Annual Report
Read Royalco's 2010 Annual Report
Royalties
Read about Royalco's Royalty Streams
Exploration
Read about Royalco's Exploration Program
Sustainability & Environment
Read about Royalco's Community Relations, Sustainability and Environment Program
Exploration Activities
Introduction
Company has chosen to extend its asset base by pursuing advanced exploration opportunities to complement cash flows from royalty rights.
The Filipino tenement package, in our opinion represents one of the most attractive porphyry copper targets globally available, with our particular interests being associated high grade epithermal gold systems. These areas have been accumulated over a substantial period of time and represent advanced exploration plays.
The Philippines Projects
Royalco’s Philippine exploration assets comprise those of Oxiana Philippines Incorporated and related entities.
The summaries set out below are of the principal projects.
GAMBANG PROJECT
On the 26th February 2010, an Option Agreement over the Gambang Tenement was executed between Royalco Resources Limited, Royalco Philippines Inc., Vale International S.A. and Vale Exploration Philippines Inc., ( both wholly owned subsidiaries of Vale S.A.), concerning Royalco's Gambang tenement in the Philippines. The key terms of the Option Agreement include:
- payments to Royalco of US$530,000 on completion of conditions precedent, a further payment of US$500,000 twelve months later subject to standard administrative conditions,
- an option to acquire the tenement after the expenditure of up to US$3.5 million within 3 years once all documentation has been appropriately registered by the Philippines authorities,
- a minimum expenditure of US$1.5 million including drilling on the highly prospective Cableway prospect,
- a payment of US$5,000,000 on exercise of the option,
- and a royalty on production varying between 1.31 % and 1.5% NSR.
Royalco Philippines Inc., Royalco's operating subsidiary in the Philippines, will retain administrative responsibility for the tenement until the exercise of the option.
Exploration Work
The significant mineralisation identified within this project area by Royalco in the 2008/2009 exploration programmes has led to an Option Agreement with Vale as described above. Porphyry copper-style mineralisation has been encountered in all holes drilled to date. Infill grid soil sampling has been completed throughout Phase 1 and Phase 2 and the programme will shortly commence Phase 3. Drilling commenced on Phase 2 on november 10 2010.
The Gambang project area is strategically situated within the Central Cordillera of Northern Luzon in the geological terrane known as the Philippine Mobile Belt. The mineral endowment of the belt is high due to its tectonic setting, offering world class prospectivity.
Deposits immediately north of this tenement include Far Southeast, Lepanto, Victoria, Guinaoang and Suyoc. To the south of the tenement lies the old goldfields of Baguio and the porphyries at St Tomas/Santo Ni-o, a belt stretching approximately 50 kilometres, with Gambang covering the strategic and under-explored central portion.
Oxiana has been active in the Gambang area since 1995 and has conducted exploration comprising stream sediment and soil geochemical sampling, geological mapping, and geophysical surveys. This exploration has delineated seven target areas with porphyry copper-gold style mineralisation.
The Cableway Prospect is centred on the largest of a cluster of gold and copper anomalies that were defined by a soil geochemical survey. The surface alteration comprises minerals that are commonly observed at high-levels in porphyry copper-gold systems. Drillhole GBD-9, drilled at Cableway, yielded 0.27g/t Au and 0.22% Cu over a 60m interval down hole from surface, followed by another 20m interval grading 0.42g/t Au and 0.49% Cu. This drillhole shows evidence of grade increasing systematically at depth and offers significant potential to the west towards elevated geochemical sampling.
The Manga Prospect lies near the northeast boundary of the Gambang application area and south southwest of the Suyoc Mines region. It is a copper-gold breccia prospect that is developed within strongly clay-altered diorites. Reconnaissance stream-sediment and grid-based soil sampling by OPI generated both copper and gold anomalies in Manga Creek and the adjacent area.
PAO YABBE PROJECT
The Pao Yabbe project area is situated in the Southern Sierra Madre Ranges of Northern Luzon and adjoins the Didipio copper gold project of Oceana Gold Limited (reserves of 23.7MT @ 0.65% Cu and 1.8g/t Au)
The regional geology of the area is dominated by a sequence of early Tertiary age volcanics of alkaline composition. This sequence was intruded by suites of intrusives of both calc-alkaline and alkaline compositions in the mid-Tertiary. Base and precious metal mineralisation is associated with these intrusives. Modern mineral exploration commenced in the area in the 1980s and exploration by Oxiana commenced in 1998. Geochemical, geological and geophysical exploration programs have resulted in the delineation of three main prospect areas in the north of the project area, Ambedbed, Manidyo and Digyan, and one in the south, Yabbe.
There is good exploration potential for high-sulphidation style Cu-Au mineralization and deeper porphyry Cu-Au mineralisation within the Pao-Yabbe tenement areas.
A chip sample from the Manidyo vein assayed 49.42g/t Au, 348g/t Ag, 3.94% Cu , 1.7% As.