The Pilbara Gold Rush in Western Australia kicked off in July 2017 with Artemis Resources (ASX:ARV) and Canadian joint venture partner Novo Resources’ (TSXV:NVO) discovery of near-surface conglomerate-hosted gold nuggets over impressive strike lengths at Purdy’s Reward.
By November, more than two dozen resource companies had flooded into Pilbara searching for gold. The discovery also caught the attention of major player Kirkland Lake Gold Ltd (TSX:KL, ASX:KLA), which has invested C$56 million into Novo Resources, as well as kingmaker Eric Sprott who has taken up share positions in a number of players in the region.
The Pilbara Gold Rush is well into its first year and although there have been some road bumps along the way, there is still a healthy momentum rolling through that red earth. Resource companies are quickly securing strategic financial partnerships and acquiring land packages in the hopes of hitting pay dirt on the watermelon seed-shaped gold nuggets being likened to the conglomerate gold found in South Africa’s prolific Witwatersrand Basin.
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What is conglomerate gold and why is it important?
Sediment-hosted conglomerates, of which Witwatersrand is the most famous example, account for more than half of the world’s gold production. These types of deposits are known to occur in many Archean cratons globally—including those found in Europe and India—resting unconformably over Archean granite-greenstone terrains.
Western Australia’s resource-rich Pilbara region covers more than half a million square kilometers including some of the world’s most ancient rock formations and is most well-known for its world-class iron deposits. However, the latest developments have shown significant potential for new gold-focused districts. The fact that the region remains underexplored despite a well-entrenched mining industry is all the more attractive to majors and juniors alike.
“The Pilbara Region of Western Australia is one of the most resource rich areas in Australia and there has been very little exploration at depth,” said Artemis’ Executive Chairman David Lenigas. “In essence, Western Australia has been spoilt for choice for shallow mineral wealth. It’s time that someone started looking for the source of a lot of mineralisation in the Western Pilbara that has fed the many surface deposits of cobalt, nickel, copper, zinc, gold and PGE’s, within Artemis’ extensive tenement package south of Karratha.”
The crux of the excitement in the region is over the possibility that the Pilbara Craton shares geological DNA with South Africa’s Kaapvaal Craton, home to the Witwatersrand Basin—which hosts the earth’s largest known gold reserves and is responsible for over 40 percent of the gold produced worldwide to date. The Witwatersrand Gold Rush of 1886 was largely responsible for the establishment of Johannesburg, and so important to the economic development of South Africa that the national currency is today known as the Rand.
While there are significant differences in the two systems (including provenance, tectonics and continuity), there are similarities worth exploring, according to a recent presentation by SRK Principle Geologist, Mike Cunningham. Both Pilbara and Witwatersrand sit on top of Archean granite-greenstone basement similar in age and composition, hosting numerous small mesothermal gold deposits (with high-nugget mineralization). In both regions, gold deposition is closely related to the deposition of detrital pyrite, uraninite and carbonaceous matter.
“Is the conglomerate gold in Pilbara real? Yes, of course it is. Can we use Wits as an analogue? Yes. But there are very important differences,” said Cunningham, who also emphasized that “discovery matters.” That is to say that although the deposit model type for Pilbara’s gold system may not be exactly the same as that found in the epic Witwatersrand Basin, it is in fact conglomerate gold and worthy of all the attention now focused on the region.
The challenge of the nugget effect
While the potential for prolific gold production makes the conglomerate type discovery at Purdy’s Reward attractive, the discontinuous distribution of the watermelon seed size nuggets has posed a problem for Novo Resources. Conglomerate gold by nature can display very irregular and patchy distribution, which can result in huge discrepancies even between adjacent drill holes. This discontinuity is what geologists call the ‘nugget effect’. This reality coupled with the fact that samples from conventional drilling are typically small in size often leads to a high level of uncertainty when generating grade estimates for resource blocks.
“The nugget effect for Pilbara gold poses a bit of a challenge, making it difficult to define a mineral resource estimate,” notes Cunningham. “Therefore, it’s hard to encourage money from investors because you need to obviously prove that you’ve got something worthwhile to invest in.” In fact, news of Novo’s first few exploration results fell flat and the market responded with a savage sell-off.
And yet, Novo’s challenge isn’t a reason to call it quits, take your ball and go home. Other resource companies have faced the challenge of nugget effect and won. It’s about being able to think outside the box. In his talk at the RIU Explorers Conference 2018, Cunningham posed the questions: How do we tackle this challenge? Is bulk sampling the answer?
Cunningham uses Inventus Mining’s (TSXV:IVS) Pardo conglomerate-gold host project in Sudbury, Ontario as an example. He points out that after obtaining an average gold grade of 1.34 g/t over 11 diamond drill holes, the company decided to conduct a large 1,000 tonne bulk sampling program which returned an average grade of 4.2 g/t gold.
Recognizing that the best way to advance the their JV project “is to ultimately move it toward large-scale bulk sampling,” Novo and Artemis recently announced a AU$5.4 million exploration program that both companies have referred to as an “important step” toward completing a JORC-compliant resource estimate in order to convert the exploration license to a mining lease and in turn boost investor confidence.
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From:: Investing News Network