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Multicommodity potential in Paterson region after maiden Winu copper resource


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Multicommodity potential in Paterson region after maiden Winu copper resource

SNL Image

Rio Tinto's Winu copper-gold project in Western Australia.
Source: Rio Tinto

Experts said the maiden resource estimate for Rio Tinto's Tier 1 Winu copper-gold discovery confirms the rationale for the iron ore major's consolidation of Western Australia's Paterson region. Other companies such as Newcrest Mining Ltd. and IGO Ltd. are also on the hunt and consolidating in the area, which could throw up additional commodities.

Rio Tinto unveiled the maiden resource of 503 million tonnes grading 0.45% copper equivalent at a 0.2% copper equivalent cutoff July 27, along with the discovery of gold-dominant mineralization 2 kilometers east at the Ngapakarra prospect.

The company also announced a number of other "encouraging" drilling results near Winu, leading it to believe in the likelihood of developing "multiple ore bodies" within one mineralization system.

Rio Tinto is targeting open pit development with first production at 7 million tonnes per annum by 2023, according to company documents The Australian cited earlier in July.

The company started a 13,000-meter drill program on the Calibre deposit within the Citadel project 45 kilometers east of Winu in May with joint venture partner Antipa Minerals Ltd., which also recently enticed IGO to farm into its Paterson copper-gold project.

Multicommodity potential

Though Winu is relatively low grade, Antipa was convinced when it moved into the region that Paterson had Tier 1 potential for high grades, according to Executive Chairman Stephen Power. Power noted that the Telfer copper-gold project was mined at grades in excess of 10 g/t over a decade ago.

"The province can throw up anything. It's not restricted to gold-copper," Power told S&P Global Market Intelligence. The executive said the polymetallic O'Callaghans deposit 10 kilometers south of Telfer has over 5% of the world's tungsten as well as copper, zinc and lead.

Rio Tinto growth and innovation group executive Stephen McIntosh said in a statement that the company had only explored about 2% of its tenements in the region. Power said it was telling that Winu's resource only went down to about 200 meters, though Rio Tinto had drilled down to about 800 meters.

IGO also executed a farm-in and joint venture term sheet on Metals X Ltd.'s Paterson exploration project in June, which could end up carrying the latter to the completion of a pre-feasibility study on a new mineral discovery.

Iron ore major Fortescue Metals Group Ltd. farmed into Carawine Resources Ltd.'s Paterson base metals project in November 2019 as part of a broader diversification strategy into battery minerals. Rio Tinto may also earn up to 80% in the Baton and Red Dog tenements within the same project.

SNL Image
Rio Tinto drills at its Winu copper-gold project in Western Australia.
Source: Rio Tinto

Winu is 130 kilometers north of the 20-mtpa Telfer plant, for which Newcrest is seeking feed as it runs out of ore. The mining major recently agreed to help Antipa explore its Wilki project on which the companies formed a joint venture in February.

Newcrest is helping Greatland Gold PLC drill its Havieron project, just 45 kilometers from Telfer, which is also "on the path of becoming a Tier 1 project," according to Shaw and Partners analyst Peter O'Connor.

Macquarie Group's resources division director, Hayden Bairstow, said in an interview that the low-grade nature of Winu's maiden resource means a "big company balance sheet" is required, as opposed to a high-grade, low-cost deposit more suited to a junior miner.

This is further evidenced by the fact that many of the juniors that flocked into the Paterson region on the rumor of the discovery have since farmed the decent exploration ground out to bigger players, according to Bairstow.

Though the initial 7-mtpa plan for Winu pales in comparison to Newcrest's Cadia gold-copper mine in New South Wales, Bairstow said it is still of a "massive scale" similar to the copper projects being worked up in South Australia's Gawler Craton by the likes of BHP Group with its 2018 Oak Dam discovery near its Olympic Dam operation.

International Copper Association Australia CEO John Fennell said in an interview that Winu's maiden resource would hopefully "incentivize financial markets to support junior explorers again and start filling the supply pipeline," which is lacking due to a dearth of exploration in the years since the global financial crisis.