Difficult commodity market conditions have pushed shares in Rockfire Resources (LSE:ROCK) down from 2.1p to their current 0.7p over the past year. However, against this harsh backdrop, the £3.22m explorer has been making stellar progress across its vast portfolio of gold and copper opportunities based near processing plants and refineries in Queensland, Australia. With Rockfire readying the exploration of its Copperhead project, alongside the numerous gold prospects within its Lighthouse tenement, CEO David Price tells us why now would be an excellent time to buy.

Wealth of experience

Rockfire Resources is run as a commercially-minded company, seeking to return an increase on investment capital to shareholders. The means of achieving this is by exploring for and developing economic gold and copper deposits in world-class mineralised areas. The company’s portfolio is currently centred on Queensland Australia, where it is the sole owner of several medium-grade, near-surface gold prospects positioned among multi-million-ounce gold deposits and processing plants. Alongside these more immediate revenue opportunities, the firm controls two large-scale porphyry copper prospects that lie within 250km of Australia’s largest copper refinery.

 

Location of Rockfire Resources’ projects in Australia (Source: Company)

Backing up Rockfire’s strong portfolio is a management team boasting considerable experience in areas such as mining and financing. Indeed, chief executive David Price, who joined in 2017, is a seasoned geologist and senior executive with more than three decades of global mining experience, including 20 years spent securing funding for projects. Notably, he also holds the highest category possible for a geologist as a Fellow of the Australasian Institute of Mining and Metallurgy.

Meanwhile, chairman Gordon Hart has more than 35 years of experience in the equity capital advisory markets. He has spent the last 12 years as MD of Venture Group Equities, where he has advised on transactions involving more than $300m of funding.

Rockfire has also gone to great lengths to ensure that its interests are aligned strongly with investors. All-in-all, directors and management own 20.8pc of the company’s issued share capital, with Price and Hart holding 3.15pc and 2.04pc respectively. Notably, the organisation’s largest shareholder is its non-executive director Nicholas Walley, who holds 11.91pc of its shares.

Shining opportunities

Rockfire has delivered considerable news flow across both its near-to-medium-term and longer-term projects so far this year. Across its more immediate prospects, the firm’s most notable area of progress recently has perhaps been its 100pc-held Lighthouse tenement, based within Queensland’s gold mining centre.

Lighthouse, which contains numerous known styles of gold and copper mineralisation, straddles two of the most productive structural corridors on the east coast of Australia. These host projects such as Mt Leyshon, which hosts 4Moz gold and 2.3Moz silver, Pajingo, which hosts 3.7Moz gold, Ravenswood, which contains more than 4Moz gold, and Charters Towers, which comprises more than 7Moz gold. Rockfire is targeting similar multi-million-ounce deposits across its tenements, where 4,500m of drilling has been completed historically by major players like Esso, Newcrest, and Aberfoyle.

Rockfire’s most advanced Lighthouse prospect is currently Plateau, where a successful 2017 drilling campaign returned intersections such as 22m at 1.9g/t gold and 22.3g/t silver (from 39m depth) and 10m at 1.90g/t gold and 9.0g/t silver (from 18m depth). According to the firm, these results suggest the potential for a high-grade gold deposit bearing a geological resemblance to the high-profile, nearby Mt Wright and Mt Leyshon deposits.

Beyond Plateau, this year has seen Rockfire reveal numerous substantial developments at another significant Lighthouse prospect called Double Event. Here, successful historical drilling by major players has mapped quartz veining over a strike length of more than 3km in an east-west direction.

Rockfire’s Lighthouse tenements (Source: Company)

Since taking control of Double Event, Rockfire has been working hard to build upon these early signs of prospectivity. For example, the business completed two drilling campaigns on the prospect last year, encountering high grades such as 3m at 10.04g/t gold (from 27m depth) and 2m at 4g/t gold (from 15m depth). As well as once again confirming that high grades could be achieved at Double Event, Rockfire said the results suggested that the project become a near-surface, medium-grade gold deposit with additional drilling.

To develop its understanding of Double Event, the firm has gone on to complete a great deal of soil sampling at the prospect this year. The results of the first wave of this work, which were released in February, included impressive gold-in-soil results of up to 0.23g/t, with five samples exceeding 0.1g/t gold. As well as enhancing Double Event’s prospectivity for hosting near-surface, high-grade gold, many of the most robust results originated from an unexplored area to the north of Rockfire’s previous drilling. According to the firm, this appears to indicate the presence of a parallel, mineralised vein and, in turn, another target to increase potential gold ounces at the prospect.

In response, Rockfire launched a second wave of soil sampling, targeting areas beyond the limits of the first area surveyed. Among the areas covered by this work, which comprised 424 soil samples and 12 rock samples, was the western extension of Double Event’s mineralised trend, hosted within Rockfire’s adjacent Kookaburra tenement. In May, the business revealed that its additional efforts had recovered gold-in-soil results up to 3.86g/t gold and rock samples up to 58.5g/t gold. This helped to extend Double Event’s total strike length of prospectivity to 4.5km while also identifying well-defined mineralised intervals to assist with future drill targeting. Gold-in-soil values appear to strengthen towards the west and the anomalous gold-in-soil footprint broadens westwards, suggesting a potential source in that direction.

Rockfire is now planning the geophysical surveys needed to take Double Event to its next stage of development. The company expects techniques such as induced polarisation to provide information at depth that will support target generation for future drill holes down to 100m below surface.

‘Whenever we do work at Double Event, we improve our knowledge of the site and are encouraged by what we see- the results are very pleasing,’ he adds. ‘It is an ongoing programme for us. As it stands, we do not know what is present at a depth of more than 25m below surface. Instead of drilling random holes in the hope of finding gold, we want to do geophysics and mapping to find significant accumulations of sulphides at depth that will help to pinpoint our drilling targets.’

It is worth noting that Rockfire’s progress across the Lighthouse and Kookaburra tenements over the last year is not limited to Double Event alone. Indeed, in December, a review of historical data at Kookaburra highlighted outstanding past drilling results at a prospect called Native Bee, six miles northeast of Plateau.

Previous work at Native Bee, which lies on a 500m magnetic anomaly near the Pajingo gold mine processing facility, returned strong intervals such as 8m at 2.18g/t gold, including 3m at 5.13g/t gold from 26m deep. With this in mind, Rockfire believes that the prospect offers considerable exploration potential and future work will target a medium-to-large-scale, near-surface gold resource.

Meanwhile, April saw Rockfire announce that soil sampling at the Cardigan Dam prospect on its Lighthouse tenement had returned two broad gold-in-soil anomalous trends sized at c.400m x c.100m each. With gold appearing to strengthen towards the north of the strike area and beyond the limits of the survey, the firm will extend soil sampling to the north to explore the spread of surface mineralisation.

In July, Rockfire’s progress at Lighthouse prompted its release of a maiden gold resource for the asset. This assigned it an inferred resource 1,349,000ts at 1.18g/t gold for 51,000 ounces of the precious metal. The business’s next expansion resource target at Lighthouse is between 2.7-4.8 million tonnes grading between 1.2g/t and 1.6g/t gold.

In a statement at the time, Price said: ‘Rockfire is on an exciting and rapid growth curve and we are looking forward to further expansion of our copper and gold resources with continued exploration success. This result from our Maiden Resource at Lighthouse demonstrates and measures our exploration success to date and provides a sound platform for continued growth of the company's asset base.

‘The company's prudent strategy of sound science, thorough evaluation and methodical exploration is being rewarded with measurable asset valuation increase. Our ambition to define large-scale mineral resources is beginning to bear fruit and our recent Maiden Resource merely signals the start of our planned resource expansion. This JORC gold resource provides the catalyst for our anticipated growth.’

Long-term view

Moving on to longer-term copper porphyry opportunities, Rockfire plans to grow and expand mineralisation at its two porphyry copper deposits in Queensland; Copperhead and Copper Dome. Copperhead is an undeveloped, large-scale copper target found within a belt of porphyry copper deposits.

To date, five diamond drill holes have been completed at Copperhead, with each recording visible chalcopyrite, molybdenite, pyrite, and bornite throughout their lengths. These holes are thought to indicate the potential for a large copper, molybdenum and silver mineralised system. Indeed, an historical estimate by Carpentaria Exploration in 1972, quoted mineral content for the asset of 35Mt at 0.16% copper for 56,000ts of metal. This early estimate was based on just 5% of Copperhead’s large surface geochemical anomaly.

Rockfire took a significant step forward at Copperhead in June when it announced that it had enhanced Carpentaria’s metal estimate significantly by including the material levels of molybdenum present at the asset. Using the original tonnage and including molybdenum values from drilling, a copper equivalent grade of 0.35% is achieved. The amount of in-situ copper increased from 56,000ts of copper to 122,500ts of copper equivalent value. Based on current prices, this represents an in-ground value of £555m. In comparison, Rockfire’s market cap currently sits at £3.22m.

The Copperhead anomaly (Source: Company)

Rockfire has now developed a staged exploration target for the asset, with planned drilling expected to deliver the next milestone of between 50 – 100Mts, with a grade range of 0.3-0.4% copper equivalent. Price tells us that while both Copperhead and Copper Dome host grades typical of most porphyries, it is their sheer size that makes them such exciting opportunities for Rockfire:

‘The potential at both sites is for substantial tonnages at low grades. Porphyry copper is very much of that nature. If you get a large tonnage, then you can mine those open cuts at a low cost and recover huge amounts of copper. That is the objective for these large prospects. Porphyries take a lot of money and time to drill, but this is because they potentially represent billions of tonnes of low-grade mineralisation. We think these could be game-changing opportunities.’

Meanwhile, in May 2019, Rockfire took the decision to exercise an option to acquire the under-explored Copper Dome project, also in central Queensland and only 50km southwest of Copperhead. The business received the project in exchange for an A$80,000 (£44,000) cash and share payment to previous owner Symbolic Resources after entering an initial option in November last year. Its decision followed months of extended soil sampling, rock sampling, and geological mapping that identified coherent, strong anomalism and mineralisation of up to 23.4% copper and 2.3g/t gold.

This work, which spanned previously untested areas, confirmed that Copper Dome could contain high-grade, vein-hosted mineralisation as well as bolstering its porphyry-hosted mineralisation potential. Indeed, Rockfire said the results ‘exceeded expectations’, with copper grades in the soil hitting multiples of almost 80 times background levels. With copper-in-soil coming in strongest at the margins of mapped porphyries, it also confirmed numerous clear drilling targets for Rockfire as it moves the asset forward. As a bonus, mineralisation at the asset outcrops at surface, providing the opportunity for low-cost, near-surface exploration.

Now that it has acquired Copper Dome, Rockfire will expand its exploration into geophysics including ground magnetics and gradient array IP. These techniques are expected to identify clear targets in and around identified geochemical anomalies, ultimately informing drilling. Price explains that the company chose to carry out extensive fieldwork at Copper Dome before May to ensure it had targets ahead of exercising its option and acquiring the asset.

Time for a re-rate?

Despite boasting a portfolio of active exploration opportunities, Price tells us that Rockfire remains on the lookout for new assets that meet its strategic requirements. Indeed, acquisitions, which Rockfire refers to as ‘inorganic’ growth (as opposed to the ‘organic’ growth of its existing assets), are always on the horizon, with the business regularly reviewing new potential opportunities.

Reviewing new potential opportunities is an ongoing process for us,’ he says. ‘We are looking for sites where we see potential for material growth. We are not interested in taking on an asset solely because it boasts a large number of ounces – we want to be able to build on what it does offer and create value in that way. When looking at an asset, we like to think about how big it could be and how we can help it to get there.’

The company is open to a re-rate potentially triggered by continued exploration success across Lighthouse, Copperhead or any of the assets in its broader portfolio. A strengthening of macro conditions will only serve to further this effect, potentially leaving the company’s currently-depressed share price looking very cheap. With its highly experienced management team and portfolio of substantial exploration opportunities in a stable jurisdiction, it will be very interesting to watch Rockfire’s performance over both the short and long-term.

Author: Daniel Flynn

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