ROYAL RESOURCES LIMITED - ASX: ROY

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Description

Royal Resources Limited's is an Australian company focussing on iron ore, uranium and gold with tenements in Arizona and Colorado in the USA and in the Northern Territory, South Australia and Western Australia. At the moment the company's main focus is The Razorback Iron Ore Project is potentially a very large magnetite deposit that can use existing open-access rail and port infrastructure.

Razorback Iron Ore Project

The Razorback Iron Ore Project is potentially a very large magnetite deposit that has access to existing open-access rail and port infrastructure. The Razorback Ridge deposit was investigated by the South Australian Government in the late 1960s. Geological mapping, surface sampling, drilling, adit development, and metallurgical testing at that time identified outcropping magnetite mineralisation over a strike length of 4.5 kilometres and extending a further 10 kilometres to the east. Royal, through its 100% owned subsidiary Razorback Iron Pty Ltd, has secured the lease over the Razorback Ridge iron deposit. In addition, approximately 1,450 square kilometres of surrounding leases have been secured by Royal through an Option Deed with Goldus Pty Ltd (EL3927 and EL3997). The deed gives Royal the exclusive right to explore for, and develop, iron ore deposits in the Option area. This ground contains over 100 strike kilometres of untested magnetite host rock that provides Royal with significant exploration upside. Collectively, EL4267 and EL3997 constitute the Red Dragon area, while EL3927 is referred to as the Pualco Project both controlled 100% by Royal.

The Razorback area has the advantages of being close to existing and available rail and port infrastructure, hosting readily beneficiable mineralisation resulting in low contaminant magnetite concentrate, is likely to be low cost compared to its peers due to very low stripping ratio, easy grinding, and high yield, and is located in a resource-supportive regulatory jurisdiction with reduced Native Title, environmental, and social risks.

Royal is targeting 500 to 1,000 million tonnes of magnetite mineralisation at grades of 25% to 65% Fe[2] at, or along strike of, the Razorback Ridge area. On the 25th August, 2010 Royal announced a JORC compliant maiden Inferred Resource of 277Mt at 25.9% Fe[3]. Royal intends to fast track the deposit to feasibility study and production once resource definition work is completed and the proposed operation shown to be economically and technically viable.

WARRIEDAR JOINT VENTURE (Midwest, Western Australia)- IRON ORE

The Warriedar Joint Venture covers 137 square kilometres of the northern extensions of the Windanning Iron Formation in the Yalgoo-Singleton greenstone belt. Royal maintains a 40% ownership in the joint venture with Gindalbie Metals Ltd. owning 60%. Gindalbie is the manager.

Evaluation of the Shine DSO hematite prospect gathered pace during the last year with a second phase of drilling completed. Seven diamond holes, for a total of 584 m, were completed to gain metallurgical samples and in-fill data. The tenor of the Shine mineralisation continued with a consistent mineralised zone of +57% Fe mineralisation having continuity down dip and over a length of more than 700 m. It is still open to the north. Examples of the high grade zones drilled are:

hole SND028: 29m @ 65.27% Fe, 2.57% SiO2, 1.62% Al2O3, 0.038% P, and 0.012% S
hole SND006: 21m @ 64.76% Fe, 2.49% SiO2, 0.96% Al2O3, 0.118% P, and 0.012% S.

The calculation of a resource for Shine was delayed because of ambiguity in mineralised lens continuity. A third phase of drilling is planned to resolve this ambiguity.

Davis Tube Recovery testing of the magnetite zone, under the Shine hematite mineralisation, showed it to be amenable to beneficiation. DTR testing returns the magnetite component of the rock. An indicative result is from hole SND008 which returned 220m @ 70.17% Fe, 2.02% SiO2, 0.009% P, and 0.069% S at a per cent weight recovery of 37.17%. Recoveries up to 63.1% were obtained in the prospect. This ore could augment Gindalbie’s Karara magnetite plant feedstock.

In September 2008, the Warriedar JV commissioned an Economic Evaluation Study on the Shine DSO hematite prospect. This study, a precursor to a definitive feasibility study, was completed in November and indicated that the Shine prospect has marginal economic viability under a road transport scenario. This situation was exacerbated with the recent reduction in the iron ore reference price. The joint venture partners have agreed to delay a decision on bringing the project to production; awaiting an improvement in the economic conditions. The progress of Gindalbie’s Karara Magnetite Mine development is keenly monitored as this may deliver rail access to the project.

In the meantime, pre-development work continued at Shine. Fauna, flora, soils, dust, and groundwater investigations are ongoing in support of a submission to EPA WA to support the ARI level of assessment of the Shine development.

At Lister prospect, 6 km south of Shine, a total of 29 RC holes, for 2,735 metres were completed. This work showed Lister to contain similar mineralisation to Shine, though at lower grades and with narrower widths: Hole SND028: 29m @ 64.58% Fe, 2.56% SiO2, 1.61% Al2O3, 0.038% P, and 0.009% S. This ore could be used to blend with Shine ore to ameliorate some of the deleterious elements.

Elsewhere, geophysical surveys, including high resolution aeromagnetics and close spaced ground magnetometer surveys have been done. These will complete the coverage of the greenstone belt and assist in structural mapping, detrital iron detection, and elucidation of small scale lithologies across all prospects. Geological mapping and outcrop sampling continue to highlight additional high grade hematite prospects. Northern and Southern Aroha, North Shine, Main Track, Magnetic Ridge and East Brak Prospects all returned +57% Fe samples from outcrop and are planned to be followed up with drilling during the next year. These areas may provide valuable satellite pit ore to a Shine development.

YARRINTREE IRON ORE (Pilbara, Western Australia)- IRON ORE

The Yarrintree Project is covered by Exploration Licence Application ELA47/1927. This application is currently pending granting following the very successful application of Royal’s in the ballot held in July 2008 by the Warden’s’ Court. There were seven other applicants for this highly sought after area in the Pilbara. Royal is very pleased with the outcome. The tenement comprises 11 graticule blocks covering approximately 33 square kilometres and with much of the area underlain by the Hamersley Group. The Yarrintree Project has the potential for both Brockman style hematite and detrital style iron ore resources. In the next quarter (July – September) Royal will progress the application by undertaking all the necessary regulatory approvals for having the tenement granted.

PLATEAU IRONSTONE (Midwest, Western Australia)- IRON ORE

A follow up reverse circulation drilling program at the Plateau prospect in the Midwest Iron Ore Province of Western Australia comprised of 23 holes with the primary objective of assessing an area of about 1 km2 where the initial drilling recorded near surface hematite ironstone enrichment. The spacing of the holes of the first drill program was about 500 metres.

Royal is very encouraged by the results of the drilling and will continue to define and extend the ironstone mineralisation of the Plateau prospect. The recent RC drilling comprised holes 100m – 300m apart to assess the lateral continuity of the ironstone/hematite mineralisation. The results of the drilling are very positive with 5 holes recording encouraging width and grades of mineralisation. The more significant assay results for these holes are provided in the Table below.

An area of 0.8 square kilometres to a depth of 5 metres of the Plateau project has the potential to contain approximately 12-14 million tonnes of pisolitic hematite/–goethite material. This is our first small target within the broader parameters of the Plateau prospect which covers about 12 km2. Of significance are the low phosphorous levels potentially making the mineralisation highly suitable for blending with high phosphorous ores.

MINDY IRON ORE (Pilbara, Western Australia)- IRON ORE

The Mindy Project (E47/1615) is located about 55 kilometres to the north east of Newman and covers an area in excess of 200 square kilometres. There has been very little prior exploration in this area as it is extensively covered with alluvium. In May 2008 a planned 6 hole program across an east-west track through the central part of the tenement commenced however the program was curtailed after 4 holes due to a rig failure. The assay results from the holes that were completed did not record any significant values. There remains one further area located in the extreme south west of the tenement that warrants more detailed assessment and this will be undertaken in the next quarter (July – September 2008).

TALLERING (Midwest, Western Australia)- IRON ORE

In August 2006 Royal completed an airborne magnetic and radiometric survey with the results highlighting an area of geological complexity and therefore of considerable exploration interest. One of the areas of immediate interest was a large magnetic high in the western area of the tenement located about 4.0 kilometres east of Tallering Peak iron ore mine presently being operated by Mt Gibson Iron Limited. A field reconnaissance of the area and a RC drilling program in late October 2006 confirmed the presence of a wide “Banded Iron Formation” (BIF) unit comparable to and an extension of the Tallering Peak BIF. Four reconnaissance holes (TPRC001 – TPRC004) were completed with two holes intersecting the BIF unit. In the western area of the anomaly the BIF unit was magnetite rich in excess of 50 metres wide. With over 4 kilometres of strike there is potential to locate areas of hematite enrichment similar to that being mined at Tallering Peak. The Tallering project is also highly prospective for gold and base metals and a once the current review of prior exploration data is completed field programs will be planned to assess areas with identified prospectively.

MARILLANA & PERISHING IRON ORE (Pilbara, Western Australia)- IRON ORE

The Marillana Bridge and Perishing Project areas are located approximately 180 kilometres to the west of Newman and are being explored for prospective iron ore resources. Surface rock chip sampling within the Marillana Bridge tenement had recorded a number of assays > 60% Fe and a small number of reconnaissance drill holes were planned to test below this surface iron enrichment. The Perishing project area is covered entirely with transported sediments and a single traverse of 200 metre spaced holes across the centre of this tenement was planned to test the basement stratigraphy and whether there was any prospective Channel iron deposition within the broad valley.

In April 2008 a reconnaissance drilling program was completed in both project areas. The two holes within the Marillana Bridge project tested the area where rock chip sampling indicated iron enrichment. However, the assay results from the drilling confirmed that the iron enrichment extended only to a depth of about 5 metres from surface. Within the Perishing Project a total of nine (9) holes were completed across the centre of the tenement with 200 metre hole spacing. The depth of transported cover across much of the area was 20 - 25 metres comprising predominantly lateritic colluvium and alluvium. A majority of the holes intersected the basement stratigraphy which comprised siliceous iron formation units with intercalated mafic and sedimentary units. Of the nine holes completed there was no observable evidence of iron enrichment or alteration.

WINDANING (Mid West, Western Australia)- IRON ORE

Windaning Tenement, Exploration Licence Application ELA 59/1522, was acquired by Royal through a successful ballot held in September 2008. The tenement is located in the Yalgoo-Singleton Archaean greenstone belt of the emerging Mid West iron province. This belt includes the banded iron formation (bif) that hosts the significant iron resources of Karara, Mungada, and Blue Hills. The ballot gives priority to Royal’s application and the process of granting the licence is now underway.

The tenement is located approximately 15 kilometres to the north and along strike of Gindalbie Metals Limited’s Karara Magnetite project and 4.5 kilometres north of Midwest Corporation Limited’s Mungada West Prospect. The latter has a resource grading in excess of 60% Fe hematite ore. Most importantly, it lies 30 kilometres south of the Warriedar JV’s Shine Prospect, a joint venture between Gindalbie (60%) and Royal (40%). The ELA covers an area of 6 square kilometres and contains in excess of 3.5 kilometres strike length of prospective bif.

NGALIA (Northern Territory, Australia)- URANIUM

(ROY Earning 60%, ALZ 40%)

The Ngalia Basin is host to the sandstone hosted Bigrlyi uranium deposit. This deposit, owned by Energy Metals Ltd, Paladin Energy Ltd, and Southern Cross Exploration NL, has an Inferred and Indicated Resource of around 8,000tU @ 0.13% U3O8. The Ngalia tenement lies 45 km along strike to the southwest, covering 28km of the concealed but prospective Mt Eclipse Sandstone, host to the Bigrlyi deposit. Royal submitted an application for drilling co-funding under the Northern Territory’s Bringing Forward Discovery Drilling Collaboration initiative and was successful in attracting 50% funding for a diamond drilling programme. Once the access agreement is finalised with the Central Lands Council, anticipated to occur by the end of 2009, this drilling, along with geophysical surveying and additional RC drilling, will commence.

GEORGE (Northern Territory, Australia)- URANIUM

(ROY Earning 60%, ALZ 40%)

George is located 95 km south of Darwin in the Northern Territory immediately southwest of Adelaide River. It covers 84 km2 and lies within the Pine Creek Orogen, host to the Rum Jungle, South Alligator and East Alligator uranium fields with the historical Rum Jungle Uranium Field 30 km to the north. The tenement contains the historical Adelaide River and George Creek Mines, both developed on vein-style uranium deposits. During the mid-1950’s Adelaide River Mine produced uranium ore at an average grade of 0.5% U3O8 while George Creek produced at an average grade of 0.26% U3O8. Both have historically defined mineralisation remaining.

Previous work by Aldershot included airborne radiometric surveying, geological mapping, outcrop sampling, and initial diamond drilling. Surface sampling returned results up to 4.0% U3O8. Drilling at Adelaide River returned a best intersection of 7.1m @ 0.35% U3O8, (7.7 lb/t) including 4m @ 0.72% U3O8 (15.8 lb/t) and at George Creek a best intersection of 1m @ 0.48% U3O8 (10.6 lb/t) was obtained. Royal plans to undertake ground radiometric surveys and follow-up drilling at both the Adelaide River and George Creek prospects. Ongoing work, in the form of surface sampling and reconnaissance mapping, will also be undertaken over the rest of the tenement in the coming year.

WATERHOUSE WEST (Northern Territory, Australia)- URANIUM

(ROY Earning 60%, ALZ 40%)

Waterhouse West is in the Rum Jungle uranium field and less than 2 km from the south-west of Rum Jungle Creek South Mine, the largest of the Rum Jungle mines. The tenement covers a 10 km strike length of the highly prospective Coomalie contact and 6 km of the Riverside Anomalous Zone (RAZ) defined by UAL in 1981. The target is unconformity-style uranium. Future work will be focussed on outlining areas for definitive drilling within the RAZ by RAB drilling. Both the George and Waterhouse West tenements have taken on increased significance with Energy Resources Australia recent upgrading of resources at their Ranger uranium mine. The newly discovered Ranger Deeps, a fault controlled mineralised system, indicates that the unconformity-related Ranger orebody is closely associated with a deep seated, long lived mineralised fault system. George lies adjacent to the Adelaide River Fault and Waterhouse West lies adjacent the Giant’s Reef Fault.

ABC (Northern Territory, Australia)- URANIUM

(ROY Earning 60%, ALZ 40%)

ABC is 37 km2 application located 16 km to the north-east of the town of Katherine. The target is a vein/unconformity style in the McAddens Creek Volcanic Member of the Kombolgie Sandstone. The prospect was drilled in 1954 by the BMR with intercepts of up to 4.29% eU3O8 (95.6 lb/t). There has been no modernexploration undertaken in the area since. ABC was acquired by Royal as part of the Heads of Agreement signed with Aldershot Resources Ltd (“ALZ”) on the 16 February 2009. Refer to the ASX Announcement titled Royal Secures Northern Territory Uranium Projects for acquisition details.

EGNAR, LA SAL, WRAY MESA (Colorado, USA)- URANIUM

The Lynx Royal JV controls in excess of 198 km2 of claims in three major groupings: Wray Mesa, La Sal, and Egnar Projects. The target is sandstone hosted tabular uranium hosted in the palaeochannel-dominated Salt Wash Member of the Jurassic Morrison Formation. During the year, the main activities that were pursued were:

1. a drilling campaign of 39 holes for 5,614m,
2. sourcing of historic drilling information
3. testing the first application of a high resolution aeromagnetic and radiometric survey in the Uravan, and
4. assessment of all claims as a prelude to claim reduction

The drilling campaign produced several mineralised intercepts. At Egnar the most encouraging was 3.05m @ 435ppm U3O8 and 2,043 ppm vanadium from 120.4m, including 1.52m @ 690ppm U3O8 and 3,610 ppm vanadium from 120.4m. A zone of thin elevated uranium mineralisation was obtained in the Wray Mesa Project, with a peak value of 0.3m @ 980ppm eU3O8 from 134.1m. These results indicate that the areas tested certainly contain uranium and all thats to be done is to find the centre of the mineralisation. Drilling results from work carried out by Union Carbide and the Atomic Energy Agency in the 1970’s and 1980’s were obtained for the northern Egnar area. These have been used as the basis for an interpretation of the high resolution aeromagnetic survey completed over Egnar in late 2008, the first such survey ever undertaken in the Uravan Mineral Belt. The survey showed that favourable uranium trap sites may be directly detectable by the method, based on the historic drilling results. The interpretation has produced a number of high priority targets which are planned for drilling over the next year. Both the drilling and aeromagnetic data were used as inputs into area assessment which, together with reviews of all three project areas will result in the disposal of low priority claims.

ARIZONA STRIP PARTNERS (Arizona, USA)- URANIUM

The Arizona Strip Partners is a joint venture with Energy Fuels Resources, the manager, with the LRJV is earning 50% into this project. The target being pursued by the ASPJV are the compact, but high grade collapse breccia pipes. In July, Royal announced that it had successfully renegotiated the joint venture conditions. An adjustment to the terms had to be made to recognise a reduction in claims caused by resolution of conflicted land held by the original owner, Uranium One. EFR offered Royal an increase in the earn-in period from three years to five years and a reduction in the earn-in amount from US$2 million to US$1.9 million. In response to the Global Financial Crisis, Royal negotiated a further increase in the earn-in period to six years with a resultant reduction in minimum exploration expenditure from US$470,000 to US$150,000 (previously reported as US$255,000).

The ASPJV advanced the project on a number of fronts. A major shift in exploration methodology was promoted by Royal, with wildcat drilling being replaced by modern exploration techniques. An airborne electromagnetic survey, using the VTEM method, was flown in order to attempt to directly detect the existence of mineralised breccia pipes. This was, in part, a response to the completion of drill testing of the Weap Pipe last year. Initial deep drilling of the Weap Pipe failed to test the target. The final hole intersected the target zone and confirmed the pipe was barren. The VTEM is expected to not only map the pipe geometry at depth, but directly test for mineralisation by detecting the capping pyrite zone. The AEM data are now being used to prioritise this year’s drilling programme. Three dimensional seismic reflection surveying is also being assessed as a possible direct targeting tool to follow-up the AEM data. The ASPJV continues to seek additional claims for exploration. While economic conditions have made it prudent for the joint venture to withdraw from costly opportunities, those same conditions have uncovered other prospects on which negotiations are continuing.

THIRTYNINE MILE VOLCANIC FIELD (Colorado, USA)- URANIUM

The Geolynx Joint Venture is a partnership between Royal (64%), Lynx (20%) and Geomininc (16%) with Royal the manager. The joint venture covers 200 claims in the Thirty Nine Mile Volcanic Field which has been an historic producer. Work on the JV has been curtailed for the most of the past year pending the outcome of County opposition to uranium mining in this district. It is anticipated that such opposition will diminish once exploration protocols are put in place by the County. In the meantime, historic drilling data for the Crampton Claims have been obtained and a ground spectrometer survey undertaken. Both are now being used to assess possible drilling targets for the coming year.

WATER TANK PROJECT (Norseman - Western Australia)- GOLD

The Water Tank Gold project is located about 5 kilometres to the east of Norseman in the Eastern Goldfields. Although the project is one of Royal’s more prospective gold projects is occurs in isolation and away from our other major project areas. An aircore drilling campaign was conducted in the second quarter of 2010 on the property to drill test three prospects as a followup on past drill results. The programme targeted untested structural corridors identified from the interpretation of re-processed aeromagnetic data and previous drilling results. These include narrow but high grade intercepts of 1m @ 12.2g/t gold from 24m (WTAC085) and 1m at 9.2g/t from 70m (WTR006) at the Empire Rose Prospect and lower grade but thicker intercepts of 8m at 1.77g/t gold from 24 metres (WTRC025) at the Jezebel Prospect. A total of 46 holes for 1,413m was drilled. Assays are awaited.

BARON ROTHSCHILD PROSPECT (South Murchison - Western Australia)- GOLD

The Baron project is located 80 kilometres north east of the Rothsay project and includes the historic Pinyalling Mining Centre, the Baron Rothschild gold mine, sections of the Pinyalling Iron Ore project and the Wildcat platinum and palladium prospect.

The first mining recorded at the Baron project was at the Pinyalling Mining Centre where 958 ounces of gold was produced from 1902 to 1939. Previous exploration within the project has targeted a wide range of minerals – gold, base metals and PGE but the majority of the detailed work was on the Baron Rothschild gold prospect. Historical drilling of this prospect defined an inferred gold resource of 800,465 tonnes at 2.39 g/t gold for 61,560 ounces (JORC compliant resource estimate). The gold mineralisation is associated with pyrite and pyrrhotite within BIF and occurs within a dilational jog with the main zone of mineralisation occurring over a strike length of 500 metres.

Recent geological modelling of all historical drill information by Royal Resources has identified exploration opportunities not previously recognised or interpreted from the Baron Rothschild drill hole data. The potential exists for high grade ore within a poorly tested plunging ore shoot. Two drill holes, 120 metres apart have recorded intersections of 12 metres at 4.95 g/t gold and 12 metres at 6.8 g/t gold within the interpreted shoot. The mineralisation remains open at depth and will be drilled tested after listing.

Mine For

iron ore, uranium, gold

Location of operation(s)

USA, Western Australia, Northern Territory, South Australia

Address

Level 3, IBM Building, 1060 Hay St
WEST PERTH, WA, AUSTRALIA

Phone

(08) 9322 8542

Email

Website

http://www.royalresources.com.au/

Last Updated

10/02/2011