Greenland Havik JORC Mineral Resource Estimate

RNS Number : 9709T

Red Rock Resources plc

19 December 2012

 



Red Rock Resources plc

JORC Mineral Resource Estimate defined for the Havik target of the

Melville Bugt Iron Project, NW Greenland

19 December 2012

Red Rock Resources Plc ("Red Rock" or the "Company"), the mining and exploration company with an iron ore project in Greenland, a producing gold mine in Colombia, advanced gold and copper exploration in Kenya and interests in steel feed, uranium and rare earths, is pleased to announce the maiden JORC-compliant Mineral Resource Estimate ("MRE") for the Havik East and Havik Northeast targets of the Melville Bugt Iron Project in NW Greenland.

As announced on the 28th November 2012, the company has received an offer from an industrial partner to acquire 51% of the outstanding share capital of NGL. Red Rock has accepted the offer and upon conclusion of geological and legal due diligence proceedings would retain an interest in the Project of between 14% and 29% (dependent on NGL shareholder acceptance levels) and would receive a cash consideration payment (gross of any commission payable to IMP) that could vary between $10.7M and $16.1M USD dependent on ultimate NGL shareholder acceptance levels.  

Closing is currently scheduled to take place on 10 January 2013 or, if earlier, on the conclusion of due diligence. There can be no assurance that the parties will enter into a definitive agreement at this time.

The full MRE Executive Summary can be found here.
http://www.rns-pdf.londonstockexchange.com/rns/9709T_-2012-12-19.pdf

Highlights

In October 2012, the Company commissioned SRK Consulting (UK) Ltd. ("SRK"), to prepare a maiden Mineral Resource Statement for the Havik East iron asset (including Havik Northeast) that lies within the Melville Bugt iron ore project, located in the north-west of Greenland, 150 km south of the town of Qaanaaq.  The Mineral Resource Estimation process was a collaborative effort between SRK and Red Rock staff which returned the following results:

·     Definition of an Inferred Mineral Resource of 67 million tonnes (Mt) @ 31.4% Fe with 51.2% SiO₂, 1.01% Al₂O₃, and 0.06% P, all of which falls within an optimised whittle pit shell.

·     Low strip ratio  of 1:8 (waste tonnes: ore tonnes);

·     High grade concentrate inferred from initial metallurgical testing averaging 70% Fe, 2.0% SiO₂, 0.3% Al₂O₃ and 0.01% P;

·     An additional twelve Exploration Targets with an identified potential tonnage of between 158 Mt and 474 Mt with a grade between 27% and 47%  Fe;

·     Recognition of the potential for Direct Shipping Ore, based on areas of high haematite content with grades up to and in excess of 60 %Fe?

Table 1: Mineral Resource Statement, Havik East Iron Asset, Greenland, SRK Consulting (UK) Ltd. Reported above a zero % Fe cut-off and within an optimised pit shell.

AREA	CLASSIFICATION	TONNES (Mt)	Density (g/cm3)	Fe %	SiO2 %	Al2O3 %	P %
HAVIK EAST	INFERRED RESOURCE	45	3.07	32.1	50.76	0.77	0.06
HAVIK NORTH EAST	INFERRED RESOURCE	22	3.05	30.0	52.12	1.51	0.07
TOTAL	INFERRED RESCOURCE	67	3.06	31.4	51.20	1.01	0.06

Metallurgy

XRF analysis on 25 magnetic concentrate samples recovered from Davis Tube Testwork (DTT) show that a high grade concentrate can be produced through conventional magnetic separation processes and at a laboratory scale grind size of P80 passing 75 μm. On average, the samples within the BIF domain show a mass recovery of approximately 42% for a concentrate grading approximately 70% Fe, 2.0% SiO2, 0.3% Al2O3 and 0.01% P. The samples for DTT were selected by SRK after a statistical review of the Fe assay data.

Additional Exploration targets

SRK were requested to evaluate the resource potential of a number of additional identified Exploration Targets that lie within RRR exploration tenement. The data presented for the Exploration Targets, shown in Table 2 and Table 3 reflects potential tonnage and grade ranges based on the field mapping, sampling and drilling undertaken by RRR and on the extent of magnetic anomalies in the regional total magnetic intensity survey provided to SRK by RRR. The calculation of the Exploration Targets uses the BIF modelled at Havik East as a proxy for thickness and density with the down-dip extent limited to 100 m, being the approximate average depth of the Havik East mineralisation. In areas where additional drilling has taken place, mineralisation depth can be extended on the basis of these results. A minimum and maximum tonnage range is reported on the basis of 50% and 150% of the calculated tonnage and the grade range is reported on the basis of a 10% variation to the mean grades of each target.

The potential quantities and grade as reported in respect of the Exploration Targets are conceptual in nature and do not constitute a Mineral Resource. There has been insufficient exploration to define such a Mineral Resource and tonnages presented are based on empirical calculations using assumed extent, thickness and density. It is uncertain if further exploration will result in the determination of a Mineral Resource. RRR believes that these figures are liable to change in light of further exploration and may increase on the application of new data.

Table 2: Melville Exploration Targets with empirically calculated tonnages

TARGET	DOMINANT ORE TYPE	LENGTH (m)	THICKNESS (m)	DOWNDIP (m)	DENSITY (g/cm3)	TONNES (Mt)	MIMIMUM TONNES (Mt)	MAXIMUM TONNES (Mt)
Havik Central*	MAGNETITE	3,000	40	100	3.06	37	18.5	55.5
Havik West*	MAGNETITE	3,500	40	100	3.06	43	21.5	64.5
Hans Nielsen Field*	MAGNETITE	2,800	40	100	3.06	34	17	51
Tuukkaq**	MAGNETITE	6,000	40	100	3.06	73	36.5	109.5
Glet**	MAGNETITE	1,500	40	100	3.06	18	9	27
Nags**	MAGNETITE	1,400	40	100	3.06	17	8.5	25.5
Nunatak**	MAGNETITE	500	40	100	3.06	6	3	9
Puiss**	MAGNETITE	600	40	100	3.06	7	3.5	10.5
York**	MAGNETITE	600	40	100	3.06	7	3.5	10.5
De Dødes West*	HAEMATITE	900	55	200	3.06	30	15	45
Haematite Nunatak*	HAEMATITE	1,600	30	200	3.06	29	14.5	43.5
De Dødes East Haematite*	HAEMATITE	1,200	40	100	3.06	15	7.5	22.5
TOTAL						316	158	474

*delineated by magnetic anomaly and / or grab samples and drilling data

**delineated by magnetic anomaly data only

Table 3: Melville Exploration Targets with calculated grade ranges

TARGET	Fe MEAN %	No. Of Samples	Sample Type	Fe MINUS 10%	Fe PLUS 10%
Havik Central	44.0	9	Grab	40	48
Havik West	43.0	8	Grab	39	47
Haematite Nunatak	35.8	18	Drillhole Interval	32	39
De Dødes West	30.0	200	Drillhole Interval	27	33
De Dødes East Haematite	38.5	12	Grab	35	42
Hans Nielsen Field	42.5	2	Grab	38	47

SRK also notes that a number of high grade assay results have been received from the grab sampling and drilling programme with grades in excess of 60% Fe being recorded. As such, SRK recognises the potential for high grade Direct Shipping Ore to be delineated in the Melville Bugt tenement and SRK advises that future exploration activities should maintain a focus on identifying potential Direct Shipping Ore in conjunction with developing the BIF resource base.

Red Rock Chairman Andrew Bell comments: "It is a remarkable achievement to have gone into this virgin area and developed a resource in two field seasons, and simultaneously sample, map and test the area, besides establishing a substantial camp and facilities. Inevitably there is much we have still to do, in particular to access and test our best haematite target and to find further haematite targets, since our geophysical magnetic data is no help in this. It is a tribute to the hard work and professionalism of our joint venture team with our partners NAMA that on such a challenging timetable we have been able to achieve an initial resource and open up the area to exploration".    

Background

Red Rock currently operates Melville Bugt under a Joint Venture agreement with North Atlantic Mining Associates Limited ("NAMA") under which it has earned 25% of NAMA Greenland Ltd ("NGL"), the holder the exploration concessions in Greenland.  Red Rock has the right to increase this percentage to 60% by funding the 2012 exploration programme and defining a JORC Mineral Resource Estimate.

As announced on the 28th November 2012 and mentioned above, the company has received an offer from an industrial partner to acquire 51% of the outstanding share capital of NGL. Red Rock has accepted the offer and upon conclusion of geological and legal due diligence proceedings would retain an interest in the Project of between 14% and 29% (dependent on NGL shareholder acceptance levels) and would receive a cash consideration payment (gross of any commission payable to IMP) that could vary between $10.7M and $16.1M USD dependent on ultimate NGL shareholder acceptance levels.  

Closing is currently scheduled to take place on 10 January 2013 or, if earlier, on the conclusion of due diligence. There can be no assurance that the parties will enter into a definitive agreement at this time.

Enquiries:

Andrew Bell	020 7402 4580 or 07766 474849	Red Rock Resources plc	Chairman
Sandra Spencer	020 7402 4580 or 07757 660 798	Red Rock Resources plc	Press Relations
Gerry Beaney / Daniela Amihood	020 7383 5100	Grant Thornton Corporate Finance	Nominated Adviser
Nick Emerson	01483 413500	Simple Investments Ltd	Broker

Competent Person's Statement

The information in this report that relates to Mineral Resources and Exploration Results is based on information compiled and reviewed by Mr Howard Baker, a Chartered Professional Member of the Australasian Institute of Mining and Metallurgy. Mr Baker is employed by SRK, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves", or the JORC code.

Forward Looking Statements

This report contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information might include, among other things, statements with respect to the Company's business strategy, plans, objectives, performance, outlook, growth, shareholder value, projections, targets and expectations, Mineral Reserves and Resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, commodity prices, demand for commodities, and currency exchange rates. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'likely', 'believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast' and similar expressions. Persons reading this report are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in the Company's Annual Report. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to update or revise any forward-looking statements whether as a result of new information, estimates or options, future events or results.

Glossary of Terms

Mineral Resource (JORC definition) - A 'Mineral Resource' concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction.

The term "reasonable prospects for eventual economic extraction‟ implies a judgement (albeit preliminary) by the Competent Person in respect of the technical and economic factors likely to influence the prospect of economic extraction, including the approximate mining parameters. In other words, a Mineral Resource is not an inventory of all mineralisation drilled or sampled, regardless of cut-off grade, likely mining dimensions, location or continuity. It is a realistic inventory of mineralisation which, under assumed and justifiable technical and economic conditions, might, in whole or in part, become economically extractable.

Inferred Mineral Resource (JORC Definition) - An 'Inferred Mineral Resource' is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource. The Inferred category is intended to cover situations where a mineral concentration or occurrence has been identified and limited measurements and sampling completed, but where the data are insufficient to allow the geological and/or grade continuity to be confidently interpreted. Commonly, it would be reasonable to expect that the majority of Inferred Mineral Resources would upgrade to Indicated Mineral Resources with continued exploration. However, due to the uncertainty of Inferred Mineral Resources, it should not be assumed that such upgrading will always occur.

Exploration target - In accordance with Clause 18.1 of the JORC Code such information relating to Exploration Targets must be expressed so that it cannot be misrepresented or misconstrued as an estimate of Mineral Resources or Ore Reserves. The terms Mineral Resource(s) or Ore Reserve(s) must not be used in this context; and any statement referring to potential quantity and grade of the target must be expressed as ranges and must include (1) a detailed explanation of the basis for the statement, and (2) a proximate statement.

Exploration Targets are reported in accordance with Section 18 of the JORC Code and for the avoidance of doubt, SRK notes:

·     The potential quantity and grade as reported in respect of the Exploration Targets are conceptual in nature;

·     There has been insufficient exploration to define a Mineral Resource; and

·     It is uncertain if further exploration (as planned by the Company) will result in the determination of a Mineral Resource

Davis Tube Testwork (DTT) - Davis Tube Recovery (DTR) testing is used to determine the iron in a sample that can be recovered as magnetite and reflects the proportion of magnetite that can be liberated by common ore beneficiation techniques. A sample is crushed and mixed with water to form a slurry that is passed through a strong electromagnet field. The magnetic fraction retained is then analysed to determine the magnetite recovery and potential concentrate grades that can be expected.

Representative samples were selected by project consultants SRK Consulting (UK) Ltd and submitted for DTR testing. XRF analyses of the resulting magnetic concentrate were obtained in order to determine the likely Fe and deleterious content of future magnetite products (Table 2).

 

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