NORTHWEST RESOURCES LIMITED - ASX: NWR

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Description

Northwest Resources Limited is an emerging Australian mining company listed on the Australian Securities Exchange (ASX: NWR). The company was listed in 2004 to acquire and explore a portfolio of mining tenements located in the Nullagine goldfield in the eastern Pilbara region of Western Australia. As a result of significant exploration success, Northwest has commenced pre-feasibility studies on developing its Nullagine Gold & Antimony Project. The company has a tight capital structure, is well funded and has no debt.

Blue Spec Shear

The Blue Spec Shear is an east-west trending shear zone which outcrops over 16kms within the Nullagine Gold & Antimony Project area. The shear zone is typically a narrow, sub-vertical band of strongly sheared wall rock and quartz reefs, which broadens in a number of places. A number of splay faults have been identified along the shear and these have been shown to be important for focusing high-grade mineralisation.

The shear hosts two of the highest grade gold deposits in Australia and is relatively unexplored over its entire strike length.

High-grade gold mineralisation along the shear is associated with quartz-carbonate-pyrite veining and stibnite (the sulphide form of antimony). The primarily shear vein-hosted mineralisation usually forms in steeply plunging lenticular shoots that display strong plunge continuity. Within the project area, the shear currently hosts three deposits:

* Blue Spec (253,000 oz @ 24.3 g/t Au and 5,550t Sb @ 1.72%)
* Golden Spec (35,000 oz @ 32.2 g/t Au and 500t Sb @ 1.40%)
* Green Spec (10,000 oz @ 3.2 g/t Au and 1,100t Sb @ 1.10%)

Northwest has completed over 21,000m of RC drilling and 22,000m of diamond drilling mainly focused on the 5km long strike between Golden Spec in the west and Green Spec in the east. Northwest’s exploration efforts have extended the depth of Blue Spec from 320m vertical to 850m, Golden Spec from 120m vertical to 370m and led to the discovery of Green Spec and the identification of high quality prospects at Orange Spec, Red Spec and Silver Spec.

There is excellent potential to discover further high-grade shoots along the extent of the Blue Spec Shear. In addition, recent drilling has confirmed the presence of high-grade, near-surface mineralisation along the shear which could support open pit operations prior to progressing to the underground development of the Blue Spec and Golden Spec deposits.

Resource: 253,000 oz @ 24.3 g/t Au and 5,550t Sb @ 1.72%

The Blue Spec deposit was discovered in 1906 and named after the winner of the 1905 Melbourne Cup. The mine suffered from disjointed ownership and inadequate capital until Anglo-American developed a new shaft and decline and mined down to the 320m vertical level between 1976 and 1978.

The strike length of the Blue Spec ore body varies from 120m to 160m but has not been closed off. Mineralization is hosted in quartz veins that average 1.5m to 3.0m in width but which are known to blow out to over 8.0m in certain zones. It is expected that these widths will allow mechanized mining of the deposit and result in comparatively less dilution. The deposit has a near vertical plunge and demonstrates excellent continuity.

Recent drilling at Blue Spec has returned moderate grade gold intersections of 4m @ 4.49 g/t Au (incl. 1m @ 8.74 g/t Au) from 121m and 2m @ 3.7 g/t Au (incl. 1m @ 5.13 g/t Au) from 42m located approximately 50m to the west of the modelled position of the remnant ore in the historical upper levels. The position of these intersections suggest that the interpreted strike of the Blue Spec deposit at depth may be significantly extended by further drilling with positive implications for potential underground development. The Blue Spec resource is divided into the Upper Zone and the Lower Zone based on contained metal and drilling density.

* Upper Zone (320m to 440m) (121,000 oz @ 42.5 g/t Au and 2,350 t Sb @ 2.61%)
* Lower Zone (440m to 850m) (132,000 oz @17.5 g/t Au and 3,200 t Sb @ 1.38%)

The Upper Zone contains greater than 1,000 ounces per vertical metre (opvm) of gold over 120m immediately below the existing underground development. Approximately 65% of this zone exceeds 1,100 opvm of gold.

The current grade estimation within the Lower Zone has been adversely affected by a combination of lower grade significant intercepts as well as a relatively low number of drill holes compared to the Upper Zone. The amount of drilling Northwest has been able to direct at the Lower Zone has been constrained by the significant time required to complete deep intersections from surface and accordingly the gold grade estimation in the Lower Zone may not reflect the true potential of the Blue Spec ore body at depth.

Northwest has identified several areas within the Lower Zone which it predicts could have potential for higher grade mineralisation if subjected to additional drill testing. This could contribute to an upgrade of the resource estimation within the Lower Zone. Extensional diamond drilling of the Lower Zone has recorded some very significant intersections, including 2.5m @ 156.2 g/t Au & 14.75% Sb from 715m down-hole.

Northwest has also identified a significant amount of remnant mineralisation potential within the Remnant Zone (the historical upper levels of the Blue Spec underground). This is thought to reflect a combination of poor development in the historical upper levels of the underground and a poor understanding of the ore body morphology with depth.

A target mineralization of approximately 86,000-100,000 tonnes grading 14 g/t – 18 g/t for 45,000 - 50,000 oz Au has been estimated for the Remnant Zone.

Golden Spec

Resource: 35,000 oz @ 32.2 g/t Au and 500t Sb @ 1.40%

The Golden Spec deposit lies 950m west of Blue Spec and was discovered in 1982. It was mined by Chase-Minproc in late 1980’s to a depth of 120m. The current JORC resource does not include any remnant ore from historical upper levels at the deposit.

The deposit consists of three separate shoots (Main, Western & 3400) which have a strike extent of 350m along the shear. Similar to Blue Spec, the mineralization is hosted in quartz veins that average 1.0m to 2.5m in width which would also support mechanized mining of the deposit. High grade gold mineralization is variously associated with the presence of stibnite.

Recent drilling by Northwest to test for near surface gold and antimony mineralisation between the Main and Western shoots at Golden Spec returning outstanding results including:

* 3m @ 21.10 g/t Au & 6.97% Sb from 14m (incl. 2m @ 31.10 g/t Au & 10.20% Sb)
* 5m @ 14.0 g/t Au & 3.67% Sb from surface (incl. 3m @ 21.36 g/t Au & 5.95% Sb)
* 2m @ 10.19 g/t Au from 14m (incl. 1m @ 18.35 g/t Au)
* 4m @ 5.73 g/t Au from 16m (incl. 1m @ 18.35 g/t Au)
* 2m @ 8.71 g/t Au from 22m (incl. 1m @ 13.20 g/t Au)

Northwest believes that further drilling directed at this near surface zone has the potential to add significant additional mineral resources.

Green Spec

Resource: 10,000 oz @ 3.2 g/t Au and 1,100t Sb @ 1.10%

The Green Spec deposit was discovered by Northwest in 2006 and lies 3.5kms east of Blue Spec. The discovery of Green Spec is very significant as it demonstrates the potential of the Blue Spec Shear to host additional high grade gold-antimony deposits along its 16km extent.

The Green Spec deposit comprises two lodes, an east-west trending gold lode along the main Blue Spec Shear, and an east-north-east trending antimony lode which has been interpreted as a splay structure similar to that seen at Blue Spec. The separation of gold and antimony into the two lodes suggest that the deposit is structurally immature compared to Blue Spec and Gold Spec, which has had more time to develop high-grade mineralisation.

The deposit has a strike length of 130m, and has been extended from surface to almost 200m vertical depth. The deposit remains open at depth and along strike. The Green Spec resource is a lower grade and higher tonnage deposit relative to Blue Spec and is amenable to open pit mining.

Orange Spec

The Orange Spec prospect was identified by Northwest in 2010 and is a new zone of high-grade gold mineralisation located 300m west of Green Spec. Drilling has returned outstanding results including:

* 2m @ 26.30 g/t Au from 44m
* 4m @ 6.0 g/t Au from 72m (incl. 1m @ 18.40 g/t Au)
* 2m @ 9.30 g/t Au from 40m (incl. 1m @ 17.40 g/t Au)
* 7m @ 2.81g/t Au from 33m (incl. 1m @ 10.50 g/t Au)

The mineralisation is associated with quartz-carbonate veining over a strike length of 100m and at vertical depths of 40-60m. The high-grade results are not reflected in shallow drilling vertically above the mineralized zone.

Red Spec

The Red Spec prospect was identified in 2007 and is located 200m east of Blue Spec. The mineralisation at Red Spec near surface and hosted in sub-vertical, stacked vein sets and is characterised by gold-only metal content. Northwest expects to calculate a maiden JORC resource at Red Spec to be included in the eventual updating of the mineral resource estimate for the project.

Camel Creek Trend

The Camel Creek Trend is located 5kms south of the Blue Spec Shear and runs broadly parallel to it over 30kms. The trend contains a number of historical workings within the Nullagine Gold & Antimony Project area.

The mineralisation on the trend is quite distinct from the mineralisation found on the Blue Spec Shear. It does not occur along a single shear but is hosted by stock work and sheeted vein systems in fault controlled settings. Gold mineralisation is near surface and characterised by medium grades (2-5 g/t) but also exhibits high grade (>5g/t) plunging shoot components. No stibnite occurs on the Camel Creek Trend.

Within the project area, the trend hosts four near surface deposits amendable to open-pit mining:

* Roscoe's Reward (20,000 oz @ 2.1 g/t Au)
* Round Hill (9,000 oz @ 4.3 g/t Au)
* Junction (8,000 oz @ 3.4 g/t Au)
* Little Wonder (10,000 oz @ 1.87 g/t Au)

Within a 5km radius of the Junction deposit, a further three deposits have been identified on the Camel Creek Trend (but not on Northwest leases) with JORC resources of approximately 217,000 oz gold. Northwest has completed over 31,000m of RC drilling along the Camel Creek Trend. This strong foundation of drilling data has provided Northwest with an excellent basis for further discoveries.

HYMAP survey

Northwest considers that the Camel Creek Trend has significant additional exploration potential within the project area, highlighted by the results of Northwest’s Portable Infrared Mineral Analyser (PIMA), Analytical Spectral Device (ASD) and airborne hyper-spectral survey (HYMAP) analysis directed at facilitating remote detection of gold-bearing systems within the project area.

Northwest conducted PIMA and ASD analysis of down-hole drill chips as part of the JORC-resource drill out of its Camel Creek Trend deposits, testing every 5th metre of RC drilling to produce over 17,000 PIMA/ASD drill-chip spectra.

Northwest then commissioned a HYMAP survey over the entire Mosquito Creek basin (which hosts the Nullagine goldfield) to acquire a high-resolution remote alteration dataset. The HYMAP survey produced 5m x 5m resolution imaging over the Nullagine goldfield, which contains over 75% outcrop.

Subsequent filtering of the HYMAP survey results for proximal gold signals identified from the down-hole PIMA work was undertaken. Significantly, the HYMAP survey generated an almost 1:1 correlation between the PIMA signatures from down hole datasets at the deposits and the JORC resource outlines.

The HYMAP survey identified numerous significant alteration anomalies within the Nullagine goldfield indicating new gold targets and extensions of existing JORC resources.

Exploration targets

Northwest conducted a follow up drilling on the Federation HYMAP target in September 2009 which lies 700m south of the Junction deposit. The short program tested the 900m HYMAP target and returned the strong results of 3m @ 15.67 g/t Au, 2m @ 5.57 g/t Au and 1m @ 5.1 g/t over the strike length of the anomaly and all within 50m from surface.

Mine For

gold, antimony

Location of operation(s)

Western Australia

Address

Se 8, Level 2, 325 Pitt St
SYDNEY, NSW, AUSTRALIA

Phone

(61 2) 9267 7661

Email

Website

http://www.nw-resources.com.au

Last Updated

7/3/2011