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MINING | AusQuest
AUSQ
Building a mutually advanta
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QUEST
ageous alliance with South32
MINING | AusQuest
AusQuest is a multi-commodity junior explorer with major ambitions. The ASX-listed company has maintained the same philosophy since its original listing back in 2003, and that has been to focus on largescale discoveries that would pique the interest of players from the mid to large-cap space. “We’ve never got into the small mine game,” admits managing director Graeme Drew. “The idea was always to retain an interest in projects that a major company would eventually develop. This is a niche which fits our background in terms of our people and their expertise.” AusQuest has followed this principle closely throughout its history, establishing a number of promising joint ventures with large companies in Australia and overseas, at times coming close to fashioning a project with the legs to sustain the appetite of a
The alliance with South32 was a momentous
major.
occasion for AusQuest and a realisation of a fundamental company aim, but what has the
However, this changed when the company
deal translated to during its first 12 months
entered the Peruvian copper-gold
and what is in store for the future?
exploration space in 2011. Six years later AusQuest was finally able to attract the
The art of the deal
major partner it had been searching for,
“We have regular technical meetings with
signing a strategic alliance agreement (SAA)
South32 and regular communication with
with South32, a giant of the Australian
their people. We work closely with them
mining sector having been spun out of BHP
presenting the projects, discussing the results
in 2015.
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and agreeing the way forward including drill
have so far provided us with in excess of
targets and programmes,” reveals Mr Drew.
$8 million and that is likely to increase over the next six months as we move into some
AusQuest’s technical team is strong and
exciting drilling programmes.”
boasts over 200 years of collective experience in the mineral exploration space, a good
In Peru, where AusQuest has identified three
fit with the well-documented technical
separate projects, over 8,000 metres of
experience of South32’s team.
diamond drilling is planned for the first two projects in the next six months. This drilling is
“From a financial point of view, we now have
estimated to cost US$4 million with South32,
10 projects under the SAA and they [South32]
as part of the agreement, providing the
MINING | AusQuest means to fund these campaigns along with capital to support additional drilling at some of the company’s Australian projects. South32 provides technical and financial support to AusQuest’s various drilling programmes in Peru and Australia, earning the right to exclusivity over all these titles as well as the right to earn equity in each of them. South32 can claim equity up to 70% by spending US$4 million on each project and has the right to go to 80% if it chooses to fund a pre-feasibility study on any project. Alternatively, South32 could choose to end its participation in a project, leaving AusQuest to fund pro-rata to maintain its equity. “If we present a project to South32 and it is rejected twice then it becomes our project. But, our aim is to have all of our projects accepted because when you are looking for major deposits, the more frogs you kiss the more chance you’ve got of finding the prince,” Drew quips. “Realistically if one of them comes in, we’ll be extremely pleased. If more than one comes in it will be a dream come true.” AusQuest is also providing management for the initial drilling programmes, which is a major bonus for the company because it has already expended substantial time and effort developing the prospects and has the knowledge and commitment to successfully drive them through the early drilling stages.
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MINING | AusQuest
“This is a little different to handing the
it gives us financial incentives (bonuses) to
projects over to a major or bringing another
provide new projects and opportunities to
company in just to do the drilling, often
South32 on an annual basis, which then helps
without the same conviction that we would
us to undertake (pay for) the generative work
have.
to provide the pipeline of projects that they are interested in.�
“Overall, we think the relationship is working extremely well. The agreement is relatively
One of the more recent outcomes of a
unique in terms of the way it is structured as
strategic meeting between the two partners
ResourceGlobal GlobalNetwork Network Resource AusQuest’s strategy because when developing multi-asset ventures, junior explorers often fall into a momentumsapping trap. They successfully raise funds for a drilling programme, achieve interesting but not compelling results and then have to wait for an extended period while raising more capital for further drilling. However, in AusQuest’s case this common pitfall has been effectively bypassed by the SAA, as the funding arrangement gives the company the breathing space required to focus on testing several prospects at the same time. “I think it’s almost unheard of to have 10 projects being funded under the one agreement. This is fantastic from our point of view. It gives us the chance to succeed and South32 multiple chances to have a potential development.” While Drew concedes that it is highly unlikely all 10 will deliver viable returns, he maintains they will all be subject to the best scientific tools; mapping, sampling, geophysics and drilling, which gives them a fighting chance of discovering orebodies. came in March 2018, when AusQuest confirmed that South32 would be extending
The Peruvian pipeline
its funding to cover four additional
In total, AusQuest has five projects that are
exploration opportunities, taking the total
currently at the drilling stage, two of which
to 10 projects under the SAA and triggering
are in Peru. Generally, the Peruvian targets
a second bonus payment of US$500,000 to
are large scale plays and occur undercover,
AusQuest.
particularly in the South where there is lots of soil, sediment and volcanic cover masking the
This serves as further vindication of
rocks.
MINING | AusQuest
This is bread and butter work for AusQuest,
Also at the drilling stage is the Cerro de Fierro
having applied techniques learned from
prospect, an iron oxide-copper-gold (IOCG)
its experience searching for undercover
target at the Northern end of AusQuest’s
mineralisation in Australia, including airborne
target area.
and ground geophysical surveys. “We recognised its prospectivity based on the Delving further into AusQuest’s Peruvian
combination of magnetics and radiometrics
portfolio, Mr Drew highlights the Chololo
from our proprietary airborne survey data.
Porphyry Copper prospect as first cab off
There was a large potassium anomaly which
the rank in Southern Peru. It was found
suggested regional potassic alteration of the
through mapping and sampling, while
rocks, and an isolated magnetic response
ground geophysics revealed a large-scale IP
several square kilometres in size sitting
chargeability anomaly, which bodes well for a
within it, making it an obvious target for IOCG
new copper discovery.
mineralisation.”
The undercover target has never been tested,
Subsequent mapping and sampling has
and AusQuest is excited to be starting a wide-
confirmed the presence of abundant copper
spaced 5,000 metre drilling programme in
in the area, not only in structures but also in
May.
the rocks as well, plus there is potential for
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the prospect to be sweetened by the possible
of process water that would be useful when
co-existence of gold.
developing new deposits,� Drew ponders.
AusQuest is currently undertaking drill
As drill programmes across five projects fast
permitting for the Cerro de Fierro project and
approach, AusQuest can look back upon its
hopes to have this completed by mid-year at
strategic alliance with South32 as a defining
which point access construction can begin.
moment in the junior’s history. With the
This is necessary for both projects as they
technical and financial support of a major
occur in elevated regions of the country.
industry player, the company has a golden opportunity to establish a world-beater of
“All of our projects in Peru are close to the
a project at home in Australia or in its new
coast, so infrastructure requirements are
Peruvian frontier.
potentially less than for the larger deposits that occur inland within the Andes. Being close to the sea could also provide a source
ASX:AQD
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Published by Anderson Murray Media Ltd
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