Rio Tinto Exploration has signed a conditional agreement with Tasman Resources for the funding of an accelerated exploration program on Tasman’s 100%-owned exploration license that contains the Vulcan iron oxide-copper-gold-uranium (IOCGU) prospect, 30 km from BHP Billiton’s Olympic Dam mine in South Australia. Under the terms of the agreement, Rio Tinto will make an initial upfront cash payment of A$10 million after satisfaction of certain conditions, including the execution of a formal agreement and obtaining Aboriginal Heritage clearance for exploration over the southern portion of the Vulcan prospect area.
Tasman must undertake a drilling program of not less than 12,000 m within the first 12 months of the agreement. Rio Tinto then has the right, but not the obligation, to earn first a 55% interest and then up to an 80% interest in the project through a two stage farm-in arrangement that includes up to A$75 million in exploration expenditures.
Tasman discovered the Vulcan prospect in 2009 after identifying its very large gravity anomaly and supporting magnetic and seismic anomalies and recognizing that its location placed it close to one of the key tectonic lineaments that had previously been used in the original targeting of Olympic Dam in the mid-1970s. Most of the eight holes drilled by Tasman to date are confined to a section in Vulcan’s north or east, intersecting iron oxide-copper-gold-uranium mineralization and/or alteration in all holes. Tasman has identified further priority drilling targets, including targets in the southern portion of the prospect area.
The main sulphide minerals intersected in Vulcan drilling so far are pyrite and chalcopyrite, not the higher-tenor bornite or chalcocite seen in higher-grade parts of the Olympic Dam deposit. However, Tasman reports, Vulcan is clearly large enough, about 11 km2, for significant development elsewhere within the system of this style of higher-grade and economically more attractive mineral assemblage.