PROJECT

Belgravia Project, NSW

Krakatoa Resources Limited (“Krakatoa” or the “Company”) (ASX:KTA) is pleased to announce that it has entered a binding term sheet with Locksley Holdings Pty Ltd (“Locksley”) to acquire a 100% interest in Exploration licence 8153m comprising the Belgravia Project (“the Project”) and covering an area of 80km² (Figure 1)

Figure 1 – Project Location over Gravity Map

Figure 1 – Project Location over Gravity Map

The East Lachlan province, which hosts the Belgravia Project, also hosts major copper-gold mining operations with significant metal endowments such as Cadia East Underground (34Moz Au & 7.6Mt Cu total resource comprising entirely indicated resources of 2,900mt @ 0.36g/t Au & 0.25% Cu)2, Cowal and Northparkes, as well as exploration and development projects including McPhillamys, Marsden, Temora, Copper Hill and Tomingley. The region constitutes the largest porphyry province in Australia.

The Project is located on the western margin of the Central Tablelands Region of NSW, 230km WNW of Sydney. The Project lies approximately 7km east from the town of Molong and around 20km NE of the major regional centre of Orange, providing excellent road, rail, power, gas and water infrastructure.

Terrain covering the Project is mostly undulating and mainly consists of open grazing land, providing excellent access. The Bell River passes through the northern and eastern parts of the licence.


Project Geology

The Belgravia Project is located in the central part of the Molong Volcanic Belt (MVB), which forms as part of the East Lachlan province within the Lachlan Fold Belt. The MVB is a remnant of the disrupted Macquarie Arc, an island arc system composed predominantly of north-south trending, fault‐bounded belts of andesitic lavas, tuffs and limestones, intruded by rare, stock-like monzonite, diorite, tonalite and dacite bodies from Ordovician to early Silurian times.

The eastern, Oakdale Formation, and western, Fairbridge Volcanics, are the main components of the Ordovician arc present. Proximal volcaniclastic rocks and alkalic basalt dominate the Fairbridge Volcanics; whereas, the overlying Oakdale Formation consists of more distal volcaniclastic rocks and limestones. Unconformably overlying these rocks are Siluro-Devonian limestones and sandstones which onlap the Ordovician from the west. A veneer of Tertiary basalt and minor sediments up to 40m thick obscures most rocks. Remnants of a deeply weathered surface are locally preserved beneath the basalt.



Mineralisation

Porphyry and related skarn mineralisation within the East Lachlan province is associated with the intermediate magmatism, which was followed by Silurian regional metamorphism and deposition of orogenic gold deposits. Contemporaneous VMS-style mineralisation resulted in deposits in intra-arc rift basins of the Macquarie Arc.

Figure 2 – Project Geology

Figure 2 – Project Geology

Within the MVB, four major porphyry systems are identified:

  • Cadia - Newcrest’s Cadia Valley Operations (Cadia Hill, Ridgeway and Cadia East);

  • Copper Hill, which underlies the Belgravia Project;

  • Cargo; and

  • Boda.

Belgravia contains parts of the Copper Hill Igneous Complex (CHIC), which locally hosts the Copper Hill deposit with a total resource of 87Mt @ 0.32g/t Au & 0.36% Cu comprising indicated resources of 47mt @ 0.39g/t Au & 0.4% Cu and inferred resources of 39mt 0.24g/t Au & 0.32% Cu, using a 0.2% copper cut-off grade (Figure 2)3. Like Cadia, emplacement of the CHIC was probably facilitated and localised by the development of a major NW to SE-trending dilational structural zone evident in magnetic data (Figure 3a).

Intrusions associated with key skarn and porphyry copper-gold deposits in the MVB are dominantly the Early Silurian shoshonitic intrusions and lavas, which display intense alteration and distinctive magnetic responses.

The CHIC is comprised of appropriately aged and oriented intrusive rocks and shares many other geological similarities to the Cadia Intrusive Complex to which it is considered analogous.


Alkane Resources

The Belgravia Project sits along trend, approximately 70km south of Alkane’s recent porphyry discovery.

On 9 September 2019, Alkane Resources Limited (ASX: ALK) announced “Discovery of Significant Porphyry Gold-Copper Mineralisation at Boda prospect within Northern Molong Porphyry Project (NSW)”.

Alkane detailed significant gold-copper porphyry mineralisation intercepts and reported “clear evidence of Cadia-style mineralisation and grade over hundreds of metres”, and that they are: “prioritising follow up drilling, seeking to determine the scale of this highly encouraging discovery”.

The recent discovery success at Boda further increases the prospectivity of the MVB.

Cadia Valley

The Belgravia Project is located along trend, approximately 40km north of Newcrest Mining’s world-class Cadia Valley Operations (CVO), which includes Cadia East, Ridgeway and Cadia Hill. Newcrest reports the Cadia East as having a total resource of 34Moz Au and 7.6Mt Cu comprising entirely indicated resources of 2,900mt @ 0.36g/t Au & 0.25% Cu2.

The Cadia East mineralisation is divided into two broad overlapping zones: an upper, copper-rich, disseminated zone, and a deeper, gold-rich sheeted vein zone nearer the main monzonite porphyry bodies. The copper-rich portion is stratigraphically limited to the volcaniclastic unit. The gold-rich zone is centred on a core of steeply-dipping sheeted quartz-calcite-bornite-chalcopyrite veins. The known mineralised system (defined by a 0.1% Cu shell) extends approximately 2.5 kilometres east-west, 0.7 kilometres north-south and 1.8 kilometres vertically. Between 80 and 200 metres of post mineralisation sandstones overlie the deposit. Similarly, between 20-80m of Miocene cover and some 450m of the Ordovician host-rock sequence overlie the Ridgeway deposit.

Indeed, review of these and other projects within the East Lachlan province demonstrates that the known resources are confined to areas of outcrop or limited cover. They contrast with the Belgravia Project, which is mostly overlain by a blanket of Tertiary basalt up to 40m thick (Figure 3b; cyan colour). This blanket has served to obscure or mask completely geochemical signals from any underlying mineralisation and has greatly restricted historical exploration both within the project area and the adjacent districts. For example, at Belgravia the aggregate exploration metres drilled is 101.5m.

Figure 3a – TMI aeromagnetics

Figure 3a – TMI aeromagnetics

Figure 3b – Radiometric image

Figure 3b – Radiometric image


Copper Hill

The Belgravia Project is located adjacent to the Copper Hill gold-copper deposit, which contains a total resource of 87Mt @ 0.32g/t Au and 0.36% Cu comprising indicated resources of 47mt @ 0.39g/t Au and 0.4% Cu and inferred resources of 39mt @ 0.24g/t Au and 0.32% Cu, using a 0.2% copper cut-off grade3 (Figure 2). Copper Hill is the oldest mined Cu deposit in NSW.

Drilling has outlined a diffuse body of mineralisation, extending north-northwest for over two kilometres, up to 800 meters wide and extending to depths of over 400 meters. High-grade mineralisation (1.0% Cu and + 1.5g/t Au) occurs in stockworks and sheeted vein sets within and forming carapaces to dacite porphyries exhibiting intense hydrothermal alteration, with local quartz-magnetite and carbonate veining. Lower-grade mineralisation (average 0.3% Cu and 0.3g/t Au) occurs as thin veinlets and very fine-grained disseminations of chalcopyrite and pyrite with variable alteration within dacite porphyries and andesitic lavas and tuffs. Moderate to strong hydrothermal alteration accompanied dacite intrusion, giving rise to mainly potassic, chloritic, sericitic and propylitic alteration in both the intrusives and adjacent Ordovician volcanics

The eastern half of CHIC is mostly captured by the Belgravia Project, where it is overlain and obscured by Tertiary Basalt, as shown in the above magnetic and radiometric imagery. The margins of the CHIC and another intrusive to its immediate north, the Larras Lake Diorite, represent important targets for future exploration by the company.



Historical Exploration Work

Geological mapping, soil and rock chip sampling dominate the previous exploration, with the crucial results and targets summarised in the prospectivity section below.

Nine aircore holes for an advance of 101.5m (averaging under 12 metres per hole) are developed across the entire project. No assay data is available on the aircore holes but with up to 40m of basalt cover, these are considered insignificant.

The plausible reasons for the lack of drilling were highlighted earlier and are related to a blanket of basalt, up to 40m thick, that is draped across the landscape obscuring the underlying rocks and any contained mineralisation or alteration. Leached country-rock preserved beneath the basalt may further confuse or mask signatures related to mineralisation. The impost of regolith development at Belgravia to general exploration, along with the limited drilling, provides excellent leverage for shareholders.

Prospectivity

Belgravia is prospective for four deposit types:

  1. Porphyry Cu-Au;

  2. Associated skarn Cu-Au;

  3. Orogenic Au; and,

  4. VMS-Au mineralisation.

The vendor, Locksley Holdings Pty Ltd, has generated six initial Cu‐Au targets for immediate consideration by the Company (Figure 4):

  • Bell Valley (Copper Hill NE)

  • Guanna Hill

  • Sugarloaf Creek

  • Shades Creek

  • Strathmore

  • Nandillyan

The Company will utilise its 21-day due diligence period to review and validate these targets.

Figure 4 – Exploration targets

Figure 4 – Exploration targets

Figure 5 – Borehole locations: Belgravia Project.  Red text and red square interpreted as CHIC in the NW, in the south interpreted as intrusive volcanics by Vendor from the original logs; black text and red square interpreted and logged as various lithologies, including limestone and ironstones, by the Developer; Yellow squares are bores missing logging information.

Figure 5 – Borehole locations: Belgravia Project. Red text and red square interpreted as CHIC in the NW, in the south interpreted as intrusive volcanics by Vendor from the original logs; black text and red square interpreted and logged as various lithologies, including limestone and ironstones, by the Developer; Yellow squares are bores missing logging information.

  1. Bell Valley (previously referred to as Copper Hill NE; Figure 4)


    Bell Valley represents stream sediment anomalies, located 4.5km northeast of the Copper Hill deposit, in the northernmost part of EL8153. The anomalous samples lie in streams that drain north from an area interpreted to overlie the CHIC, where the drainage has cut through the mantling basalt and exposed the underlying prospective bedrock.

    Water bores, developed across the hinterland, including within Belgravia, have proved useful in confirming the underlying geology. By nature, no holes were assayed but most holes were lithologically logged during their development. This information can be used, for example, to confirm the spatial extent of the CHIC to the northeast in Belgravia (Figure 5).


    Most of the prospective geology in the survey area is mantled by degraded Tertiary basalt that,in turn, overlies a deeply weathered and leached bedrock (Figure 3b). Rock chip sampling has identified pervasively altered volcanic and dioritic rocks in the area. The observed alteration coincides with an interpreted northwesterly-trending dilation zone developed along the eastern flank of the CHIC.

    Locksley collected twenty-two chip samples around the Bell Valley area. The samples fell into four lithological categories:

    • Proximal submarine volcanics such as pillow lavas, interflow cherts, and immature mafic volcaniclastics.

    • Subvolcanic pyroxene–feldspar porphyry dykes and sills

    • Altered diorite

    • Tertiary ferricrete

    Intense epidote–chlorite–quartz ± pyrite alteration, considered to represent the outer propylitic assemblage of a mineralising system, is developed in rocks over a wide area at Bell Valley (in green; Figure 5). The alteration lies proximal to the Larras Lake intrusives immediately north of Copper Hill and previously targeted by Alkane Resources.

2. Guanna Hill

Guanna Hill (Figure 4) is a 6km x 2km geochemical anomaly developed along the Mitchell Highway. Government mapping describes the area as Tertiary basalt overlying Ordovician Fairbridge Volcanics. The target lies immediately north the Molong Pb‐Zn Prospect, interpreted as a distal Pb‐Zn skarn. Bedded highly fossiliferous limestone of the Silurian Nandillyan Limestone hosts the Molong mineralisation.

The area was targeted after perceived skarn development beneath the Tertiary cover was recognised during a review of water bore data (Figure 5). Geological logs from the boreholes recorded juxtaposed felsic intrusives, limestone and “ironstone”, which plausibly represents magnetite skarn or gossan. Quartz veining was also recognised.

The presence of a strong magnetic high, coincident with a robust potassic signal in the radiometric imagery, support the presence of an alteration system.

An orogenic gold prospectivity map produced by New South Wales Geological Survey (NSWGS), ranks Guanna Hill very favourably as a gold target (Figure 6). The map considers only the gold prospectivity associated with the Kanimblan Orogeny, the final orogenic episode forming the Lachlan Fold Belt. Supporting information on what and how data is used to build such predictive mineralisation models lies on the NSWGS MinView website.

Figure 6 – Orogenic Au target (NSWGS)

Figure 6 – Orogenic Au target (NSWGS)

3. Sugarloaf Creek

Geopeko revealed highly anomalous stream sediment and rock chip geochemistry over an area of approximately 2km at Sugarloaf Creek. The base metal anomalism was returned from sulphides in “quartz stringers” within andesite.

Andesitic tuffs, volcanics and volcaniclastics intruded by a feldspar porphyry were later identified during geological mapping by Geopeko and then Gold and Copper Resources Pty Ltd. The latter also recognised pervasive hematite-rich alteration within the anomalous stream sediment zone and recommended follow‐up exploration. The work, however, was not undertaken.

4. Shades Creek

Shades Creek (Figure 4) straddles the Bell River approximately 12km north‐northeast of Molong and overlaps the northern edge of EL8153. The geology of the area consists of sandstones, siltstones, shales and andesite.

Mineralisation was observed in two areas as:

  • Samples of malachite staining on fine-grained siliceous rocks, sourced near an old

    working; and,

  • Minor sulphides in a siliceous rock.

No gold assays were performed.

Soil and stream sediment sampling successfully outlined a linear zone of elevated Cu values hosted by andesitic rocks containing small amounts of fine-grained disseminated pyrite and chalcopyrite.

5. Strathmore

Strathmore (Figure 4) represents a 10km length of elevated Cu (>100ppm Cu) in stream sediment samples along the Bell River. The target area lies over the Ammerdown Fault and andesitic volcanics of the Oakdale Formation (Figure 7).

Just outside the project area, Geopeko identified dioritic intrusives during detailed mapping, and chip sampling by BHP (1988) returned encouraging Au, Hg and Cu anomalism.

Figure 7 – Strathmore Target: geological setting

Figure 7 – Strathmore Target: geological setting

6. Nandillyan

Similar adverse regolith impacts on the mineral exploration results are recognised elsewhere in the Project.

Radiometric imagery reveals widespread potassic alteration at Nandillyan. It is supported by potentially skarn-related, intense haematite + epidote alteration that coincides with a ground magnetic anomaly. Intensely veined (quartz) and altered volcanic was located in a 400m long zone was sampled but did not return any anomalous metal values. The alteration zone lies along a fault zone within the Silurian Barnaby Hills Shale and warrants further consideration.






ASX Announcement

LATEST UPDATE