5.4 1.6 2.8
40 25,121,511 42.4 4.8 1.4 2.6
42 15,279,918 43.3 4.2 1.3 2.2
44 3,042,107 44.5 3.0 1.0 1.9

Resources estimated by Derwent Geoscience Pty Ltd.

*Please refer to the Resource Estimation Report and accompanying JORC 2012 Table (Reference: ASX Announcement by Jindalee Resources Limited dated 10 October 2017 titled “Arthur River Magnesite Deposit JORC (2012) Resource Estimate”).

Lyons River Deposit

In January 2021 Jindalee announced that an Exploration Target Range (ETR) of 40-60 Mt @ 40-44% MgO (at a 40% MgO cut-off) had been estimated for the Lyons River deposit.

The Lyons River ETR is based on a total of 37 diamond drillholes completed by CRA Exploration (now Rio Tinto) between 1982 and 1989  with mineralisation delineated over a 2km strike, 400m wide and 300m deep. Mineralisation remains open at depth.

At a 40% MgO cut-off, the ETR is 40 to 60 Mt @ 40 – 44% MgO, 2.5 – 3.5% CaO, 5.5 – 6.5 % Fe₂O₃ and 1.0 – 1.2% SiO with (Table 2). The ETR is constrained to 100m depth from surface.

Table 2: LYONS RIVER EXPLORATION TARGET RANGE

Cut-Off
(% MgO )
Mass
(Mt)
MgO
(%)
SiO2
(%)
Fe2O3
(%)
CaO
(%)
>40% 40-60 40-44 1.0-1.2 5.5-6.5 2.5-3.5
>38% 90-100 40-42 0.9-1.0 8.0-10.0 3.0-4.0
>35% 140-180 38-41 0.9-1.0 10.0-11.0 3.0-5.0
No cut 200-250 35-37 0.9-1.0 10.0-12.0 6.0-7.0
           

*Please refer to the ASX release dated 22 January 2021 titled “Prospect Ridge: Exploration Target for Lyons River Deposit” for further details including accompanying JORC 2012 Tables.

The Lyons River ETR demonstrates the potential to increase the existing Mineral Resource base at the Prospect Ridge Project, which should positively impact the economics of any mining studies at the Project. A 3,000m diamond drill program has been designed to infill the deposit to provide the necessary confidence in grade and geological continuity required to upgrade the ETR to a Mineral Resource.

Note that the potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.

EL2/2016 covers 14km of prospective stratigraphy between, and along strike of, the Arthur River and Lyons River deposits.  Most work to date has been focused on the southern part of the Arthur River deposit and Jindalee considers there is excellent potential to increase the Project’s resource base, both at the Arthur River and Lyons River deposits and along strike from these deposits.

¹ Reference: ASX Announcement by Beacon Hill Resources dated 2 may 2012 titled, “Positive Preliminary Scoping Study Results for the Arthur River Magnesite Project.”