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Strong, steady growth drives nickel aspirations
Wednesday, 20 June 2007

IT HAS been a case of buy one project, get one free for speedy nickel-tungsten aspirant Hazelwood Resources. By Mark Mentiplay - RESOURCESTOCKS*

Location of Hazelwood Resources projects

Hazelwood Resources got a big bonus when it set out to develop its rapidly expanding Cookes Creek nickel project in northern Western Australia.

While the corporate and exploration focus remains on nickel, the company plans to bring an associated revitalised tungsten project nearby into production towards the end of next year to fund its much bigger nickel aspirations.

And this all in the space of just six months since listing after raising an oversubscribed $6 million.

"We started and remain, primarily a nickel company. We got the tungsten for free, so now it's a case of fast-tracking the tungsten, the price of which has risen quite dramatically over the last 18 months, to underwrite our advanced nickel targets," Hazelwood chairman Mark McAuliffe told RESOURCESTOCKS.

The Cookes Creek project is near Nullagine in the southeast Pilbara, the main focus of which is the highly prospective Anomaly Hill nickel prospect, with the rapidly emerging Big Hill tungsten deposit, about 7km to the east, paying the freight.

Hazelwood technical director Terry Butler-Blaxell says the challenge at Cookes Creek is not one of target generation, "it's more a case of target reduction. We have such a large holding of prospective host rocks for both nickel and volcanogenic massive sulphide (VMS) mineralisation. We also have an advanced tungsten project in the same area on which we are now able to commence economic evaluation".

Hazelwood is continuing metallurgical work at Big Hill, along with a 24-hole infill drilling program with a view to having a JORC-compliant mineral resource this month.

McAuliffe expects this to be followed by financing and offtake agreements before the end of the year, and production towards the end of 2008.

He says the company is already talking to a number of buyers, but does not see a problem given the current world tungsten shortage.

While the drilling is continuing and the numbers still being crunched, McAuliffe is confident of improving on the non-JORC resources of 3 million tonnes at 0.17% wolfram trioxide outlined by Mitsui back in the 1980s when its value was about a quarter of what it is today.

Such a resource could provide about 4000t of 65% wolfram trioxide, the specification required for sale, over four to five years and worth about $128 million at current prices.

Major pluses for the project are that the mineralisation is shallow and free from contaminants. It sits on top of a hill, so mining will be a straightforward blast and push operation, with a low strip ratio.

Also present is the mineral fluorite, which may be separated and sold, providing a valuable co-product.
Metallurgical test work and process design for the tungsten commenced almost immediately on listing, focusing on conventional gravity and flotation processes.

A large 30-40t sample for a bulk pilot plant run is planned within weeks.

"Big Hill is a great project to pursue quickly and provide the cash flow for the nickel projects, as well as hopefully expanding the tungsten resource," McAuliffe said.

A second diamond drill rig is expected to be pressed into operation at Big Hill during the March quarter this year.

To ensure rig availability, Hazelwood has concluded an agreement with Colby Drilling for shares for $600,000 worth of drilling. The company dived into its task just before Christmas and toiled through 48C heat to crank up the Cookes Creek project.
With the recent acquisition of a 70% stake in the extensions to Cookes Creek from Giralia Resources, now Hazelwood's second-largest shareholder, the company has 30km of nickel prospective strike within the project area, of which only 300m has been drilled.

The prime nickel target is Anomaly Hill, where previous rock chip sampling has yielded grades up to 5.6%, but with extensive historical diamond and percussion drilling failing to go deep enough to test the basal contact.

While the first results from Hazelwood's own diamond drill program at Anomaly Hill have returned excellent results, 11 new geophysical conductance anomalies have also been identified from a recently completed helicopter electromagnetic (Hoistem) survey over the western extensions of the project, including the Giralia ground.

Results from the first two of the five diamond drill holes into Anomaly Hill included 4.2m at 1.05% nickel from 74m, and 0.7m at 2.04% from 77.5m, along with elevated cobalt and anomalous platinum group elements.

The other returned 5m at 0.55% nickel from 147m, including 1m at 0.90%, again with elevated cobalt and anomalous PGEs.

But importantly, this intersection was 30m below the deepest historic intersection recorded at the project. The mineralisation was found in an area where drilling about 25 years ago had failed to penetrate the Cookes Creek layered, ultramafic unit.

"That old drilling included some diamond drilling and then percussion drilling, which was just a waste of money because it didn't go deep enough. The basal contact of the mineralised zone is about 80-100m deep, which our drilling reached," McAuliffe said.

"We found disseminated nickel, it's low grade but it has cobalt credits. It's just what we were looking for and we now have a much better idea of the geology. We just need to get some tonnage now."

Assays from the remaining three holes are due soon.
The Hoistem survey has taken the number of conductive metal sulphide drilling targets from eight to 11, none of which have been tested and will be included in the upcoming drilling target review.

A high priority will be a 700m by 400m anomaly at nearby Copper Gorge, historical drilling around which has yielded significant copper mineralisation, but only three scattered holes have been drilled near the core of the anomaly.

Hazelwood's uranium prospects at Arthur River, 120km north of Gascoyne Junction, attracted recent attention when Giralia associate U308 reported some good uranium results nearby.

The company planned a radiometric survey there for the end of March.

An airborne geophysical survey is also scheduled for the Vickers Well gold-uranium prospect between Laverton and Wiluna as soon as it is granted.

Hazelwood also has options and applications covering the Tardarinna Hill gold prospect, 60km south of Whim Creek and the Mangaroon tungsten-gold project, 200 northeast of Carnarvon.

While Hazelwood's fast-track route to exploration and imminent tungsten-based cash flow has seen the share price spike to 41c, prompting a "please explain" from the ASX, McAuliffe remains optimistically cautious.

"I want to see strong, steady growth, backed by real results, which we are getting," he said.

* This report, first published in the April 2007 edition of RESOURCESTOCKS magazine, was commissioned by Hazelwood Resources

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