Clancy Exploration

We were planning to be drilling at Condobolin in September but we decided to carry out a 3D IP survey first, which has now been completed. Drilling is now scheduled to start at Condobolin on October 24.

Today we released an update on Condobolin, highlighting the newly defined Meritilga prospect. This prospect sits in the middle of a very large geochemical anomaly and alteration zone that links the Phoenix, Mascotte and Potters prospects. Preliminary results from the recently completed 3D IP survey suggest that chargeable anomalies are also present in the same area. The processing of the 3D IP data will be completed soon so stay tuned for further updates.

It  has been a busy period for Clancy. The rights issue was completed in June which was a significant achievement given the prevailing market conditions. Mike Etheridge accepted the Board’s invitation to take on the Non-Executive Chairman’s role in late July and James Macdonald will remain on the Board as Non-Executive Director.

Clancy is now gearing up for a substantial drilling campaign and we recently signed a binding preferred driller MoU with Australian Mineral and Waterwell Drilling Pty Ltd (AMWD) for up to $5M of drilling.

Aeromagnetic and radiometric surveys have been completed at Condobolin, Currumburrama, Roseholme and Billabong Creek and numerous target areas have been defined for follow-up. Auger soil surveys have been completed or are in progress at Condobolin, Cundumbul and Gobondery with results expected in the next few weeks. Auger soil surveys are also planned for Orange East and Billabong Creek.

We now hope to be drilling at Condobolin in September. The aeromagnetic and radiometric survey identified several areas of interest and we thought it prudent to test these areas with soil geochemistry to deliver further drill targets for the forthcoming drilling. A 3D IP survey is also scheduled for mid-August. We are really excited about  the potential at Condobolin.

The remaining half of 2011 will continue to be a busy. The exploration and support team has been expanded in Orange and we are well funded. Clancy has a booth at Diggers and Dealers, which starts today, so it will be interesting to find out what the general mood of the industry is. Stay tuned for more regular (hopefully!) updates.

Today we announced details of a fully underwitten 1 for 2 rights issue with a free attaching option to raise approximately $4.38M before costs. The rights issue is jointly underwritten by Patersons Securities and Soaring Securities and is priced at 8c, a premium to the last closing price before the trading halt of 7.4c. The premium reflects confidence in our exploration team and the prospectivity of our copper-gold projects in NSW.

The ex date for the rights issue is 6 May 2011.

The funds will be deployed at Condobolin, Trundle and Orange East with drilling planned in the current quarter, and to advance early stage exploration at a number of other projects. We are currently flying aeromagnetic and radiometric surveys at Billabong Creek and Condobolin, following the completion of surveys at Roseholme and Currumburrama. The data from the latter surveys have been processed and a number of anomalies have been identified for follow-up.

This morning we released some terrific results from our first RC drilling program at the Condobolin project. Last year we reported some very high-grade gold, copper and zinc rock chip results from a number of prospects in the Condobolin Mineral Field and the RC drilling was designed to follow-up the rock chip results.

The drilling was able to confirm that the vein samples we obtained from the mullock are indeed the same lodes we intersected in the drilling. Achieving this sort of outcome, as everyone in the exploration game would know,  is much easier said than done. And to do it at multiple prospects on the same tenement is a testament to the fact that there’s much more to be found within the Condobolin Mineral Field.

Most of the RC holes were drilled at Phoenix where the old timers mined high grade gold from workings that were up to 60m deep over widths of up to 10m. Our holes targeted the strike and dip extensions of the workings and the results have confirmed that good gold grades persist at depth and along strike. It looks like we have at least one decent sized lode (8m drilled width) dipping to the SE, at a consistent grade (3.7g/t Au) with higher grade zones up to 10g/t Au. This lode is open down dip and along strike to the south. The old timers mined visible gold (VG) at Phoenix. We have not seen any VG yet but we did some screen fire assays which confirmed that there is coarse gold at Phoenix and the plan is to submit other mineralised intervals for screen fire assay to check for coarse gold.

We are keen to return to Phoenix as soon as possible and hope to have diamond drilling program underway there within the next month or two.

Drilling at the other prospects, Mascotte, Potters and Bluebell, confirmed that there is significant potential for silver-lead-zinc-gold lodes. We only drilled one hole at Potters but got some tantalising results from it: 6m @ 2.7% Zn, 2.7% Pb, 30g/t Ag within a broad Zn halo (24m @ 0.9% Zn).

So we are pretty excited about what we have found so far and we think there is something fundamental going on in the Condobolin Mineral Field in terms of the potential scale of the mineralised system/s. It’s an area that has been overlooked in the past and from what we have seen in our drilling, there is plenty of blue sky not only around the previous workings, but also in the broader district.

We have recently increased our ground holdings in the area and we will be flying a high-resolution aeromagnetic and radiometric survey in the next few weeks, which will assist in targeting other areas beyond the old workings.

We are pretty excited by the Trundle Park RC drilling results that we released to the ASX today (see here). Apart from the excellent high grade gold-copper silver results in hole TPRC003, the drilling has confirmed shallow low- to moderate-grade gold and copper skarn mineralisation (0.4 to 1g/t Au and 0.2 to 0.4% Cu) over large widths (40-60m drilled widths). The skarn is magnetite-rich, so it forms a prominent magnetic anomaly and we can map that out with ground magnetic data and it has over 2km of strike length and is poorly drill tested.

The average depth of our drill holes is 124m and most of the skarn intervals are less than 50m vertical depth, so there is plenty of scope to potentially define shallow low- to moderate-grade gold and copper resources. Also the significant amount of magnetite means the intervals are quite iron rich as well, so we will be investigating that further as demand for magnetite is quite strong at the moment and a rail line runs right through the project.

Work by previous explorers identified potential for a large hydrothermal system at Trundle Park but rock types from shallow drilling suggested that it was too deeply eroded to be prospective for higher level and higher grade epithermal style mineralisation. However, one of the things we noticed during mapping prior to drilling was a fair amount of epithermal-style veins in subcrop and mullock around the old workings at Trundle Park which was contrary to previous interpretations. Our initial assessment is now supported by these drill hole assays.  The trace element data in our RC results were elevated in arsenic, bismuth, tellurium and antimony for some intervals, which is typical of epithermal mineralisation.

We intersected an epithermal vein 75m south of some old workings and we think the old timers probably mined a high grade epithermal quartz vein (the rule of thumb being that they wouldn’t have mined much below one ounce or 31.1g/t Au). The quartz vein we intersected had a pink to purple mineral phase, which may be fluorite but we need petrology to confirm that. The vein ran 20g/t Au and nearly 7% Cu over a 2m composite (see the release)  and we think we have drilled the southern strike of the vein that was mined previously. The vein is open at depth and along strike and we will get a rig back there to follow it up as soon as we can.

On a final note, exploration activity in NSW is obviously picking up because the ALS lab in Orange is chock-a-block with everyone’s samples, so our turnaround times  have dropped off a little bit. The good news is that ALS are planning a lab upgrade, so in a few months time their throughputs will increase. In the meantime, we expect to have the Condobolin RC drilling results finalised within the next couple of weeks and I’m looking forward to reporting those results, so stay posted.

Regards,

Gordon