ASX ANNOUNCEMENT
31 October 2016
September 2016 Quarterly Activities Report
EXPLORATION ACTIVITIES
Search and evaluation for a second project
Winmar Resources Ltd (Winmar or the Company) (ASX:WFE) continued to review multiple commercial opportunities into the quarter under review. The process was assisted by its corporate adviser DJ Carmichael Pty Ltd, which offered several projects known to it.
In June 2016, Winmar was introduced to the Lomero gold-silver-copper-zinc project in Andalucia Spain by ASX-listed Kimberley Diamonds Ltd (ASX: KDL). DJ Carmichael Pty Ltd conducted its own review of the Lomero project and recommended it as offering the most potential of the projects reviewed.
Farm-In and Joint Venture for the Lomero gold-silver-copper-zinc project
On 16 August 2016, Winmar announced that it had entered into a Farm-In and Joint Venture Agreement (JVA) with ASX-listed Kimberley Diamonds Limited (KDL) in relation to KDL's Lomero gold-silver-copper-zinc project in Spain (Lomero).
Lomero is an advanced exploration project located in Andalucia Spain amongst several major mining and development projects (Figure 1). The project is described in a later section. The key terms of the farm-in and joint venture arrangement between Winmar and KDL are as follows:
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Following execution of the JVA and payment of a condition precedent payment of AUD$200,000, Winmar acquired a right to earn in up to a 70% interest in the tenements over a 3 year period, starting 13 May 2016.
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Winmar is to acquire an initial 10% by spending €400,000 in Year 1.
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Winmar may then elect to acquire a further 35% interest by spending €3 million in Year 2
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Winmar may then elect to acquire a further 25% interest by spending a further €2 million in Year 3.
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In the event of a decision to mine, the JVA will proceed on a contributing basis (Winmar 70%, KDL 30%).
Application for initial drill programme at Lomero
On 15 September 2016, Winmar announced that it submitted a proposal for four diamond drill holes as part of its Year 1 work programme to the government of Andalucia on 14 September 2016.
The proposed holes total 1500m and target four locations up to 150m below the eastern end of the former mine workings. Two earlier drillholes on the edges of this zone provided encouraging results. Above it, hole TH-1 intersected 2.0m of massive sulphide averaging 3.5 g/t gold, 0.66% copper and 7.0% zinc, while hole L04-51 intersected 1.35m averaging 8.4 g/t gold, 0.55% copper, 9.95% lead and 13.13% zinc within a broader zone of enrichment. Either of those intercepts could represent the edge of a new zone of mineralisation.
Government approval for the submitted work programme is anticipated to take up to two months, at which point Spanish regulations allow for approval to be taken as granted. Accordingly, Winmar anticipates that it will be able to commence the drilling in late November. Some additional administrative steps are required before drilling can commence but these steps are not expected to produce a delay.
CORPORATE ACTIVITIES
Completion of Private Placement
On 1 September 2016, Winmar completed a private placement of $810,718 via the issue of 270,239,462 fully paid ordinary shares at an issue price of $0.003 per share. The placement was heavily oversubscribed. DJ Carmichael Pty Ltd acted as Lead Manager and Corporate Adviser to the Company for the placement.
The placement shares were to be issued via two tranches. The first tranche of 103,572,795 shares was issued on 8 September 2016 under the Company's existing 15% placement capacity under Listing Rule 7.1. The second tranche of 166,666,667 shares, raising $500,000, has been committed and will be issued following shareholder approval, which will be sought at the Annual General Meeting on 15 November 2016.
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The Company intends to apply the funds towards near-term drilling activities at the Lomero Project in southern Spain.
Appointment of Director
On 16 August 2016, Winmar announced that Mr Rod Sainty had been appointed as Managing Director of Winmar. Rod brings 30 years of mine district mineral exploration and mine geology experience for gold and base metals (copper, lead and zinc) gained within several of Australia's most productive mineral provinces. For much of his career Rod has been based at operating mines in the Northern Territory, Tasmania, Queensland and Western Australia, owned by mid- tier miners Electrolytic Zinc, Pancontinental Mining and Plutonic Resources and the junior miners Australian Development and Jabiru Metals.
A major focus of his experience has been drilling peripheral to ore deposits, particularly high- grade volcanogenic massive sulphide (VMS) ore deposits, and using the insights gained to identify orebody extensions and satellite deposits. Rod has played key roles in the discovery of three ore deposits: the Baseline Archean gold deposit near Kalgoorlie, the West 45 copper-zinc VMS deposit near Charters Towers in north Queensland and the Bentley copper-zinc VMS deposit at Teutonic Bore, WA.
BACKGROUND TO PROJECTS
Lomero gold-silver-copper-zinc project
The Lomero gold-silver-copper-zinc project is located 60km north of the deep-water port of Huelva in Andalucia, Spain, within Spain's premier mineral district, the Iberian Pyrite Belt. It is located just 8km west of the large Aguas Teñidas (MATSA) copper mine operated by Trafigura and Mubadala. A rail line 4.5km east of Lomero is used to transport mineral concentrates to the port of Huelva.
Lomero is a 1km-long tabular volcanogenic massive sulphide (VMS) deposit with the highest gold grade of any mineral deposit within the Iberian Pyrite Belt. Previous mining operations extracted at least 2.6 million tonnes of massive sulphide ore containing an average grade of 5 g/t gold and 1.2% copper.
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Investigation Permit (IP) 14977 over the deposit was awarded to KDL on 7 October 2014 following a competitive public tender process conducted by the government of Andalucia. The consideration paid was zero. Instead, the tender requirement was a proposed exploration programme and budget to investigate the mineral resource and potential. Following the award, KDL was required to complete a number of additional administrative steps and satisfy a review process before the IP could be formally granted. The grant resolution was issued to KDL on 13 May 2016, triggering the commencement of the Year 1 commitment.
Figure 1: Proximity of the Lomero Project to major VMS deposits within the Iberian Pyrite Belt
Hamersley Iron Project
The Hamersley Iron Project consists of Mining Lease M47/1450 and Exploration Licence E47/1617 and is located approximately 50km north-east of Tom Price in the Pilbara region of Western Australia, immediately south of the Solomon project held by Fortescue Metals Group Ltd (ASX:FMG). Winmar currently holds a 70% interest in the project.
The project contains the Winmar Iron Deposit within Mining Lease M47/1450. The Winmar Iron Deposit is a Channel Iron Deposit (CID) occupying a surface area of 2.0 km by 2.5 km. A minor component consists of Detrital Iron Deposit (DID) style mineralisation.
In May 2013, independent mining consultants RungePincockMinarco Ltd (ASX: RUL) estimated the total Mineral Resource as 343 million tonnes (Mt) at an average grade of 54.5% Fe (57.9% CaFe1), including 42.6 Mt at an average grade of 55.2% Fe (57.3% CaFe1) classified at the Indicated Mineral Resource category.
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The Mineral Resource estimate is summarised in Table 1.