Kenya update

RNS Number : 5923T

Red Rock Resources plc

14 December 2012

 



Red Rock Resources plc

Completion of JORC Mineral Resource Estimate: 1.2 million ounces, Mikei Gold Project, Migori SW Kenya

14 December 2012

Red Rock Resources Plc ("Red Rock" or the "Company"), the mining and exploration company with an iron ore project in Greenland, a producing gold mine in Colombia, interests in steel feed, uranium and rare earths, and a gold and base metal exploration project in Kenya (15% owned directly and 37.96% indirectly, currently under review to consolidate its interests), is pleased to announce a JORC-compliant Mineral Resource Estimate ("MRE"), prepared by CSA Global (UK) Ltd ("CSA"), of:

29.4 Mt @ 1.26 g/t Au with contained metal content of 1.193 MOz Au

This comes with the completion of the MRE at the MK prospect: the fifth and final MRE of the Mikei Gold Project (MGP) Resource validation programme.The MK MRE stands at 1.35 Mt @ 3.06 g/t Au, containing 133 kOz Au (0.5 g/t Au cut-off).

Ariel Partners LLP ("Ariel") continues to work with Red Rock on a rationalisation of its interests in Mid Migori Mining Co. Ltd ("Mid Migori") and Kansai Mining Corporation ("Kansai"). Progress in this regard is being made and Ariel expects to put an indicative proposal before Red Rock in the near term.

Highlights

In summary, the MGP MRE is now a well-defined resource with significant economic potential and scope for expansion and would benefit from a rationalised ownership structure to enable development.

The new MRE has been completed on the MK prospect which is the last of five mineralised prospects within the MGP to have a JORC-compliant MRE estimated following the 2011 Resource infill drill campaign. The new estimate can now be added to the other MGP MREs already completed (at the KKM, KKM-West ("KW"), Nyanza ("NZ") and Gori Maria ("GM") prospects). This finalises the validation and re-estimation of the historic NI 43-101 MGP Resource. At a 0.5 g/t Au cut-off grade, the updated JORC-compliant, Indicated and Inferred MGP Resources total:

	Inferred		Indicated		Total
	Mt	g/t Au	Mt	g/t Au	Mt	g/t Au	kOz
KKM	1.41	1.15	16.34	1.00	17.75	1.01	577
KKM-West	3.03	1.02	1.13	1.07	4.16	1.04	139
Nyanza	1.15	1.70	1.17	3.73	2.32	2.73	203
Gori Maria	3.78	1.16	0	0	3.78	1.16	141
MK	0.58	1.76	0.77	4.05	1.35	3.07	133
Mikei Resources	9.95	1.21	19.41	1.29	29.36	1.26	1,193

Table 1 Summary of 2011-2012 JORC-compliant MREs (0.5 g/t Au cut-off) for the MGP, SW Kenya (NB. Apparent errors may occur due to rounding)

·     The entire Resource is quoted at a higher cut-off grade than historically reported, and with improved confidence in the dataset. The cut-off grade of 0.5 g/t Au was chosen to reflect a more realistic estimate to define potentially economic mineralisation prior to determining a cut-off grade for mining as part of planned mining studies.

·     The shortcomings connected with the historic resource estimation techniques have been thoroughly addressed and the current Resource is considered more robust.

·     66% of total Resources are in the Indicated category

·     Kansai's 2006 NI 43-101 MRE was estimated at a cut-off grade of 0.25 g/t Au. At the same cut-off grade, the 2012 JORC MRE totals 42.57 Mt @ 0.99 g/t Au for 1.35 MOz of contained metal representing a 29% increase in tonnes, and a 15% increase in contained metal.

·     Metallurgical test work on samples from the MK prospect shows that gold recoveries in excess of 90% may be achievable

·     Mineralisation at all prospects remains potentially open at depth (including down plunge) and along strike of key higher grade zones.

·     Preliminary pit optimisation work has commenced and will be completed on all prospects within the MGP. The aim is to gain an indication of the best areas for economic development and to focus resource development activities (including drill hole positioning and targeting mineralised shoots).

Introduction

The MK prospect is part of the larger, gold-mineralised Mikei shear system discovered in the 1980s. The shear system hosts 4 other prospects for which MREs have been completed and reported by the company in December 2011 and July 2012. Throughout 2011, Red Rock completed a major Resource infill drill campaign over the Mikei area to validate and improve confidence in the existing Resource and explore the potential for high grade shoots and extensions. The Mikei mineralised trend extends 7 km along the strike length of the Migori greenstone belt (figure 1).

Figure 1: Mikei Gold Project Location Plan

http://www.rns-pdf.londonstockexchange.com/rns/5923T_-2012-12-14.pdf

Previous Work

The Mikei Gold Project at Migori in the Nyanza Province, Kenya has undergone several phases of historical drilling since the late 1980s including a resource estimate under the Canadian NI 43-101 resource reporting standard which was produced by Ddraig Mineral Resources for Kansai in 2006 and is filed on SEDAR.

The objective of the 2010-2012 Red Rock work programme was to: improve confidence in the historical data; increase geological and structural understanding; potentially increase total estimated mineral resources; and update the historic MRE to JORC standard.

During 2011 and 2012, Red Rock has as far as possible attempted to establish the reliability of this data and have:

·     Undertaken an extensive database validation and digital capturing exercise since 2011

·     Drilled 111 infill holes

·     Collected downhole structural data that has constrained the structural and mineralisation model

·     Collected assay data from Red Rock drilled holes that correlate well with historical data and support their inclusion in the current MRE

Prospect	Number of Holes	Meters Drilled
KKM	31	3,400.05
KKM-WEST	33	4,292.66
GORI MARIA	17	1,808.03
MK	7	963.68
NYANZA	23	2,851.88
Total	111	13,341.30

Table 2 Summary of Red Rock's drilling at the MGP prospects

Red Rock has undertaken significant data validation, resurveying, reassaying, mapping and interpretation work for the MGP and integrated this into the updated JORC MRE. The resulting block models will be used to assist further resource development activities.

MK Metallurgy

The metallurgical test work was carried out at Wardell Armstrong International Plc's ("WAI") laboratories in Cornwall, UK, on 35 composite samples (individually and as one global composite) from MK drill core totalling approximately 23 kg. These were sampled and submitted by Red Rock under the recommendation and guidance of Holland & Holland mineral processing consultants.

Prospect	No Composite Samples*	Total Weight kg	Au  Recovery %**
MK	35	23	96.8

Table 3 Summary of sample information and gold recovery by cyanide leach for the MK prospect

*One global composite sample was prepared from the 35 samples (which were composites themselves from various intersections of the drill core). Weighted portions were taken from the 35 samples, blended as a global composite and then split into 1kg sub samples for the test work.

**Recovery at 75 microns grind size, 0.5 g/l CN solution and 48 hours leach residence time.

The test work results demonstrate that the gold content of the MK Resource is amenable to gold recovery by a modest grind size followed by a cyanide leach in a mild strength cyanide solution at low lime consumption. The overall % recovery is in the 90s which indicates that the loss of gold to the tailing is minor and not worth pursuing. The leach results support the potential for using conventional cyanide leaching techniques with gold recoveries in excess of 90% achievable.

MK Resource Estimation

The MRE for the MK prospect, as summarised in Table 1, was prepared by Mr Galen White, FAusIMM, FGS - Principal Geologist of CSA Global CSA.

The MRE announced today, estimated by CSA in accordance with the Australasian resource reporting standard (JORC 2004), is not directly comparable to the historic resource estimates (pre-Red Rock) as a higher grade of 0.5 g/t Au cut-off has been used to report the Resource (i.e. one that is a more appropriate consideration of the potential economic cut-off).

A much more detailed picture of the mineralised system has been developed, with:

·     an improved understanding of grade variability at each deposit

·     improved geological and structural understanding

·     improved definition of weathering surfaces

·     metallurgical test work completed

·     a 3D volume block model that can be used for pit optimisation and mine planning

CSA worked with Red Rock's Project Geologists in interpreting mineralised domains following cross sectional 2D analysis, before creating 3D wireframes (figure 2).

Figure 2: MRE block model for the MK Prospect

http://www.rns-pdf.londonstockexchange.com/rns/5923T_1-2012-12-14.pdf

The MRE process adopted by CSA is summarised as follows:

·     Ordinary Kriging within mineralised envelopes defined using a 0.25 ppm grade cut-off boundary. Mineralised envelopes honoured geological boundaries and geometries were informed by surface and orientated down-hole structural data.

·     Oxide surfaces were produced following Red Rock's re-logging of oxidation state, within available core. Oxidation information was interpreted in 2D, with 3D wireframes being created to flag material appropriately and assign densities. A density of 2.40 g/cm3 was applied to oxide, and 2.75 g/cm3 to fresh material.

·     The estimate was carried out using Ordinary Kriging following variographic analysis to determine the directions and ranges of grade continuity. Directions of observed grade continuity honour the strike and dip of mineralised domains.

·     Raw assay data was composited to 1 m intervals prior to estimation.

·     Top cuts of 10 ppm were applied to all domains at MK.

The increase in the 2012 MK JORC Resource tonnage is a direct result of mineralised lodes being identified in the hanging and foot wall of the main mineralised zone, and as a result of Red Rock's extension drilling to the south east (figure 3).

Figure 3: MK Domain wireframes, with drill holes coloured by company

http://www.rns-pdf.londonstockexchange.com/rns/5923T_2-2012-12-14.pdf

The JORC Resource at the MK prospect was classified as Indicated and Inferred (figure 4) with more than half of the estimated tonnage in the Indicated category.

Figure 4: MRE Block Model for MK distinguishing between Indicated and Inferred portions

http://www.rns-pdf.londonstockexchange.com/rns/5923T_3-2012-12-14.pdf

The table and graph in figure 5 show conceptual grade-tonnage relationships only and are derived from Inferred and Indicated Resources for which economic viability of realising tonnage above any given grade cut-off has not been assessed at this time.

Figure 5: Grade-tonnage tables and graphs

http://www.rns-pdf.londonstockexchange.com/rns/5923T_4-2012-12-14.pdf

On-going / Future Work

Some mineralised portions of the deposit remain open at depth or along strike. These areas of open mineralisation as well as any gaps in information or potentially coherent higher grade shoots will be targeted in future resource development work. Detailed delineation drilling will only be completed to upgrade the Resource to Measured category as part of a feasibility study should there be areas where the Indicated mineralisation is considered likely to be sufficient to generate mineable Reserves in the near term.

The coherence of higher grade mineralisation (>1.5g/t Au) within the prospects suggests that potentially mineable volumes of higher grade material do exist (figure 6). The shoots of higher grade mineralisation within these systems are currently the subject of detailed analysis, particularly the high grade shoot at the Nyanza prospect.

Pit optimisation work has commenced and is being carried out by SRK Consulting (UK) Ltd. The aim is to produce a first pass assessment to identify the most likely mining areas and key sensitivities to focus current activities to progress towards a feasibility program; potentially focussing on a small 'starter' pit of higher grade material. Output will include generic, logical assumptions for the mining parameters. Conceptual pit shells will be modelled on the best areas of shallow higher grade mineralisation with a view to understanding the potential for economic development, and for maximising the positions of planned resource development drilling. 

Figure 6: 3D MRE block models for all MGP prospects at 0.5 g/t Au and 1.5 g/t Au cut-off

http://www.rns-pdf.londonstockexchange.com/rns/5923T_5-2012-12-14.pdf

Company Chairman Andrew Bell comments:

"With this declaration of a new mineral resource figure for MK we have completed the rigorous programme of drilling and revalidation that have enabled us to integrate the information from decades of earlier exploration at Mikei into our data and models. As one phase ends, another begins. On these more secure foundations, and with additional metallurgical and geological work completed, we are developing a better structural understanding and are able to target high grade shoots, areas of coherent higher grade, and directions in which mineralisation appears to be open. We can now also start work on pit optimisation and mine planning. This is a milestone achieved, and opens the way to more rapid progress. We thank CSA, who held us to a high standard, and our teams in Mikei and London who helped us achieve this result."

For further information contact:

Andrew Bell 020 7402 4580 or 07766 474849                         Chairman Red Rock Resources plc

Sandra Spencer 020 7402 4580 or 07757 660 798  Investor Relations Red Rock Resources plc

Gerry Beaney / Daniela Amihood 020 7383 5100                NOMAD Grant Thornton Corp Finance

Nick Emerson 01483 413500                                                        Broker Simple Investments Ltd

Updates on the Company's activities are regularly posted on its website, www.rrrplc.com.

Competent Person Statements

The information related to the estimation of Mineral Resources in this release has been compiled by Mr Galen White of CSA Global (UK) Ltd. He is a Fellow of the Australian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity 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 (The JORC Code).

The information related to metallurgical test work in this release has been reviewed by Mr Leonard Holland of Holland and Holland Consultants. He is a Fellow of the Institute of Materials, Minerals and Mining and has sufficient experience relevant to the mineral processing techniques under consideration.

Forward Looking Statements

This report contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information might include, among other things, statements with respect to the Company's business strategy, plans, objectives, performance, outlook, growth, shareholder value, projections, targets and expectations, Mineral Reserves and Resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, uranium prices, demand for uranium, and currency exchange rates.

Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'likely', 'believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast' and similar expressions. Persons reading this report are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in the Company's Annual Report. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to update or revise any forward-looking statements whether as a result of new information, estimates or options, future events or results.

Glossary

Alteration	Changes in the chemical or mineralogical composition of a rock, produced by weathering or hydrothermal solutions.
Archaean	A period in geological time between approximately 2.5 - 3.8 billion years ago.
Assay	A chemical test of a rock to determine the metal content.
Block model	A three dimensional shape that is designed to define the estimated extent of a particular portion of a mineralised system. The volume will usually be assigned a particular density, and therefore tonnage, and grade, and so metal content. All the blocks within a mineralised system will be combined to come up with the total mineral resource estimate.
Competent Person	A professional person with a minimum of five years' experience relevant to the style of mineralisation, the type of deposit under consideration, and to the activity which that person is undertaking.
Cut-off grade	A lower grade level used to define continuity of mineralisation.
Geological boundaries	The divisions within a rock mass determined by rock type, deformation, alteration and / or mineralisation.
Geostatistics	A branch of applied statistics that deals with variables (here Au) that fluctuate in 3D space.
Grade variability	The characteristics of metal distribution through a mineralised system. If sufficient sampling information is available, the understanding of the grade variability within the mineralised system at sampled locations can be used to estimate metal grades at unknown locations within the system.
Grams per tonne, 'g/t'	A chemical measure of the amount of gold or other metals in a rock. Exactly equivalent to 'ppm' or parts per million.
Greenstone	A broad term for volcano-sedimentary sequences, usually of Archaean age, that are known to host gold mineralisation. Referred to as 'green' due to their common alteration state, and contain noticeable amounts of the greenish mineral chlorite. They generally occur in tectonic belts that are longer than they are wide.
High grade shoot	The part of mineralised zone, surface or vein that contains higher grade material. Since the concentration of these minerals is the result of large scale geological features these shoots are usually traceable for significant distances, once enough information is available.
Indicated Resource	An "Indicated Mineral Resource" is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological or grade continuity but are spaced closely enough for continuity to be assumed.
Inferred Resource	(JORC, 2004) An "Inferred Mineral Resource" is that part of a Mineral Resource for which volume or tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.
JORC	The Australasian mineral resource reporting standard. The Joint Ore Reserves Code is defined as the code for reporting of Mineral Resources and Ore Reserves and is widely accepted as a standard for professional reporting purposes. The JORC Code requires that, for a published report to be compliant with the JORC Code in reporting resources, reserves or exploration results, the documentation on which the report is based must be prepared by, or under the direction of, and signed by, a Competent Person or Persons. As established by the Joint Ore Reserve Committee of the AusIMM and others - (JORC 2004).
kOz	Thousands of ounces of contained metal.
Kriging	A statistical linear method of grade interpolation which uses distance weighting estimation where the distance employed is a measure of spatial correlation (derived from variography).
Metallurgical testwork	Any of a range to tests designed to characterise the requirements to extract a mineral or metal from a particular rock; frequently includes metal recovery after particular physical and / or chemical processes.
Mineralisation	The parts of a geological system that are enriched in the metal of interest.
MRE	Mineral Resource Estimate, as defined by JORC.
MOz	Millions of ounces of contained metal.
Mt	Millions of tonnes.
Nugget / nugget effect	Inherent grade variability within the same sample or between samples at close distances. The tendency, particularly of gold distribution, to be characterised by localised high concentrations of metal. Including, but not exclusively, the occurrence of visible gold.
Oriented core / downhole structural information	The recovery of drill core such that its actual orientation in space is known so that actual measurements of the spatial orientation of structural features can be made which helps predict the correlation of mineralised zones.
Oxidation	The alteration of rocks by natural processes, usually resulting in reduced strength, such as the prolonged exposure to surface weathering.
Pit shell	The design of a theoretical open pit based on an MRE block model and the application of economic parameters used in mining. Part of the process of determining economic feasibility, and here preliminary to the definition of an Ore Reserve.
Polygonal grade estimation	A simplistic form of resource estimation where each drillhole is assigned, a usually irregularly-shaped, polygon of the thickness and grade encountered in that hole without taking into account any of the geostatistical variability or geological continuity.
Ppm	Parts per million. A chemical measure of the amount of gold or other metals in a rock. Exactly equivalent to grams per tonne.
Quartz vein / reef / lode	A secondary accumulation of a silica-rich mineral, quartz, along a fracture surface usually caused during the deformation of a volume of rock, and often the host to, or associated with, gold mineralisation in greenstone belts. Can vary from millimetre-scale up to a number of metres thick.
Shear zone / system	A volume of rock in which shearing across a measurable width, and such that the rock is deformed as much by ductile deformation as it is by discrete planar breaks or faults.
Strike	eg 'along strike'. The direction a geological feature, such as a shear zone, bedding or a quartz vein, is trending.
Structure	In the geological context this refers to the deformation of pre-existing rocks by fold, faulting, shearing and veining.
Tcm	'tonnes per cubic metre' a measure of density, required to estimate tonnages within a volume.
Variography	Analysis of grade continuity via the comparison and correlation of sample grades according to the distance and orientation between samples.
Wireframe	A computer-generated three dimensional outline of a volume of material.

 

END

 

 

MSCTIBJTMBIBBLT