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Larvotto Resources eyes major move from explorer to producer

Updated: Mar 21


Larvotto Resources’ acquisition of the Hillgrove project in New South Wales came with an operating processing plant. Credit: File

ASX-listed Larvotto Resources is looking at a major transitional change from mineral explorer to producer after today confirming it had picked up the Hillgrove gold-antimony project in New South Wales for a song.


The company acquired the 1.4-million-ounce gold equivalent operation after entering into a binding term sheet with the administrators of former owner Red River Resources for a purchase price of less than $6 per ounce.


With a grade of more than 6 grams per tonne gold equivalent – which can be broken down to 4.5g/t gold and 1.2 per cent antimony – the project cost Larvotto just $3 million, with about a further $5 million required to for the replacement of environmental bonds in compliance with NSW laws.


Management today confirmed it had completed the deal following a successful placement and entitlement offer of $7.6 million, in addition to a non-cash consideration of $2.5 million from leading world commodity trader Trafigura, which represents a 15 per cent share in Larvotto. The cornerstone investor in Beijing-based GAGE Capital Management is subscribing for $2.9 million for a 19.9 per cent holding in the company.


Hillgrove covers 93 square kilometres and contains six key mining areas within a total of 31 permitted mining licenses. The acquisition also includes an operational processing plant with a 250,000 tonnes per annum capacity, which was put on care and maintenance in 2021, and associated infrastructure.


Since 1857, the area has been mined for both gold and antimony. Continuous antimony production at the site took place for more than 30 years up until 2002 when the price fell to an all-time low. Due to external factors affecting the companies involved, the Hillgrove project failed to restart twice even though metal prices improved.


Until Red River went into administration in November last year, its plan was to restate the reserve base and increase resources through exploration of both new and existing targets. Red River spent about $20 million on exploration and successfully increased resources and generated several extremely high-grade new targets, adjacent to existing resources, that Larvotto says requires follow-up exploration.


Recent drill highlights from Red River’s final year at the operation returned impressive results, with 4.5m grading 29.5g/t gold and 0.3 per cent antimony from 467.75m including 0.45m at 257g/t gold. Additional hits returned 0.4m going a whopping 525g/t gold from 396.7m and 0.6m reading 108g/t gold from 510m.


Wider intersections include 9.5m at 4.3g/t gold and 0.8 per cent antimony from 70m, in addition to 20.3m at 4.1g/t gold and 0.9 per cent antimony from 51m.


Larvotto says Hillgrove has previously operated successfully as both a single-commodity gold and antimony operation – but never both at the same time. However, management believes that in combination, both metals have complementary extraction processes and provide an overall high-grade mining opportunity.


The region typically hosts higher-grade antimony near the surface with gold grade increasing with depth as antimony decreases. The company believes that if its plans play out as envisaged, one operation should be able to carry the other financially, leaving plenty of cream on the top.


While Larvotto is not expected to immediately flick the switch from explorer to producer, the amount of work done by Red River and other previous owners certainly gives management a head start.


The Bakers Creek hub, which is part of the wider Hillgrove project, has been identified as priority target for drilling, with more than 200 known gold-antimony deposits that are primarily located from 500m vertical depth and below. Management says the potential to extend the mineralisation from all of the other zones to the same – or deeper – extent as Bakers Creek will be a high priority for exploration.


The company plans to get to work on increasing resources while converting the current measured and indicated resources into JORC reserves.


Its recent drilling has identified a new high-grade zone at the Bakers Creek deposit, in addition to near-surface gold and antimony mineralisation. Several other targets have also been identified as extensions to existing zones or parallel structures. Drilling can be undertaken from surface and in many cases, from underground.


According to Geoscience Australia, more than 20 Australian deposits are known to contain antimony but mostly below economic grades. It typically occurs in association with gold, but in Australia, it is also known to occur in some zinc-lead-silver deposits. The bulk of Australia’s economically-demonstrated resources of antimony occur at the Costerfield gold deposit in Victoria and at Hillgrove.


One third of the global use for antimony is in lead storage batteries, while antimony alloys are also used for manufacturing solder, sheet and pipe metal, ammunition, bearings, castings and pewter. The metal can also be combined with oxygen to form the antimony trioxide that is used primarily as a fire retardant. It is also listed by the Federal Government as a critical mineral considered important to the nation’s resources sector.


After an intense few months of due diligence and negotiations with the Administrators of Red River, we have achieved what no exploration program could ever have done – in one swoop, we have added 1.4Moz of high-grade JORC AuEq ounces for the purchase price of under $6 per ounce (after NSW government environmental bonds). Larvotto Resources managing director Ron Heeks.


In addition to the transformational opportunity at Hillgrove, Larvotto is also carrying out exploration on three more projects across Australia and New Zealand.


In Queensland, the company holds about 900 square kilometres of tenements, which have been dubbed the Mt Isa copper gold and cobalt project. The operation sits along strike from the Mt Isa mine and also surrounds the Barbara copper mine.


Earlier this month, Larvotto completed 2100m of reverse-circulation (RC) drilling at the site and unveiled results including a 20m hit grading 1.03 per cent copper from surface with 4m at an impressive 2.48 per cent copper from just 12m. Wider intercepts from its Yamamilla prospect delivered 44m going 0.63 per cent copper from 48m including an 8m section at 1.64 per cent copper from 84m.


Rock-chip samples from Mt Isa’s IXL prospect returned some staggering grades including 38.7 per cent copper and 0.77g/t gold, 25.3 per cent copper and 0.69g/t gold, 8.23 per cent copper and 2.62g/t gold and 28.3 per cent copper and 1.29g/t gold. Recent sampling also returned grades of about 9 per cent cobalt in rock chips where no previous sampling for the mineral has taken place.


Following the success of its initial drill program, Larvotto has started planning for follow-up exploration programs at Mt Isa. Geophysical surveys will be conducted to assist in the targeting of the next phase of drilling, while future on-ground mapping and structural analysis will also be pursued.


Over to the west and the company also holds a significant patch of ground in Western Australia’s renowned Goldfields region. The Eyre project covers 580sq km about 30km east of Norseman and is considered prospective for rare earths, gold, lithium, base metals and platinum group elements (PGE).


In April, air-core (AC) drilling at the operation’s Merivale South prospect returned some ridiculous figures with total rare earth oxides (TREO) results of up to 1.26 per cent, or 12,611 parts per million, with 3787ppm magnetic rare earth oxides (MREO). Testwork is currently underway on samples from the impressive target.


A 2383m RC drill campaign identified a significant nickel-copper anomalism at the company’s Mt Norcott prospect, with an ultramafic nickel anomaly intersected on the western side of Merivale. Assay highlights show a 100m section at 675ppm nickel from surface including 4m grading 0.178 per cent nickel and 913ppm copper.


Thick pegmatites were also drilled at Merivale with anomalous results for lithium, while multiple pegmatite swarms have been located throughout the Eyre project.


Finally, across the ditch, the company is part of an earn-in deal with Zedex Gold for the Ohakuri gold project in New Zealand. Management says the operation has been explored by several companies in the past 40 years and a large, lower-grade area of gold mineralisation has been identified. Previous drilling in 2012 revealed some wide hits including 172m grading 0.41g/t gold, 160m going 0.32g/t gold and 215m at 0.21g/t gold. Larvotto completed a 1924m diamond drill campaign at the site in the second half of this year, with results pending.


With some solid results across its exploration project in Queensland, WA and New Zealand, Larvotto will continue to explore its highly-prospective tenements. However, the company’s immediate focus for the New Year will be on Hillgrove, where it will move to shore up its resource and continue to work on its potential production plans.


As Heeks said when the acquisition of Hillgrove was announced – not many junior companies get the chance to move up the resource curve so rapidly and cost effectively.


It is also interesting that this company is named after the only beach in Monaco, which is a regular playground for the rich and famous. Larvotto will be hoping that is the ideal omen for what it too could become.


Is your ASX-listed company doing something interesting? Contact: office@bullsnbears.com.au

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