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RMX Ready to Start Drilling High Grade Gold Project - Days Away


Published 28-OCT-2020 09:59 A.M.


7 minute read

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Red Mountain Mining (ASX:RMX) will commence drilling at its Mt Maitland High Grade Gold Project in the first week of November 2020, just a few days from now.

RMX acquired the Mt Maitland project, which lies within the prolific Murchison Goldfields in WA in July this year.

RMX is currently capped at less than $20M, and given the bullish macro environment for gold explorers, successful drill hits could reward RMX investors that invest prior to drilling beginning.

The Mt Maitland Gold Project comprises a 62km2 parcel of tenure and contains two, distinct north-south mineralised shear zones over a strike length of 19km within an Archean greenstone belt.

RMX’s project is in close proximity to the $1.1 billion Westgold Resources Fortunum Gold Mine and its Bluebird Gold Mine to the south. It is also near the $800.3M capped Sandfire’s Monty Gold Mine and its Degrussa Copper Gold Mine.

Having secured an RC drill rig and completed its heritage clearance survey, RMX is set to conduct a 1300 metre, 18-hole drill program.

The company was recently encouraged by a significant gold nugget found while prospecting within the Mt Maitland tenure.

The nugget points to the potential high-grade nature of the mineralisation at the Mt Maitland Project.

You can see the size of the nugget below:

RMX nugget

While drilling at Mt Maitland is an important development for RMX, which is fully funded for all exploration activities having just raised $360,000 at 1.2 cents, it is one of two catalysts that shareholders should find highly encouraging.

The second catalyst is the 100% acquisition of the Mt Mansbridge Heavy Rare Earths Project, which is located just 40 kilometres from Northern Minerals’ (ASX:NTU) flagship Browns Range project.

Market interest and investor sentiment is growing once again with regard to the rare earths sector as China could restrict the export of rare earth materials to the US which could lead to a rare earth price surge.

Mt Mansbridge is prospective for Heavy Rare Earth Elements (HREE) and nickel-cobalt and RMX will begin its drilling program at Mt Mansbridge in the first quarter of 2021 with the primary focus to be on Heavy Rare Earths.

We will look at the Mt Mansbridge project shortly, but first let’s examine the immediate catalyst and what this means for RMX.

Catalyst 1: Gold Drilling at Mt Maitland just days away

As mentioned, RMX successfully completed the required heritage clearance survey, and secured an RC drill rig for its maiden drill program at Mt Maitland, which is now just days away.

The 18 holes, 1,300 metres program is ready to go, with onsite earthworks and preparation already completed.

The Mt Murchison area is highly prolific and RMX is hoping it can emulate the results of many of its much bigger neighbours.

Here’s a look at what surrounds RMX’s Mt Maitland project:

Next Investors Image

Also in the region is prolific Canadian Junior, the $67.9M capped Superior Gold (CVE: SGI).

The Mt Maitland Project came with multiple drill-ready targets and historic production which averaged 19g/t Au.

Outstanding results from historic exploration at Mt Maitland include:

  • gold-in-soils: peak 2,724 ppb, anomalies over 13 kilometres of strike
  • rock chips: up to 62g/t Au, 8.8% Cu and 290g/t Ag channel sampling: 2.50m @ 22.7 g/t Au and 0.75m @ 61.8 g/t Au
  • Drill results include 13m @ 2.53 g/t from 9m, 2m @ 1.53 g/t from 13m

During the heritage survey, additional geological mapping was conducted which has assisted RMX to vector this maiden drill programme.

Conclusions include that gold mineralisation is concentrated in discrete domains within the project area, more specifically, either within or proximal to narrow vein-breccia stock-work, or occur in clusters of small to medium size mineralised bodies along shears or favourable lithological units.

Another mineralisation style appears to be related to steeply dipping dilatational structures, where a high-angle shear at the mafic/ultramafic contact intersects a steeply dipping more competent rock type (BIF) and refracts to a steep angle.

Continued strike-slip displacement causes this refracted surface to develop as an extensional structure. Rock chip sampling was undertaken across certain prospects within the tenure, with samples submitted for laboratory analysis.

Catalyst 2: Proposed acquisition of Mt Mansbridge Heavy Rare Earths Project

Drilling at Mt Maitland will provide near-term news flow, however the medium to long-term prospects of RMX’s foray into a new rare earths/nickel-cobalt project is also likely to be well received by investors.

RMX reached an agreement with ARD Group (ARD), the vendors of the Mt Mansbridge heavy rare earths project, to favourably restructure the transaction that was voted against by shareholders in March 2020.

The restructure gives RMX significantly reduced share dilution and no milestone consideration for the acquisition.

This Project consists of three West Australian tenements containing targets prospective for HREE and nickel-cobalt and is just 40 kilometres from Northern Minerals (ASX: NTU) Browns Range Project, located in the Kimberly region of Western Australia.

The project area is approximately 130 kilometres south-east of the township of Halls Creek and consists of three contiguous granted exploration licenses E80/5111, E80/5229 and E80/5413 which combined cover a total area of 280 square kilometres.

Shares in Northern Minerals have doubled in the last four months, which could augur well for RMX in the future.

Next Investors Image

The project area has been subject to exploration activities since the 1970s, primarily for uranium, gold and diamonds which were all unsuccessful.

The presence of the REE mineral xenotime in the Killi Killi Prospect has been overlooked and RMX now see the opportunity to capitalise on this and determine whether there is an economically viable concentration of REE’s.

Also, within the project area is the Déjà vu Prospect that contains an ultramafic intrusion which RMX intends to assess from the perspective of nickel-cobalt prospectivity.

In response to the security of REE supply and global demand for battery minerals due to the rapid growth in lithium ion batteries for electric vehicles, RMX will fast track exploration and development to try to capitalise on the current demand for Heavy HREE and the strengthening demand for nickel-cobalt.

Rare earths gaining traction

Wesfarmers Limited (ASX: WES) recently instigated a $1.5 billion takeover bid for Lynas Corporation. In part, this was due to speculation that China may restrict further material to the US which will cause a surge in Rare Earth prices.

As such, there is renewed market interest and investor sentiment back in the rare earths sector.

China is responsible for more than 80% of global supply of rare earths, however supply chain concerns abound as Beijing could use its dominant position as a rare earths exporter to the US as leverage in the trade dispute with the sector being the next front in the trade war.

From this identification and development of non-Chinese sources of rare earths to reduce the dependence on supply from China have risen.

On 30 September, US President Donald Trump issued an official statement addressing the ‘national importance of reliable access to critical minerals’, focusing on America’s need to be independent from critical mineral imports by ‘foreign adversaries’.

With the US currently importing 80% of its rare earth elements directly from China, President Trump declared a state of national emergency and emphasised efforts in strengthening domestic mining and processing capacity.

The future supply of heavy rare earths is critical in the development of high-tech applications and high-performance magnets used in electric vehicles and wind turbines.

With very few significant heavy rare earth resources outside China and the global diversification away from the Chinese supply chain, this represents an excellent opportunity for RMX to explore and develop new sources of heavy rare earths outside of China.

The final word

The macro outlook is favourable for RMX’s recently acquired rare earths project and there is little doubt this acquisition could have a material impact once drilling starts in Q1 2021, however right now the company’s focus is on the Mt Maitland High Grade Gold Project.

Drilling at Mt Maitland is just days away, with a steady stream of news likely to follow.

Given its proximity to the Fortunum Gold Mine and Bluebird Gold Mine and to Sandfire’s Monty Gold Mine and its Degrussa Copper Gold Mine, RMX looks to be sitting on fertile ground.

The company is confident its drilling program will be successful after an RMX employee uncovered a high-grade nugget.

Now we just have to wait and see what else is uncovered when drilling kicks off in the next few days.

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