SIPA RESOURCES LIMITED - ASX: SRI

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Description

Listing on the Australian Stock Exchange in 1987, Sipa Resources Limited (ASX Code: SRI) is a Perth-based Australian gold, base metals and nickel exploration company with a proven track record. Sipa in the 1990s found the Panorama Copper-Zinc VMS Province and the Ashburton Gold Province, where the company produced profitable gold to mid 2004 from its discoveries.

THADUNA COPPER PROJECT (Sipa 100%)

Sipa has been exploring at our 100% owned Thaduna Project in sedimentary rocks of the Yerrida Basin for some five years, based broadly on the premise that the area is prospective for large copper, and other metal, deposits perhaps analagous to the giant Mt Isa copper deposit. We believe that the historic copper mines of the district – Thaduna, Green Dragon, Rooney and Ricci Lee – is the ‘smoke’ that indicates there may be much larger deposits nearby. In May of last year Sandfire Resources NL discovered the high grade DeGrussa Copper-Gold Deposit, followed by the nearby Conductors 1, 4 and 5 lenses at their Doolgunna Project. The total resource presently stands at:

* 10.7 million tonnes grading 5.6% Cu, 1.9 g/t Au & 15 g/t Ag

DeGrussa is hosted by mafic volcanic and intrusive rocks of the Bryah Basin that adjoins the Yerrida Basin, but also appears associated with the Jenkin-Goodin Fault Complex of regional-scale major, and in part basin-bounding, structures.

Sipa’s Thaduna Project western boundary is about 15 kilometres east of Sandfire’s eastern boundary and about 25 kilometres easterly of DeGrussa. Our ground contains about 35 kilometres of strike of the Jenkin Fault.

Since 2005 we have geologically mapped and rock chip sampled, taken 3,500 geochemical samples from shallow auger and vacuum holes, drilled 3,200 RAB/ Aircore holes for about 28,000 metres, drilled 8 RC holes for 1,770 metres, flown airborne magnetics/radiometrics and VTEM electromagnetic surveys. This work has been designed to systematically test structural corridors interpreted as being prospective. Many copper anomalies have been detected from the auger/vacuum, and deeper RAB/Aircore, drilling and targeted drilling at our old Rooney and Ricci Lee mines have produced a number of intersections like:

* THR181 at Rooney – 14m @ 3.8% Cu, from 2m, in 2007
* THC003 at Ricci Lee – 16m @ 2.5% Cu, from 118m, in 2010

We are currently near the middle of a 25,000 metre RAB/Aircore programme to:

* follow-up numerous auger/vacuum geochemical anomalies
* follow-up bedrock copper anomalies from earlier RAB/Aircore drilling and VTEM conductors from the airborne survey
* continue first-pass systematic RAB/Aircore geochemical drilling of zones within the Project considered prospective.

In addition, we have planned a 700 metre deep diamond drill hole into a large, and unusual for the Yerrida Basin, magnetic anomaly about 10 kilometres north of the old Thaduna copper mine. The anomaly may be caused by an igneous intrusion into the Basin and, as such, may be prospective for associated porphyry copper-gold, Iron Oxide Copper Gold or skarn basemetal mineralisation. The Western Australian State Government is providing half the direct drilling cost of this hole through the Co-Funded Government – Industry Drilling Programme.

The northern part of the magnetic anomaly is partially overlapped by an eight kilometre long coincident copper-gold (with associated tellurium, silver, bismuth and arsenic) auger geochemical anomaly within a black shale sequence discovered by CRA Exploration in the late 1980’s, known as the Johnson’s Cairn Prospect. This Prospect is also coincident with part of the Jenkin Fault. The current drilling will test two areas about three kilometres apart where recent Sipa resampling of CRAE drilling returned up to 0.3% copper, 30 ppb gold, 1 ppm tellurium, 1.4 g/t silver, 8 ppm bismuth and 110 ppm arsenic, perhaps indicating some focus within the black shale sequence.

Following completion of the current RAB/Aircore programme, decisions will be made on follow-up RC drilling of recent encouraging RC holes at Rooney, Ricci Lee and hole THC008 at a VTEM anomaly east of the old Thaduna mine, along with targets developed from the current drilling programme.

ILGARARI COPPER PROJECT (Sipa 100%)

Sipa selected the Ilgarari area in 2006 for similar reasons to our Thaduna and Yerrida Copper Projects – namely prospective rocks and structures, copper anomalies in regional geochemical databases and proximity to old copper mines.

Exploration to date, on this 100% owned property, has included geological mapping, detailed airborne magnetic/radiometric surveys, rock, soil and auger sampling and a recent 410 hole RAB/Aircore programme for 16,388 metres of drilling. This drilling was part funded by the Western Australian Government through the Co-Funded Government Industry Drilling Programme.

The RAB/Aircore programme had two principal aims:

* to test structures interpreted as prospective for localising copper deposits from geological-geochemical-geophysical mapping, by lines of overlapping angled holes
* to test a large area, on a nominally 4 kilometre x 4 kilometre grid by ‘fresh rock’ sampling to try to detect large alteration zones, perhaps associated with major deposits, geochemically and spectrally

Whilst results are still being assessed, two areas were chosen for immediate soil-sampling geochemical follow-up. When all data has been reviewed, decisions will be made on the next exploration phase.

TENNANT CREEK GOLD AND COPPER PROJECTS

West Warrego Joint Venture

Sipa’s interest in an area to the west of the old Warrego Gold Copper Mine was sparked because the ground had been subject to exploration moratorium since the early 1970’s, and because a Northern Territory Government airborne magnetic/radiometric survey flown in the 1990’s showed that the Tennant Creek Goldfield rocks were likely beneath sand cover to the west of the younger intrusive, Warrego Granite.

Subsequent to a Farm-in and Joint Venture Agreement with the Hosking-Allender-Le Brun Syndicate in 2005, who held the Exploration Licence Applications over 375 square kilometres, an Agreement for Exploration was entered into with the Central Land Council on behalf of the Karlantjipi Traditional Owners in 2007. Exploration in 2009 and 2010, as detailed below, allowed Sipa to earn it’s possible 70% interest and the Syndicate has now informed us that we may achieve 80% by ‘carrying’ them to decision to mine (that carry to be repaid from future production).

Subsequent to grant of tenements in 2008, we commenced exploration on the ground in 2009, first conducting detailed ground-based magnetic and gravity surveys over an area about 25 kilometres west of Warrego, where the airborne survey had detected a number of ‘discrete’ magnetic anomalies. These ground surveys successfully outlined ‘ridges’ of high gravity, interpreted to represent ‘corridors’ of alteration and also defined some 12 discrete, or ‘bullseye’ magnetic anomalies within, or adjacent to, the gravity corridors.

Most of the historic, high grade gold (average 15 g/t) and copper (average 3%) mines at Tennant Creek were within, or associated with, steeply plunging, pipe-like bodies of ‘ironstone’ containing the magnetic mineral magnetite and hence are represented on geophysical images as discrete, or bullseye, magnetic anomalies.

Sipa interpreted the bullseye anomalies within our detailed magnetic survey as likely being caused by pipe-like magnetite bodies, and set out to test four by diamond drilling late last year. Half the direct drilling cost was provided through the Northern Territory Geological Survey’s Collaborative Geophysical and Drilling Programme. Another three bullseye anomalies were RC drilled earlier this year. The drilling is regarded as having been successful, in that whilst potentially ore-grades were not intersected:

* Tennant Creek Goldfield-like sedimentary and porphyry rocks were intersected, thus confirming an extension of the Goldfield
* each hole intersected bodies of magnetite, thus explaining the bullseye anomalies
* Tennant Creek-style chlorite and haematite alteration is associated with each of the magnetite bodies
* one small copper sulphide - chlorite – haematite vein was intersected and geochemical analysis for low levels of gold, copper, bismuth and molybdenum suggest that at least four of the ironstones drilled may contain mineralised bodies

Our next approach will be to integrate more detailed geophysics over a much larger area of the Project after a 50 to 60 hole reconnaissance RAB programme designed to map out domains of sand cover less than 15 metres thick, depth of weathering in the bedrock and distribution of bedrock types. This information should help us plan where cheap surface geochemistry can be applied and where more expensive systematic RAB/Aircore drilling will be necessary, before deeper RC and diamond drilling.

It is hoped to conduct the reconnaissance RAB drilling later this year after new meetings with Traditional Owners and the CLC and new Sacred Site Clearance Surveys, prior to an aggressive exploration programme next field season.

WOODLINE GOLD & BASEMETALS PROJECT Sipa 100%

Sipa first acquired ground at Woodline in 2005, based on the recognition of underexplored Archaean greenstone rocks. Around the same time the Tropicana Gold Deposits in the ‘Transition Zone’ between the Proterozoic Albany-Fraser Metamorphic Province and the Archaean had been discovered about 300 kilometres to the northeast, by AngloGold Ashanti and the Independence Group.

By late 2006, new prospects, notably Beachcomber in similar geology, were announced closer to our Project, thus changing some of our focus into some 700 square kilometres of the Transition Zone within our tenements. In late 2006, Newmont Exploration Pty farmed-into Woodline and spent some $6 million on exploration up to May 2009, when Sipa regained ownership and inherited extensive geological, geophysical, geochemical and reconnaissance-scale RAB/Aircore drilling databases. Significantly though, there was no diamond drilling and only six RC drillholes. Sipa believes that the work done at Woodline since 2005, and the data resulting, has set up many targets for more-focussed auger geochemistry and drilling.

Sipa now owns 70% of 485 square kilometres and may earn 70% of 248 square kilometres held by Comet Resources Limited and of 59 square kilometres held by Image resources NL.

Early in 2010 we RC drilled at Socrates in the greenstones to test a hypothesis that the mineralisation trends northeast-southwest, rather than at the previously thought northwest-southeast orientation. Three RC holes appeared to support this interpretation and we then tightened up the auger geochemical sampling, resulting in good definition of northeast-southwest gold-tellurium-bismuth trends, bounded by northerly trending arsenic corridors.

Recently we commenced an extensive RAB/Aircore programme of angled holes on northwest-southeast traverses, at right angles to the geochemical trends, with very encouraging initial success, like:

* WDR217 - 10 metres @ 4.9 g/t gold, from surface
* WDR215 - 15 metres @ 3.2 g/t gold, from 10 metres
* WDR216 - 15 metres @ 1.6g/t gold, from surface to end of hole
* WDR338 – 10 metres @ 1.1 g/t gold, from 20 metres
* WDR375 – 6 metres @ 1.9 g/t gold, from 80 metres to end of hole

Results are still awaited for some 138 holes from this 220 hole programme. When all are to hand we will asses whether the next phase is more RAB/Aircore drilling, RC or a combination of both.

Early in 2010 we also drilled seven RC holes at the southern end of the very large Heraclitus-Theofrastos gold-in-calcrete anomalies within the Transition Zone, where Newmont had intersected significant gold in ‘lode’ in felsic gneiss in reconnaissance RAB drilling and three RC holes. Our RC drilling confirmed the persistence of the lode down dip and at least 150 metres along strike to the northeast, and for the first time some moderate grade – being, 9 g/t over 1 metre.

Infill auger sampling was then conducted and results disclosed some 15 kilometres of discrete mineralised trends above 20 ppb, within the much broader plus 10 ppb anomalies.

A recent RAB/Aircore programme appears to have confirmed that significant gold, of above 0.1 g/t, may be restricted to the plus 20 ppb geochemical trends. Very significantly, seven RAB holes intersected anomalous lode about 1.2 kilometres northeast of the hole containing the 9 g/t sample, and two holes

50 metres apart intersected more than 1 g/t gold:

* WDLR 109 returned 4m @ 1.2 g/t, from within 14 m of lode grading 0.4 g/t
* WDLR 108 returned 3m @ 1.1 g/t & 1m @ 1 g/t, from within 13m of lode grading 0.4 g/t

A subsequent RAB/Aircore programme has just been completed and when results, which are awaited, have been received and assessed the next drilling phase will commence.

In addition to Socrates and Heraclitus-Theofrastos there are many more gold-in-calcrete anomalies, which have only had very sparse reconnaissance RAB/Aircore, that require more work.

YERRIDA COPPER PROJECT

Sipa’s 100% owned Yerrida Project comprises three Exploration Licences totalling some 640 square kilometres in the southeastern part of the Palaeoproterozoic Yerrida Basin.

The Project overlies the northwestern continuations, beneath the younger sediments and volcanics, of the Wiluna and Joyners Find Archaean greenstone belts and structural corridors that, along with east-west cross structures, have influenced both basin development and, likely, mineralisation. The Project southern boundary is located only four kilometres north of the major Magellan lead oxide deposit, which at 210 million tonnes grading 1.8% Pb is a significant lead accumulation, and our Project is thus immediately credentialed with a ‘good address’ in exploration terms.

The main rocks within the Yerrida Project are mafic volcanics and intrusives together with cherts of the Killara Formation, all of which, are anomalous in copper, based on results of systematic regional geochemistry by the Geological Survey of Western Australia. There are also pyritic, black shales and calcareous siltstones of the Maraloou Formation prospective for Mount Isa-style deposits.

The combination of prospective lithologies and a favourable basin tectonic/structural history, together with the ‘existing empirical evidence’ of substantial base metal occurrences in the Yerrida Basin, being - Magellan lead immediately to the south and Thaduna copper camp further northwest - suggest an enhanced prospectivity for significant metal deposits within the Yerrida Project.

Sipa’s exploration strategy for next year’s field season is to drill several ‘essentially stratigraphic’ holes, in part to evaluate the relatively ‘flat lying’ sedimentary-volcanic sequence geologically and geochemically and in part to assess the applicability of airborne Electromagnetics, before planning more exploration.

Mine For

gold, silver, lead, zinc, nickel, copper, platinum group metals

Location of operation(s)

Western Australia, Northern Territory

Address

Ground Floor , 6 Thelma Street
WEST PERTH, WA, AUSTRALIA

Phone

(61 8) 9481 6259

Email

Website

http://www.sipa.com.au/

Last Updated

2/02/2011