Brisbane, Sep 3, 2008 AEST (ABN Newswire) - Kangaroo Metals Limited (ASX: KML), a diversified exploration and mining company with projects in North Queensland and Tasmania, has completed its due diligence examination of the California Creek Alluvial Tin Mine and will progress to purchase.
Due Diligence Summary:
The California Creek alluvial mining operation is centrally placed on KML's current California (EPM14877) and California West (EPM14357) tenements. KML have completed a due diligence sample program in order to assess the potential of California Creek to host significant volumes of alluvial tin. The deposit is covered by 15 mining lease held by Bookall Mining. As part of a sales agreement, KML targeted 3,000t of cassiterite (tin - SnO2) concentrate in order to proceed with the purchase of the mining leases and plant. Alluvial tin was freely panned by KML from surface diggings at multiple sites along the creek during an initial survey of the leases.
The area under consideration for purchase by KML is some 26km in length and varies in width from 50 to 100+m, though the mining leases are limited to 100m in width. California Creek is an active depositional-erosional alluvial system in Far North Queensland 20km northwest of the township of Mount Garnet. Alluvial deposits within the system include channels, flood terraces, banks and islands. The alluvial material ranges in size from silt to large stones and a variety of alluvial "washes" have been identified based on size relationships and include sandy loam, gravel, cobble and large stone washes.
KML's sample program covered the full length of the mining leases (26km) by digging a series of pits across the creek at regular intervals of nominally 1km referred to as "sites". From each pit a single sample of 20L (equal to 1/50 of cubic metre) volume
was taken using a hoe pick and shovel. In all, 148 pit samples were taken from 40 sites with spacing not >50m. Pits were dug to basement below tin-bearing alluvium however in 57 pits the basement was either not reached or could not be clearly identified. In some instances (5 pits) 2 samples were taken due to increased thickness of alluvial material, and in some cases (58 of 148 pits) samples had to be taken from a loose pile excavated from the pit due to difficult access where the pit was filled with water or where the pit was considered unsafe for entry. The samples were reduced to a heavy mineral concentrate using a centrifugal rotor sluice (Knudsen Bowl) then manually panned to remove excess sand. The concentrates were then submitted for analysis to provide accurate mass and tin content.
For each pit, the depth of alluvial wash to basement was recorded as well as the width (m) of the feature that was sampled (bank, terrace, island, or channel). These measurements were used to weight the grade of each pit sample, which is derived from the analytical mass of the heavy mineral concentrate, in order to arrive at an average weighted concentrate grade for each of the 40 sites. An average depth for each site was also calculated by weighting the individual pit depths with the widths of the alluvial features that the pits are situated in. The total length of mining leases covering alluvial deposits is 26,295m and the mining leases are 100m in width, centred on the creek.
Average grade of concentrate (sites)
1,001g/m3 (Range: 273 to 2008)
Average weighted depth (sites)
1.91m (Range: 0.45 to 4.50)
Average width of alluvial deposits (sites)
83m (Range: 50 to 100m)
From this data KML believes that there is potential for an exploration target of 3,000-6,000t of cassiterite (SnO2) from some 3-6 million cubic metres of alluvial material. Overburden across the leases is essentially non-existent with tin bearing alluvium at surface.
While this target is conceptual in nature and does not imply that a mineral resource has been or will be defined, the results from this sample program have provided KML with enough confidence to go through with the planned purchase of the leases.
Further work is planned in order to increase confidence in the grades and volumes of the alluvial deposits and move towards defining a mineral resource. KML will plan a similar scale program to focus on the sections of California Creek closest to the existing plant site. KML also plan to seek independent valuations to assist in arranging finance to comply with our purchase agreement.
Final analyses of the concentrate samples for tin metal (Sn%) content are expected within the next 3-4 weeks.
Details of the Agreement:
Satisfaction of the Due Diligence has been notified to Bookall Mining Limited and progress to acquisition confirmed. Once final conditions are met on or before 31 October 2008, the final sum of $5.55million will be payable to Bookall Mining Limited by 31 November 2008.
California Creek Startup:
California Creek will undertake a staged start-up targeting 50 tonnes of concentrate a month during the testing phase, ramping up to 200 tonnes a month over the following months as equipment and staff are brought online.
"This asset has exceeded our expectations and we now feel confident that California Creek will become the one of the cornerstone assets of the KML Company. With the tin production worldwide continuing being in shortfall in world production expected, we believe we are well positioned to capitalize on market demand for tin."
Note:
This report is based on and accurately reflects information compiled by Dr Brian New, PhD, who is a fulltime employee of the Company. Dr New has sufficient exploration experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Brian New consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Contact
Dr Brett Teale
Managing Director
WEB: www.kangaroometals.com.au
TEL: +61-7-3161-0397
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