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HARDEY RESOURCES LIMITED

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REPORT HIGHLIGHTS POTENTIAL FOR TARGET MINERALISATION ACROSS FOUR PILBARA CONGLOMERATE-HOSTED GOLD PROJECTS

ASX Announcement 6 September 2018 

HIGHLIGHTS

  • HDY’s new geology consultant completed an updated study on the four Pilbara projects – Cheela, Bellary, Hammersley and Elsie North – which highlighted the potential for subsurface target mineralisation for conglomerate-hosted gold and polymetallic deposits 
  • Overall, the geology consultant believes there is ample evidence – given widespread occurrences of Hardey Formation and Mount Roe Basalt – to verify material exploration upside for conglomerate hosted-gold mineralisation, especially for the Bellary project which is contiguous to Novo Resources1 (TSX-V: NVO) ground near Tom Price 
  • Other findings that illustrate the projects’ prospectivity and potential to contain mineralisation include: 
    • Peers making significant gold mineralisation discoveries in the Pilbara associated with Lower Fortescue Group lithologies – Hardey Formation and Mount Roe Basalt; and 
    • Favourable setting for conglomerate-hosted gold deposits comparable with similar geological and chronological settings in South Africa and India 
  • The Board is now reviewing plans to fast-track a high-level exploration program to garner a greater understanding of the underlying conglomerate gold-hosted mineralisation across the four projects 
  • Further, this updated overview is timely as the Board can confirm it has recently been approached by Australian and international groups interested in the four projects

Hardey Resources Executive Chairman, Terence Clee commented: “While considerable resources have been devoted to closing out the two vanadium transactions, our geology consultants have been conducting reviews on the gold assets. This initial update on Cheela, Bellary, Hammersley and Elsie North is highly encouraging, particularly the prospect of subsurface target mineralisation being apparent. More importantly, recent approaches by Australian and international groups is timely, with the Board seeking to optimise these assets through bringing in prospective strategic partners.”

Hardey Resources Limited’s (ASX: HDY) (“HDY” or “the Company”) Board is pleased to present shareholders an update on its four conglomerate-hosted gold projects in the Pilbara region.

PILBARA CONGLOMERATE-HOSTED GOLD PROJECTS 

High profile neighbours

HDY has four conglomerate-hosted gold projects in the Pilbara region that are within the Lower Fortescue Group – Bellary, Elsie North, Hammersley and Cheela. Of these, Bellary and Elsie North are contiguous to high profile NVO’s ground (Figure 1).

Click here to view the full announcement 

STRATEGIC ADVANTAGES FROM RE-OPENING NELLY VANADIUM MINE

ASX Announcement 31 August 2018

HIGHLIGHTS 

  • One of the key reasons for acquiring Nelly Vanadium Mine (NVM), other than the significant potential upside SRK Consulting highlighted1, is Argentina’s favourable regulations enabling a legacy mining right to be expediated for reactivation compared to other mining countries 
  • Condor Prospecting2, a specialist geological and mining consultancy, have empirically concluded it takes 3-5 years to transform a greenfield project to a viable mining operation in Argentina (5-7 years in most developed jurisdictions), but potentially less than 12-months to expedite reactivating a legacy mining right 
  • To demonstrate HDY’s strategic imperative to re-open NVM, the Board has already sent a formal letter to the Director of San Luis’ Mining Department (SLMD) that details the change of ownership and forward plans 
  • In addition, senior HDY representatives will be travelling to San Luis (from Australia) in early September to expedite the process to re-open NVM on several fronts: 
    • Meet the SLMD Director and key officials to establish a working rapport; 
    • Set up a liaison office to assume managing ongoing activities directly with the SLMD, which includes exploration approval and accompanying Environmental Impact Assessment (EIA) the vendor already submitted; and 
    • Fast-track the process to reactivate the mining right 
  • Once exploration approval is granted, the geology team can commence verifying the extent of mineralisation within NVM and bulk sample legacy stockpiles: 
    • Quantifying the stockpiles’ mineral potential is the priority before prospective off-take partners undertake independent metallurgical testing 
  • Once the mining right reactivation is approved, then the stockpiles can potentially be monetised to facilitate generating early stage cashflow, while the technical team works on feasibility plans for optimal open pit mining operations, with forward planning to accommodate future underground mining operations 
  • The Board believes NVM delivers HDY a significant comparative advantage in enabling it to potentially jump-start vanadium pentoxide production faster relative to peers with predominantly greenfield assets

Hardey Resources Executive Chairman, Terence Clee commented: “The Board’s immediate core objective is to capitalise on Argentina’s comparatively favourable mining laws to expedite re-opening Nelly Vanadium Mine. Our initial goal, pending the mining right being granted, is approval of the exploration permit. This will enable the geology team to commence work verifying the extent of vanadium mineralisation and potentially monetising the historic stockpiles.”


Hardey Resources Limited’s (ASX: HDY) (“HDY” or “the Company”) Board is pleased to outline to shareholders plans to move swiftly to secure the necessary regulatory approvals to bring NVM back into production as soon as possible.

SIGNIFICANT REGULATORY COMPARATIVE ADVANTAGE 

Re-opening NVM creates value 

In the Board’s view, based on preliminary geological evidence to date1, re-opening NVM and scaling up vanadium pentoxide (V2O5) production will expedite creating value for shareholders at a materially faster rate, in turn supplementing the future development of HDY’s Australian greenfield assets. Moreover, compared with the typical 3-5 years to transform a greenfield project into a viable mining operation in Argentina (5-7 in most developed countries), the relative timeframe to reactivate NVM’s mining right is potentially under 12-months2.

HDY’s objective is firstly to secure exploration approval, as this will allow: 

  1. Necessary work to start so geological data can be compiled to model, estimate, and report a JORC (2012) code compliant V2O5 mineral resource; and 
  2. Bulk sampling historic stockpiles, with the potential for specimens to be sent to prospective off-take partners.

The second objective is to secure the mining right, so the stockpiles can be monetised, and mining operations allowed to commence (Figure 1).

Ramping up 

To reflect the Board’s intent to re-open NVM as quickly as practical, the Board has sent a letter advising the SLMD’s Director about the change of ownership and forward plans. Further, senior HDY representatives are travelling to San Luis in early September and already have a confirmed meeting with SLMD’s Director to establish a working rapport.

HDY will be establishing a liaison office in the San Luis Province to directly manage ongoing contact with the SLMD to progress the exploration approval and mining right. To date, the exploration approval application and accompanying EIA have already been lodged with the relevant authorities. The Board anticipates having greater clarity on the approval timeline after the senior representatives meet with the Director in early September.

There are a considerable number of documents that SLMD requires before the process to reactivate the mining right can commence, which includes:

  • Details behind the corporate owner and evidence it is registered as a mining producer; 
  • Verification that it is the beneficial owner of NVM; 
  • Confirmation there are no national or provincial tax issues; 
  • Comprehensive EIA (i.e. that builds on the one submitted at the exploration permit phase); 
  • Location, coordinates of the mine, maps, roads, and other workings; 
  • Detailed explanation and supporting information for reactivating the NVM project which includes: 
    • Plans for new infrastructure; processing facilities; administration/ accommodation buildings; workings and mine development; and tailings storage facility; 
  • Investment plan and Gantt chart that outlines timeframe for developing the mine infrastructure and then commencing operations.

Clearly, the liaison office will work directly with HDY’s in-country geology team, SLMD and the team at head-office in Sydney. In this way, the Board intends to expedite compiling the necessary documentation thoroughly, so it can be submitted to the regulator as soon as practical.

Click here to view the full announcement

SRK CONCLUDES HIGH-GRADE VANADIUM MINERALISATION AT NELLY MINE

ASX Announcement 29 August 2018

HIGHLIGHTS 

  • After reviewing all relevant evidence, that included preliminary field mapping, historical channel sample assay values, etc, SRK Consulting, with input from Condor Prospecting, concluded that the Nelly Vanadium Mine (NVM) in San Luis, Argentina, is highly prospective for high-grade vanadium mineralisation 
  • The report confirmed historic operators only extracted a minor portion of the mineralised central vein, ground truthing showed a continuous vein 1.1km long and SSW-NNE trending, with near vertical dip, providing significant upside for any future potential mineral resource estimate 
  • Historical channel sampling and assay results throughout the historical workings produced grades from the partially mined vein that ranged up to 1.9% V2O5 with a length weighted sample average of 0.82% V2O5 
  • SRK has confirmed, via ground truthing, that the NVM deposit comprises a 1.5km1 SSW-NNE mineralised trend, with five quartz-rich hydrothermal veins (including one partially mined) with relatively high historical vanadium grades: 
    • Dimensions are up to 5.5m wide and from 12m to potentially 40m deep, subject to further verification by exploration methods 
    • The type of deposit at NVM differs materially from the four main types found globally which includes vanadiferous titanomagnetite and sandstonehosted vanadium systems that are prevalent in Australia 
  • During SRK Consulting’s three-day site visit, the team noted, multiple small surface workings and the historical mineral processing plant, around which at least ten stock piles exist: 
    • The NVM had historically produced vanadium pentoxide, between 1949-57, only one vein was partially-exploited, leaving most of the deposit intact 
      • A future priority will be to bulk sample the ore in the stockpiles and determine the volume, since this is a probable source of early stage cashflow 
  • The Board will be fully implementing SRK Consulting’s recommendation to expedite a high-level exploration program, as the core objective is to re-open NVM

Hardey Resources Executive Chairman, Terence Clee commented: “Confirmation from SRK Consulting there is potentially four untapped, mineralised veins at Nelly Vanadium Mine and ten historic stockpiles, reflects the project’s significant potential upside. The Board has accepted all SRK Consulting’s recommendations to expedite a high-level exploration program, with re-opening the mine as soon as possible the core priority.”

Hardey Resources Limited’s (ASX: HDY) (“HDY” or “the Company”) Board is pleased to provide shareholders with a high-level summary, focused on key findings and recommendations, from SRK Consulting’s geological review on Nelly Vanadium Mine.

HIGH GRADE VANADIUM DEPOSIT 

Scope and context 

SRK Consulting’s brief – working collaboratively with Condor Prospecting – was to review all necessary historic information (public and private), undertake a site visit to NVM (Appendix A) then produce a geological review as the final deliverable. The specific terms of reference were broadly to evaluate work done to date, provide key findings and final recommendations.

Key findings 

SRK Consulting’s key findings are as follows: 

  • NVM has the potential to deliver a high-grade vanadium deposit based on the historical channel sampling assay results; 
  • Ore continuity had been confirmed by preliminary field mapping / ground truthing to define a mineralised strike length of at least 1.5Km, with the central vein continuously surface mapped for 1.1Km; 
  • SRK proposed a high-level exploration campaign to verify the grade and continuity as indicated in the preliminary field mapping and the historical channel sampling assay results; 
  • The mineralisation at NVM does not conform to one of the four main world-class vanadium deposit types, rather it can be defined as a SSW-NNE set of quartz-rich hydrothermal polymetallic veins with relatively high contents of vanadium-leadzinc-copper; 
  • NVM was successfully mined from 1949-57, with V2O5 produced from a minor portion of the mineralisation based on the observed large portion of remaining vein from within the historic workings and the interpreted 1.5km strike of the vein.; and 
  • Insights from the site visit, when reconciled with historic geological maps and previous studies, confirmed the veracity of the information (as shown in the section ‘Site Visit Overview’, Appendix A, and the accompanying JORC (Code) Table 1)

Key recommendations 

The SRK Consulting team recommended a high-level exploration program be implemented at NVM to determine the extent of mineralisation within the system, as the current findings are from SRK ground truthed surface observations of the mineralised veins, complemented by the historical channel sampling assay results A key priority was verifying the V2O5 grade and ore continuity, particularly from a depth of 15-40m along the mineralised trend, based on the historic workings, since this would determine the project’s scalability.

Once regulatory approval is granted, SRK Consulting suggested the following conceptual exploration program be rolled-out at NVM, comprising:

  • Geophysics: the induced polarisation method is widely used for exploring hydrothermal veins, but critical is ensuring the technology applied can go deeper than 100m:
    • Existing mining works should be used to adjust the geophysical model to the actual geological setting, after detailed geological mapping; and 
    • Once geophysics and geology have been matched in the old mine and surroundings, detailed geophysical exploration can be applied to the rest of the mineral deposit. 
  • Mapping: detailed geological and structural mapping through aerial photos, satellite imagery and field work. 
  • Topography: detailed topographic mapping within the project area and historic mining works. 
  • Ore sampling: to better constrain ore grades. 
    • Veins – surface channel sampling that is perpendicular to the veins strike which is spaced according to vein thickness and length. 
    • Stock piles – collect samples from each according to estimated volume. 
  • Ore chemistry: conduct whole-rock chemical analyses for some oxides (e.g. sulphate, carbonate) and most trace elements. 
  • Mineralogy: thin-section optical microscopy for transmitted and reflected light as a first step to assess ore mineralogy, grain size and texture. Post this, get a sub-set of samples for further mineralogical studies. 
  • Conceptual model: define a conceptual model based on geological, structural and geochemical information collected mainly at surface and estimate vein continuity in depth based on geophysics.

If the results from the conceptual geological model demonstrate ore grade and ore body continuity, then formulate an inaugural drilling campaign. In turn, this paves the way for a 3D geological model to be constructed, the estimation, and subsequent reporting of a JORC (2012) code V2O5 mineral resource.

Click here to view the full announcement

TERENCE A CLEE

Executive Chairman


Terence Clee holds combined B Com and LLB degrees. He commenced his career as an accountant at KPMG working in corporate audit and corporate tax. Terence co-founded Hemsley Lawyers alongside lawyers from Allens Arthur Robinson and Blake Dawson (now Accurst) and was responsible for the business development and strategic growth of the practice. Terence has experience in the start up and small cap space having advised technology start ups and junior miners on commercialisation, cross border transactions and R & D.


ROBERT McCAULEY

Non Executive Director


Mr McCauley has held senior Board and Management positions in ASX Listed Companies including Commissioners Gold Ltd now Gold Mountain Ltd (ASX:GMN) and has extensive experience in capital raisings, IPO’s, finance, media, corporate advice and acquisitions. Robert was also nominated in 2011 as an industry representative on the ASX equity market review panel reporting to ASIC. Robert holds a BSc degree and is a Member of the Royal Institution of Chartered Surveyors (Aust.UK). He is also a Registered Surveyor, Licensed Surveyor WA and a Chartered Land & Minerals Surveyor. Robert has over 35 years of experience and involvement in infrastructure development including Boddington Gold Mine WA – now Newmont Mining Corporation; North West Shelf Natural Gas Project and the Monasavu Hydro Electric Scheme, Fiji - World Bank Project. Mr McCauley brings to the Board his broad knowledge of corporate and technical skills including assisting the Company to identify and analyse future M&A opportunities.


ROBIN ARMSTRONG

Non Executive Director


Mr Armstrong has extensive corporate experience in listed companies specializing in the small to medium market cap sector. Mr Armstrong provides the board with a well rounded finance background in strategic advice, merger & acquisitions and capital raising.

WWW.HARDEYRESOURCES.COM.AU

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