Greenland update

RNS Number : 9677S

Red Rock Resources plc

06 December 2012

 



Red Rock Resources plc

Assay results exceed field estimates for Havik drilling 

6 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 first assay results from its maiden drill season in Melville Bugt, north west Greenland.

Red Rock has defined a folded, fault repeated iron formation at both the Havik East and Havik Northeast Prospects - these bodies are a short distance apart, considered to be the same horizon, and being assessed together for resource potential.

Highlights

Geochemical analysis has been completed for two thirds of the 2012 drilling in the Havik area and the assay results from the fully representative sampling consistently show a significant increase from the preliminary field readings reported earlier in the year. Initial metallurgical analysis has also been completed and is favourable.

Key outcomes include:

·     Positive results from new assays confirm majority of iron grades  between 28-38% Fe returned across the prospect, with 6 of 10 holes returning average grades over 30% Fe and a number of intersections exceeding 35%;

·     Iron concentrations from assay show a marked and consistently higher grade (3.1% to 14.0% increase) than the field-based handheld XRF estimates released in July 2012;

·     Banded iron formation samples to date indicate overall low deleterious elements values (S, MgO, Al2O3, CaO, P, Mn, TiO2), XRF concentrate grades are pending;

·     Coarse grained magnetite crystals, 1-2mm diameter, favourable to beneficiation and magnetite liberation;

·     Initial Davis Tube Recovery from six samples shows an average mass recovery of 46% from a head grade of 35% Fe, XRF concentrate grades are pending.

Table 1: Assay results from Havik - best intersections

Drill-hole	From (m)	BIF DH Width (m)	Assay*     Fe %	Field XRF** Fe %	Apparent Increase in Fe%
HED001	21.95	51.55	33.13	26.3	6.8
	Including	18.55	35.40	26.5	8.9
HED002	13.00	63.90	32.81	26.1	6.7
	Including	31.67	35.56	24.7	10.9
HED003	5.60+	141.40+	31.70	24.0	7.7
	Including	19.00	35.45	22.9	12.6
	Including	34.35	34.86	20.9	14.0
HED004	3.05+	47.25+	28.34	20.7	7.7
	70.15	78.10	33.45	23.2	10.3
	Including	16.00	35.48	28.3	7.2
HED009	41.50	24.65	30.05	23.2	6.9
HED010	128.65	50.70	33.80	24.2	9.6
	Including	27.40	34.36	22.2	12.2
HED013	4.40+	40.00+	28.78	25.2	3.6
	Including	4.60+	35.06	29.6	5.5
	Including	6.10	34.21	29.0	5.2
HED016	5.60+	38.40+	27.79	19.4	8.4
	68.15	7.45	30.37	24.0	6.4
	Including	7.80	33.03	20.6	12.4
HED018	32.00	68.80	28.14	20.6	7.5
	108.60	11.80+	30.67	23.0	7.7
	Including	12.00	34.89	23.4	11.5
	Including	7.90	34.00	21.2	12.8

^* Weighted average Fe% based on the results of XRF fused glass disk analyses carried out by ALS Minerals Laboratories

^** Weighted average Fe% obtained from Niton field X-ray fluorescence (XRF) "spot" analyses

+ Downhole thicknesses with a '+' indicate the upper or lower BIF contact was not reached due to drilling placement/ issues, indicating this value as the minimum thickness.

Red Rock Resources' Chairman, Andrew Bell, said that "Havik was our main magnetite target this year. The results confirm the presence of high quality magnetite at Melville Bugt and are an encouraging indication of the prospectivity of the licence area as a whole".

"From the first batches of lab results we can see that the iron grades are of uniform distribution, related to a coarse grained magnetite with a high Davis Tube Mass Recovery."

"The initial drilling has shown that the outcropping bodies at Havik have a favourable shape and position, with both of the pods likely to be in the resource estimate being situated on hill tops, only 5km from a natural deep-water harbour location. There are also a number of similar, ice-free magnetic anomalies in the area still to be properly assessed."

"We are eager to see the remaining assay results in the coming weeks, after which, Mr Howard Baker (MAusIMM, CP), of independent consultants SRK Consulting (UK) Ltd, will undertake the maiden Mineral Resource Estimate for the project, which is expected to be completed by December 2012."

Detailed Discussion

Understanding the controls on iron distribution in the Havik area was one of the key objectives of the 2012 Melville Bugt Project field season. Outcropping banded iron formation (BIF) was found at a number of prospects during 2011 reconnaissance, including both Havik East and Havik Northeast, where the BIFs form prominent ridges associated with significant airborne magnetic anomalies, which have a combined strike length of some 2.5km.

Assay data has now been received from ALS Minerals Laboratory for 10 of the 18 holes drilled at Havik East and Havik Northeast, which are summarised in Table 1 and Appendix 1.

Drill Programme Objectives

The BIF outcrops and associated magnetic anomalies of the Havik area were the initial targets of Red Rock's maiden drill season on the Melville Bugt Project (Figure 1).

http://www.rns-pdf.londonstockexchange.com/rns/9677S_1-2012-12-6.pdf

The main objectives of the 2012 diamond core drill programme were to:

·     Delineate the sub-surface extent and continuity of the BIFs;

·     Characterise geological structures that are key to understanding the 3D geometry of BIFs across the whole licence area;

·     Assess the extent and the implications of secondary haematite replacement;

·     Obtain a JORC Mineral Resource Estimate from one or more targets.  

Assay Results

Havik East

As reported previously, Red Rock's 2012 drilling has defined a folded, fault-repeated BIF sequence at both Havik East and Havik Northeast (Figure 2). The bodies are considered to be the same horizon, and perhaps even the same fold, itself repeated at surface due to fault movement.

http://www.rns-pdf.londonstockexchange.com/rns/9677S_2-2012-12-6.pdf

To date, 575 core samples from Havik East and Northeast have been analysed at ALS Mineral Laboratories in Ireland. Core logging identified 327 of these samples as BIF with the remainder a mix of metasediments, schists, ultramafics and metavolcanics. The BIFs in the Havik area tend to be coarse-grained, micro-banded magnetite-quartz (average 1mm, but up to 2mm in places) with minor impurities. Results for Havik East and Havik Northeast show a consistent, well-defined cluster of grades between 28% and 38% Fe (Figure 3), with the highest iron grade of 62.2% obtained from a 0.38m sample.

Samples that returned iron contents of <28% tend to be associated with higher SiO₂, MgO and Al₂O₃, which may represent variations in original composition, such as a lower magnetite/quartz ratio or a slightly higher sedimentary content.

At the other end of the distribution (seen in Figure 3), samples returning values >38% are mostly distributed on the margins of the BIF sequence or else occur as thin layers or pods isolated from the main BIF sequence,  suggesting that the iron enrichment/ silica depletion, may be secondary, and associated with faulting. In some cases, the grade increase may be associated with localised secondary alteration of magnetite to haematite, as minor haematite has been noted in core and thin section. Preferential fluid flow along lithological contacts and fault zones may also cause significant iron concentration via silica leaching, as seen in the highest  grade (0.38m @ 62.2% Fe) sample at Havik, which contains >90% magnetite. The remaining ~10% quartz in the sample has been recrystallized, indicating high levels of fluid activity which supports the preferential fluid flow model.

http://www.rns-pdf.londonstockexchange.com/rns/9677S_3-2012-12-6.pdf

Representative samples were submitted for Davis Tube Recovery testing, which is used to determine the percentage of iron in a sample that can be recovered by magnetic separation (see below). Early indications show an average iron recovery of 94% from the 49% total magnetite bulk composition of the samples, (with a head grade of 35% Fe). Preliminary thin section analysis confirms uniform coarse grain size for magnetite and suggests minor, partial alteration of magnetite to haematite along grain boundaries (Rogers, 2012; MSc Thesis). This is also supported through core logging, which may have increased iron grade in sections.

Deleterious elements are low throughout much of the Havik iron prospects (Appendix 1). As expected in a banded deposit, silica (SiO₂) is the major deleterious element, ranging from 44.2% to 54.4% of the bulk rock. Sulphur (S) and phosphorous (P) are low, returning bulk rock values ranging between 0.001-0.243% and 0.035-0.068% respectively. The highest average sulphur abundance within was obtained from HED009. Closer inspection of the data from this hole suggests that the weighted average has been skewed by just one sulphide-bearing sample within a greenschist-altered deformation zone.  If this sample is removed from the calculation, the weighted average for sulphur in HED009 becomes a more acceptable 0.182%.

Al₂O₃ and MgO show slightly higher abundances (up to 1.16% and 8.53% respectively and in HED016 and HED014), however this is interpreted to be largely held in sheet silicates, such as chlorite and muscovite, which form common metamorphic minerals in the Havik area. Analysis suggests that micro-inclusions, which are potential sources of deleterious elements in processed concentrate, are largely absent from the Havik BIFs (Rogers, 2012; MSc Thesis). This suggests that the majority of deleterious Al₂O₃ and MgO occurs as separate minerals and is potentially easily separated from the magnetite during to ore processing. Assays of magnetite concentrates would be required to assess the deleterious content of any ore product and will form part of metallurgical test-work undertaken at a more advanced stage.

http://www.rns-pdf.londonstockexchange.com/rns/9677S_-2012-12-6.pdf

Work Planned

All samples for a comprehensive analytical program have been received by ALS Minerals Laboratories and the remaining full assay results from the 2012 Melville Bugt drilling programme are due and will be reported in the coming weeks. Assessment will focus on the grade and metallurgy of: the magnetite dominant Havik East and Havik Northeast; and the haematite dominant De Dødes and Haematite Nunatak. Further DTR analysis of selected samples have been selected by SRK Consulting (UK) Ltd, to generate a concentrate grade for the prospect. Fire assays and trace element analysis have also been undertaken on selected intersections to investigate anomalous geochemical results obtained from the field XRF. 

SRK Consulting (UK) Ltd has been engaged to supply a JORC Mineral Resource Estimate, which is intended for release December 2012.

Discussion of techniques used

XRF vs. Assay Results

While the Niton readings completed on the core immediately after drilling generally give a good indication of the iron grade of BIF, it is apparent that the majority of magnetite-BIF assay data seen for the Havik area so far yield an iron grade that is typically ~7% higher than corresponding field-XRF values (Table 1 & Appendix 1). The discrepancy between field-XRF and laboratory assay data is likely due to differences in the selection and preparation of samples for the two techniques; the handheld XRF analyses a single, small (3mm wide) spot on unprepared core. This makes the techniques vulnerable to variations in grainsize (especially if coarse grained), sample heterogeneity (e.g. quartz-magnetite banding), surface weathering and alteration. By comparison, whole rock, half core assay samples are powdered and fused into a glass disc, providing a homogenous, flat surface with a uniform composition that is representative of the entire (up to 2m) sample. Consequently the assay results provide a far more representative analysis of drill core than the preliminary field XRF data reported during the course of the field season.

Davis Tube Recovery

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. The samples submitted for DTR at Havik East returned an average (head) grade of 35.3% Fe, which is equivalent to the rock sample containing a potential maximum of 48.8% magnetite. DTR liberated an average of 46.0% magnetite in the three samples, equating to a 94% Fe recovery. The remaining 6% will remain as other non-magnetic mineral phases such as haematite or other silicates. 

QAQC

Sampling procedures and quality assurance and control (QAQC) assessments were carried out commensurate with documented operating procedures, which have been approved by the project consultants, SRK Consulting (UK) Ltd. BIF samples were analysed using XRF spectroscopy on homogeneous fused glass disks, magnetic susceptibility and Davis Tube recovery, with selected exploration samples being tested by fire assay and inductively-coupled plasma mass spectrometry. The assay results presented here used blank material collected from a locally sourced barren quartzite and a selection of Certified Reference Materials (CRM) from Geostats PTY LTD.

Laboratory results for CRMs were within the acceptable range for iron content, and all blank material returned an acceptable ≤0.6% Fe. Of the 47 CRM analyses returned to date, four have yielded Fe contents  which lie outside of the accepted standard deviation. Two of the CRMs returned a number of values for Al₂O₃ and SiO₂ that are outside the acceptable range and these are currently being assessed by project consultants SRK Consulting (UK) Ltd and the laboratory. These values and associated assay samples may require revisiting if further investigation identifies inaccuracies in the data, however the scale of the apparent discrepancy is small and unlikely to change the overall interpretation.

Analytical procedures

All diamond drilling was carried out by Cartwright Drilling Inc, using two heliportable CDI 500 diamond drill rigs drilling with a BTW core size. Downhole deviation surveys were conducted at the end of the hole using an Icefield Tools Gyroshot survey tool.  Orientated core measurements were taken systematically through the entire length of the hole using a Devico Devicore DC core orientation tool to allow for structural information to be gleaned from the heavily magnetic ground.  Precision collar surveys were taken using a Reflex Northfinder APS system.

All geological and structural core logging, core photography, Magnetic Susceptibility measurements and sampling was carried out on-site. Magnetic Susceptibility measurements were taken 3 times each metre using a Terraplus KT-10 Magnetic Susceptibility Meter. Sampling procedures, quality assurance and control and Rock Quality Designation (RQD) assessments were carried out commensurate with the Company's Standard Operating Procedures, which were approved by the project consultants, SRK Consulting (UK) Ltd. Core was halved on site, with blanks, duplicates and standards inserted at systematic intervals. One half of the core was kept for reference and the other sent to the ISO17025 accredited ALS Minerals Laboratory in Ireland for assay. Analytical work included XRF spectroscopy on homogeneous fused glass disks, Magnetic Susceptibility, Davis Tube Recovery, with selected exploration samples being tested by Fire Assay and Inductively Coupled Plasma Mass Spectrometry.

Ahead of obtaining laboratory assays, the Company used a Niton XL3t GOLDD handheld XRF analyser to obtain first-pass chemical compositions from the core. This analysis enabled the geological team to obtain field results of the core, allowing construction of a working model of the composition of iron formation as drilling progressed. The geologists operated the handheld XRF as a standard part of the core logging process, with one spot analysis per lab sample. Analysing core at the midpoint of every sample eliminates selective sampling and acted as an internal QAQC safeguard against sample bias. It should be noted that although the handheld XRF is a good indicator of bulk composition, data can be misrepresented as a result of factors, such as grain size, weathering/alteration and sample heterogeneity.

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, NGL 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 Exploration Results is based on information reviewed by Mr Gary Hurst (MSc), who is a Fellow of The Geological Society of London and Member of The Society of Economic Geologists. Mr Hurst is an employee of Red Rock Resources plc and has sufficient experience which is relevant to the style of mineralisation under consideration, and to the activities being undertaken. Mr Hurst has reviewed the information in this announcement and consents to the inclusion of the information in the form and context in which it appears.

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.

 

END

 

 

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