When you’re a small cap resources explorer on a tight budget, drawing on the previous work of deep-pocketed companies on the same ground helps to shorten the odds of success – especially when they leave the riches behind.
In the case of gold and rare earths explorer Killi Resources (ASX:KLI), the collective work of Barrick Gold, Tanami Gold and Goldfields helped to refine the company’s targets on its tenements covering a swathe of the Tanami West district in northern Western Australia.
Named after West Tanami’s imposing Killi Killi Hills, Killi listed on the ASX on February 10 under the ticker KLI, after raising $6 million at 20 cents apiece.
Under chief executive Kathryn Cutler, Killi has wasted little time putting the funds to work on its flagship West Tanami Gold Project, which covers 100 kilometres of gold potential and 95 kilometres prospective for heavy rare earths.
The company also has two key secondary projects in Queensland: Mt Rawdon West in the state’s south and Ravenswood North, near Charters Towers. It also owns the Balfour base metals (predominantly copper) project in the Pilbara region.
At West Tanami, Cutler is confident that the ground sits on the same geology as Newmont’s 15-million-ounce Callie Gold Mine, across the border in the Northern Territory but on the same structure.
“That system is repeated up the Tanami belt system to where we are,” she says.
“Other notable projects on the same structure include Northern Star Resources’ Tanami Goldfields, ABM Resources’ Twin Bonanza and Black Cat Syndicate’s Coyote and Kookaburra mines.”
Cutler notes the previous owners of Killi’s ground carried out “first pass” geophysical and geophysical work.
“They gave us a solid broad ground to start with, but they never tested any of the targets to depth,” she says. “They never stuck a proper reverse circulation or diamond hole in it.”
Killi is about to change that, with two rigs – one diamond and one air core/reverse circulation – on site poised for a 20,000 metre drilling program.
The program will test the mineralisation along strike of the Kookaburra target, on the easter flank of the tenements, before moving to the “more theoretical” Oracle-Raven target on the northern section.
“We have quite a number of gold targets to test this year and next, as well as giving rare earths a go as well,” Cutler says.
In their dozens of iterations, rare earths such as dysprosium and terbium are essential industrial ingredients in applications including electric motor magnets, wind turbines and nuclear reactors.
Killi is heartened by the geological proximity, of Northern Minerals’ advanced, dysprosium-heavy Browns Range project to the north.
The company believes the structures are conducive to hydrothermal rare earths deposits, formed when fluids from magma sources in ancient times hit the right lithology and deposit the minerals in the rocks.
“We see ourselves primarily as a gold explorer with rare earth potential,” Cutler says. “But you never know – the tail might wag the dog.”
Cutler says there’s a perception in the market that the West Tanami mineralisation is deeply undercover and thus unattractive.
“That’s absolutely not true,” she says. “The data to date shows the cover is only five to 12 metres, which is shallower than a lot of places in the Kalgoorlie goldfields by an order of magnitude.”
Despite its prospectively, the West Tanami region has been grossly underexplored for a number of reasons: it’s quite expensive to operate in and the wet season confines exploration to eight months of the year at best.
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Ultimately, the previous owners of the ground turned to larger targets elsewhere, not knowing that the big deposits tend to be concealed under 10 to 15 metres of low-grade material.
“The enormity of these projects probably became overwhelming and they thought it was too tough,” Cutler says.
“The Tanami is certainly not as easy as other projects to get started.”
In May Killi prepared for the upcoming field season at West Tanami, including redoing 60 kilometres of old pastoral tracks used by the previous owners and dozing 100 kilometres of new roads.
The field work is being completed with the assistance of the Tjurabalan People, the traditional owners and the earth works are being carried out by the Halls Creek based Djaru Contracting
In addition to the drilling, a closely-spaced and low-flown magnetics and radiometrics survey is due to start.
Covering 1000 square kilometres, the survey will be flown on 50 metres spaced lines only 20 to 30 metres above ground. “That should have been done at least 20 years ago, but it hasn’t,” Cutler says. “The fact that it hasn’t been done highlights the opportunity.”
At Ravenswood North, meanwhile, Killi is rearing to start a drilling program after reporting “ripper” soil sampling results from its Rocky prospect.
The sampling identified two distinct gold anomalies within a 1.5 kilometre area, with elevated sniffs of silver and copper as well.
These coincided with two high grade rock chip samples: one measuring 17.4 grams per tonne gold and 5 g/t silver and the other assaying 16.19 g/t gold and 7.16 g/t silver.
The company has just completed a VTEM (Versatile Time Domain Electromagnetic System) survey and is awaiting results.
“The results to date show the same geochemical signature for all the major gold deposits in the area, including the Mt Leyshon and Mt Wright deposits near Charters Towers.”
Appointed last August, Cutler is a geologist with 15 years’ experience with gold projects in WA and NSW, including as senior geologist at Blackham Resources where she took the Wiluna Gold Project from exploration to production.
More recently she has been exploration manager for the ASX-listed WA gold plays Satum Minerals and Aruma Resources.
Cutler describes West Tanami as the main game and the Queensland ventures as the sweetener.
“Everyone has known about the potential of the West Tanami in geology circles, but it’s probably one of the country’s most underexplored provinces,” she says.
“There’s a good chance of a decent deposit out there and we now just have to get out there and find it.”