Tanami nets Jaguar, chases Coyote

Aussie explorer Tanami Gold has netted an interest in the exciting Jaguar base metals discovery but also has its sights firmly on AngloGold's high-grade Coyote gold project.

PERTH -- Aussie explorer Tanami Gold [ASX:TAM] has netted an interest in the exciting Jaguar base metals discovery but also has its sights firmly on AngloGold's high-grade Coyote gold project.

Tanami's strategic 15 percent investment in fellow junior Pilbara Mines [ASX:PIL] at the modest cost of A$1.1 million signals the onset of an acquisition push by Tanami and could ultimately be a forerunner to a full merger should Pilbara's flagship asset, Jaguar, become a commercial mining proposition.

In addition, Tanami is hoping to pick up the undeveloped Coyote deposit in the Tanami-Arunta province from AngloGold, but that won't be as simple as the Pilbara transaction.

Funds from the Tanami share placement (12.34 million Pilbara shares at A$0.09 cents each) will go mainly towards the planned feasibility study (FS) into the approximate A$45 million (standalone) development of Pilbara's wholly-owned Jaguar deposit in the north-eastern goldfields of Western Australia, and the purchase will result in changes at the helm of Pilbara.

A paw on Jaguar, which has a current inferred underground polymetallic resource of 1.72 million tonnes grading 3.6 percent copper, 11.9 percent zinc, 127g/t silver, 0.9 percent lead and 0.18g/t gold, gives Tanami exposure to an advanced project as well as a tenement package located in one of WA's most prospective mineral provinces. "Tanami rates the potential of this area very highly, with Jaguar ... just 30km south-south-east and on the same structure as the LionOre Mining discoveries at the Thunderbox gold mine and the Waterloo and Amorac nickel deposits," said Tanami's managing director, Denis Waddell, who will take over from John Davis as Pilbara's managing director, while Ross Smith, whose direct and associated interests account for around 14 percent of the Pilbara share register, also vacates the Pilbara board.

Better known for its work in the frontier Tanami-Arunta region that straddles WA and the Northern Territory, where it has a large landholding, Tanami sees Jaguar as a stepping stone. Waddell told Mineweb Tanami wasn't betting the farm on Jaguar/Pilbara at this point and would take things one step at a time, referring to the FS-related evaluation, delineation and testing that still had to be done. As part of the FS, preparations are being made to carry out further drilling aimed at upgrading and increasing the Jaguar resource.

"The decision to invest in Pilbara is a result of our ongoing assessment of acquisition opportunities aimed at taking Tanami Gold to producer status," he said. "It in no way diminishes our commitment to the Tanami province, but rather presents an opportunity to provide medium- to long-term funding for our ongoing exploration and development in that region."

Another perhaps bigger catch for Tanami that, if successful, would certainly galvanise its Tanami-Arunta gold production strategy and could lead to a market re-rating is the capture of Coyote in WA. AngloGold has deemed this project - which hosts a latest published inferred resource totalling 1.3Mt at 6.89g/t for 300,000oz of gold - too small for its global investment parameters. "Should we be the successful bidders, this acquisition will complement our Larranganni gold resource (2.3Mt at 2.4g/t for 175,000oz) located just 35km to the north," said Waddell.

However, the sale by tender of Coyote promises to be a hotly contested affair, if the number of enquiries made at AngloGold's booth at the recent Diggers & Dealers Forum is anything to go by. Cash-rich juniors, and even Newmont Mining Corp, are likely bidders which may force Tanami out of the hunt.

Newmont's position in the nearby Tanami gold treatment plant (on the NT side of the Tanami) could be an added incentive to pursue Coyote. The US giant last year inherited a 60 percent stake in the Tanami plant following its takeover of Normandy Mining, which had been in the process of buying out Tanami partner Otter Gold. Newmont, which already has The Granites plant in the Tanami, currently treats ore from its Groundrush mine through the joint ventured Tanami plant and might take a shot at snaring Coyote as a future source of mill feed. AngloGold owns the balance of the Tanami plant and is set to also divest that, which again Newmont might be interested in snapping up.

Through their respective takeovers of Normandy and Homestake, Newmont and Canadian-based global gold producer Barrick Gold Corp (7.5 percent shareholder of Tanami) also have big Tanami-Arunta groundholdings, the latter mainly in joint venture with Tanami. It also has JVs with Newmont.