Encounter Resources (ASX: ENR): Interview with MD Will Robinson

We spoke with Will Robinson, MD of Encounter Resources (ASX:ENR), about the potential of the company’s projects in the Paterson Province of WA, including the 100% owned Lamil Project and the Yeneena project with IGO. We also talked about the potentially huge copper upside from the Elliott Project in NT, with BHP as a recent farm-in partner.

 

Read our most recent article on ENR here

 

Transcription

 

Stuart: Hello and welcome to Stocks Down Under. My name is Stuart Roberts and I’m one of the co-founders of publication. It’s Monday, the 18th of October, and joining me from Perth is Mr. Will Robinson, who’s the managing director of Encounter Resources, ENR. Will, good morning.

Will: Stuart, great to be here.

Stuart: Will, I’m talking to you on some of the projects that Encounter Resources is engaging in, I’m reminded of Star Trek, going where boldly where no man has ever gone before. Now, it’s not quite as outrageous as that but it’s fair to say that the 26,000 kilometers or lower about, square kilometers of ground you’ve in the northern territory is a pretty bold bet on the next sediment-hosted copper deposit, would you agree?

Will: Oh no doubt. I mean, I think we’ve looked at the new data that’s been provided out of the Exploring for the Future program by the federal government in the Northern Territory Geological Service and we had a view back three or four years ago when the data started to come out. Let’s just say, we want to be the first onto anything that looks like a copper anomaly in that new data that comes out. The first project we picked up was Elliott because it had, they sampled the old station waterboards out there for hydrogen chemistry, and each end of the top 20 samples all set in a cluster and it was one or two orders of magnitude rather than key strip structural intersection on the southwestern corner of the Beetaloo Basin and we secured that ground and then essentially added to our positions continually since then because of what we’ve seen and earlier this year, BHP exercise as an option on a deal we’d done with them to come in as an earning partner on that project. Look we’ve taken the approach that there will be a sediment-hosted copper deposit found in the Northern Territory on the western edge of the McArthur Basin on some of those key structures and that we should be acting like that’s already happened. But this is one of the great new provinces that could be, that has the potential to host tier one top deposits.

Stuart: Right. So it’s no surprise then, from the original farming agreement with BHP, 10 years and 20 million. It’s now turned into 10 years and 25 million on 60% more ground. So it seems to me like BHP is very like-minded with you on the potential.

Will: Look, I think it’s been really good to deal with the team there and I think they can see the opportunity as much as we can that this is a place where there hasn’t been exploration blowing historically. We’re seeing empirical data coming from water bores, from hydrogen-chem surveys that the government’s done, and from old oil well holes that have been drilled for the gas out there, you know, that we’re seeing copper in the basin and I think that’s, you know, we’re seeing some strong encouragement so we should be answering some of those questions.

Stuart: Right. In terms of the actual exploration action, it’s not in that part of Australia. It’s on the Paterson Province in Western Australia, a mere 25 kilometers from Telfer. You’re getting some pretty interesting hits at a prospect called Lamil. Tell us about how that project originated.

Will: Yeah. It’s a domal feature, as they say, sitting west of Telfer and we’ve done some shallow drilling in the past and earlier this year, we got some pretty interesting numbers in a shallow RC drill program at the June prospect within the Lamil project which had copper-gold numbers extending to bottom a hole and finishing in sort of point three to point five grams per ton of gold

Stuart: And get the diamond rigs on to that as quickly as possible. Right?

Will: Well, we could but obviously it’s a bit of a challenge. We would have been there a bit earlier but actually, the rig got things started in June and went for about three months. We actually had two rigs going for the large part of that and we got a lot of core in the labs at the moment like a lot of people with, it’s a bit of a longer delay to get your assay results but that should all be coming back in the next month. And yeah, look at, the rocks look interesting. It’s… We understand that, you know, in the Paterson, these are vertical systems. We’re seeing, you know, vertical extent at winnow and heavier on [inaudible 00:04:28] You know, if you get on to one of them, it can extend vertically a long way and you can really end up with quite a large deposit. So, this is the first of the really systematic diamond drilling that’s been done on a prospect and we’ll be eager to see what the results show.

Stuart: Certainly. And great to see a little Australian company having success there alongside Greatland from for Britain and, of course, Rio Tinto. So you’re partnered by, you’re either side of some pretty big companies, right?

Will: Yeah. Well, I mean, we’ve been up in the Paterson since 2009. We started exploring at our Yeneena project and there was a time up there a few years ago when it was just us and Antipa. There wasn’t too many other people kicking around and, you know. Obviously, now you come there’s no tenement available in the entire belt so, and it’s the big mining case. It’s obviously, Newcrest, it’s Rio Tinto, it’s Fortescue.

Stuart: And IGO in your case for Yeneena.

Will: IGO, absolutely. We’re not just at Yeneena, we’re elsewhere in the Paterson. So you’ve got four big companies who are having [inaudible 05:28:083] at the Paterson.

Stuart: Right. Now, we’re talking about just two parts of Encounter, but there’s various others. You’re at the moment spinning out Hamelin Gold to focus on an interesting part of the Western Australia-Northern Territory border. Talk to us about how the projects within Hamelin have shaped up.

Will: Yeah. Well, this was an area that… We had a project generation alliance with Newcrest back a few years ago and we, and they were paying us to generate projects and ideas for them. And we came up with this, the Western Australian side of the Tanami belt, which was, I guess, there was a few things that had changed was that the operating environment towards, the attitude towards exploration in this part of the world was becoming more encouraging. And I think probably the most important thing that probably appealed to this area was the success that Newmont was having at Callie and Newmont doesn’t talk too much it but they’ve been finding millions and millions of ounces of high-grade gold over the last six or seven years out there. I really got the handle on what’s controlling the mineralization. And, you know, it’s currently the lowest cost large production unit inside Newmont. They’re running a gas pipeline out there and there’s, you know, it’s going to be right in the mine. It’s gonna be around for a long time and these are orogenic gold deposits that you can find, and you don’t tend to find one or two of them, you find belts of them in the Western Australian side of the border.

I think 70% of the drill holes in our tenure, which extends over 100 kilometers, is less than 10 meters. And it’s been a two-dimensional exploration program. There’s some really good numbers that have come out of some of that shallow drilling that we’re going to follow up on. But we’ve got the same geological package that hosts at Callie deposit on the Western Australian side of the border. And some very large-scale geophysical anomalies that have come out of regional magnetic surveys that were flown by Newcrest in the time they were in a joint venture. We got the project back earlier this year from Newcrest with the attention on heavier on [inaudible 00:07:36] and we said this is the perfect project, it’s a company in itself. It wasn’t part of our budgeting and planning but it requires a really dedicated term with a dedicated focus and I think also a dedicated investor base because sort of investors that might want to invest in orogenic gold in Tanami are probably different from those that want to find copper in the Northern Territory. And we wanted to have a pretty clear split where Encounter was going to be a primarily copper-focused company with projects in the Paterson, the Northern Territory, and the West Arunta and this was going to be a clearly focused gold company in the Tanami.

Stuart: So one of the things that’s really impressive about your company is its willingness to take big bets. So we were talking before about using the Northern Territory geoscience folks to actually go after some really big plains. And it’s the same kind of work elsewhere. Where does that come from? We were talking before we pressed the button about you spent a lot of years at WMC before you stepped out to start Encounter. Is that we get your exploration ethics from, if I could put it like that?

Will: Yeah. Look, I mean, I think this, we take the view and I guess, but exploration was, you know, was front and center of everything that Western Mining did for those periods when it was very successful and they had a culture there that looked at exploration as, you know, it’s the start, and as Paul said, the big value creation step. We used to say that 90% of the value that’s created in this industry is created with the exploration drill. The other 10% is with engineering and sort of having having having that sort of approach. And I think we’ve been… And Jon Hronsky who sits on our board, he wrote a paper about 15 years ago saying, talking about the requirement for a renaissance in greenfields exploration because not many companies were doing it. And the metal projection demands for copper and nickel and zinc and all these things were continuing to grow but we weren’t finding new high-quality resources to replace the depleting mines that have been sort of found in the 70s and 80s. And that’s really to me and particularly maybe in the last 12 months, it’s kind of becoming very clear that the world’s desperately short of those metals.

Stuart: Is it ever?

Will: You know, you can sit where you sit on the spectrum as to how fast this transition’s going to happen or whatever. But it doesn’t really matter because every scenario you’re short of copper and there’s not a lot of substitution opportunities at this point in time.

Stuart: And whenever there’s a new copper discovery made in recent decades, well, less than decades. Traditionally, it used seven or eight years to get a decent copper mine up and running. And there’s been very few large discoveries that could then provide the next lot of decent mines, right?

Will: Yeah. Well, I mean, a lot of the big companies just weren’t doing a lot, it wasn’t the focus. There was…we can… A lot of technological and focus was around larger trucks and moving bigger mines. And I think the industry is moving underground, it’s moving into higher quality resources you’re moving less rock. You’re finding high-quality, less environmental footprint and all the things that go with that and, you know, this industry is in a state of transition towards finding new resources in new parts of the world that are going to be there needed for the next 10, 20, 30,40, 50 years.

Stuart: All right. Now, one last question. You’ve got to deposit called Aileron, which you haven’t talked about much last year or so but the original hits on Aileron were pretty good. Talk to us about that project.

Will: Yeah. Well, this was another one of those belts and we targeted and said well, there was a really interesting magnetic feature there which had been known about. It had actually been known about [inaudible 00:11:21]

Stuart: This was in the Arunta block, if I recall?

Will: Yeah. The West Arunta, yeah. So it was a Western mining peg that we never got access to the ground to test it. This is back as I said about 20-odd years ago, we took up a tenement over there and subsequently expanded it to take a belt-scale position. And we said, well, look if we’re successful here, you want to control, you know, you want to control the region. So let’s put our foot on a large tenement package. In joint venture with Newcrest drilled first part of that last year, we had a bit of an issue with the rig and we only drilled 150 meters but we got some really interesting [inaudible 00:12:05] rock that looked, you know, like the sort of thing you’d see around one of those IOCG type deposits but not under 300 meters or 500 meters of cover like South Australia but under 10 meters of cover. So it really is a…

Stuart: You dig with a shovel. It’s so shallow.

Will: Yeah. Well, we did. We tried some surface geo-chem it was… We thought we might save something from there. And so we actually got some interesting contrast to background and some geo-chem and we’re gonna…we’re planning go back there. We’ve just completed a gravity survey in August. Some interesting gravity features came out of that survey, we’re going to complete that work on the next little bit, and then we’re planning to test a few of these targets and complete the drill hole that we started. That’s the first hole in a hundred-kilometer-long belt that’s been drilled. And to get sort of half percent rare earths and, you know, 0.1% copper and all those sort of things in a 150-meter deep hole was quite an encouraging start.

Stuart: Nice. Well, Will Robinson, well done to you and your team on your achievements just lately and I’m really looking forward to what Lamil, Elliott, Yeneena, and all those other interesting projects are going to throw up for you in the next year or so. So keep up the good work.

Will: Stuart, thanks for your time.