Next Investors logo grey

GAL hits unexpected massive sulphides in shallow aircore drill program


Published 17-NOV-2021 15:30 P.M.


10 minute read

This doesn't happen often.

Our long term exploration investment Galileo Mining (ASX:GAL) is currently “aircore” drilling, chasing a nickel and palladium discovery in Norseman, WA. Today it hit an unexpected (and good) result...

Aircore drilling is a shallow form of drilling, generally used as a precursor to generating higher priority drill-targets to then follow-up with RC/Diamond drilling.

An aircore drill bit can easily push through the top layers of weathered rock.

GAL is 4,000m into its 10,000m aircore drilling campaign - The primary goal for this program was not necessarily to identify anything new but to refine RC and diamond drill targets.

That changed (for the better) today when we got news that GAL hit some unexpected hard rock ~52m from the surface - Something the aircore drill bit couldn't handle.

Upon investigation it turned out that GAL has struck massive sulphides at a shallow depth, which was announced this morning.

What does this mean? Why is hitting massive sulphides good?

“Massive sulphides” are the types of rock that host precious metals - if you can find this type of rock, you have the right type of rock for mineralisation.

However - massive sulphides are typically found in deeper, fresher, bedrock - so are not often encountered in shallow aircore drilling like what GAL is doing now.

In addition, GAL intersected these massive sulphides on the margin of a large ulta-mafic intrusion - this is the exact setting where mineral deposits can occur.

So for GAL to hit massive sulphides during shallow drilling is a very encouraging sign.

Here is the sulphide chip (25mm across) that GAL was unable to break through with its aircore drill bit:

Next Investors Image

Handheld XRF readings taken on site indicated minor amounts of nickel and copper. We won't know the palladium, platinum, and gold results until the cores go to the lab for assaying.

What’s next for GAL?

In four weeks GAL will receive single metre samples from the sulphide intercept just hit in today’s hole.

In approximately 8-10 weeks we will get standard assay results from the remainder of the drill hole and all adjacent drill holes.

Follow up EM surveys and RC drilling is required for GAL to get a clearer picture of what kind of mineralisation is in the rock, the grade, and how deep it extends.

This follow up exploration will happen early next year.

Meanwhile GAL is going to finish the remaining 6,000m of its aircore drill programme at Norseman, then swiftly switch focus to its diamond drilling campaign on its Fraser Range nickel targets in December.

The Fraser Range assets first attracted us to GAL, so we are looking forward to that drilling event.

We are long term investors in GAL, a company that regularly runs high potential drilling exploration campaigns, aiming to make a large discovery.

GAL recently raised $6.5M at 26c, so is well funded for its current drilling campaigns and beyond.

We made our first investment in GAL in March of 2020 & have since increased our investment three times over the last 18 months. GAL is currently trading at ~25c, which is still below the recent placement price of 26c.

More on today’s news

GAL is in the middle of a shallow aircore drilling program looking for palladium & nickel at its project in Norseman, in the Kambalda nickel belt of WA.

GAL’s aim for the 10,000m AC drilling program was to test 5 high priority Palladium-Nickel drill targets, plus a number of prospects which are essentially riskier un-confirmed targets.

Prior to this aircore drilling program, GAL did a lot of preliminary work to guide the drill targets - soil sampling managed to deliver high grade palladium mineralisation of up to 0.81g/t & Nickel grades of up to 0.25%. This project has also had some prior drilling on it which hit anomalous palladium.

All of this preliminary work determined the drilling locations that are being drilled now. The primary goal for this program was not necessarily to identify anything new but to refine RC and diamond drill targets.

Hoewer today we got news that during an air core drilling program GAL hit massive sulphides ~52m from the surface.

It’s not everyday that you hit massive sulphides during an air-core drilling program - the fact that the air-core rig couldn't even penetrate into the massive sulphide says it all.

Massive sulphides are generally found in deeper bedrock so today’s result is huge for GAL & could be a game-changer for the Palladium-Nickel prospectivity at the Norseman Project.

With drilling only 40% done we are hoping that GAL can get a few more unexpected pleasant surprises.

In our previous note we mentioned that we were primarily looking out for the presence of Palladium in the assay results, today’s announcement was a welcome surprise to us.

Next Investors Image

Today’s announcement adds further weight to the potential for a sulphide discovery at the Norseman Project.

Nickel or palladium mineralisation in the assay results coupled up with follow-up works on the massive sulphide intersection is really shaping the Norseman project into something very interesting.

If we see EM Surveys indicating stronger conductors at depth & then RC/Diamond drilling confirming this, GAL could really be onto something here.

We will be watching this one closely...

GAL still has Fraser Range diamond drilling to come

We mentioned in our previous note that we were looking forward to the GAL’s next Fraser Range drilling programme to start in December.

GAL will be diamond drilling its highest priority Fraser Range nickel targets in this programme.

The Fraser Range projects have always been our favorite GAL assets as we think they hold the potential for the biggest discovery.

During a previous RC drilling program, GAL clipped the top of an EM conductor and confirmed the presence of sulphides, after running downhole EM surveys (which confirmed a strong conductor further down, GAL set this as the primary target).

The EM results showed that the conductive response is related to sulphide mineralisation - but the diamond drilling campaign will determine whether or not the sulphides contain economic mineralisation at depth.

Next Investors Image

After months of target generation work putting together this drilling program, it’s almost time for GAL to get the drill-rigs on the ground and running.

Fraser Range nickel discoveries can take a long-time to fully delineate, but if a company is lucky enough to make one then it can be extremely rewarding for shareholders.

Making a large nickel discovery in the Fraser Range is our primary reason for investing in GAL and we are looking forward to seeing what GAL can find.

More ground being added to the Fraser Range projects:

Last week we also saw GAL announce that it had expanded it’s landholding in the Fraser Range project area by a further 70km^2, increasing GAL’s total tenement holdings to 672km^2.

The tenements acquired sit ~6km along strike from GAL’s Lantern South Prospect which was previously drilled for Nickel/Copper sulphides and returned intercepts as thick as 41m @ 0.19% Nickel + 0.14% Copper + 5m @ 0.49% Nickel + 0.46% Copper.

We like that GAL haven't wasted any time & have already scheduled Ground EM Surveying for December as part of it’s drill target generation program here.

Next Investors Image

This transaction was done at a small cost to GAL of $170k ($90k cash + 308,000 GAL Shares @ 26c/share).

Hidden in the acquisition announcement was a summary of the existing Aeromagnetic Data showing “intrusive rock signatures with potential for Nova Style nickel/Copper mineralisation”.

Basically GAL have added another tenement that they clearly think is prospective enough to warrant testing in future drilling programs. The more targets GAL can generate the more there will be to look forward to. Bring on the Fraser Range drilling programme.

Why are we looking forward to the Fraser Range drilling programme?

The main reason for our investment in GAL as mentioned above is for its Fraser Range nickel projects.

In exploration, the rewards can be large, HOWEVER metals exploration is a high risk endeavour, especially if a small cap company with zero revenue to fall back on.

When doing due diligence on potential investment opportunities we always check to see who are the people backing a particular company.

With GAL we have the man who was behind the first nickel discovery in the Fraser Range - Mark Creasy.

Mark Creasy is GAL’s major shareholder, owning 24.6% of GAL shares & was responsible for putting the Fraser Range region on the map with the $1.8BN Nova nickel discovery.

Here’s Sirius’ discovery ASX announcement from 2012:

Next Investors Image

GAL is following the same playbook for exploration in the Fraser Range that led Mark Creasy’s Sirius to the ultimate discovery success:

Initial Massive Sulphide Intercept → Leading to Downhole EM surveys → Leading to a LARGE Discovery.

There are no guarantees in high risk exploration, but we definitely like that GAL is following the same exploration script as Sirius.

Creasy knows the area like the back of his hand having one of the largest exposures in much of the high potential exploration ground across the Fraser Range across various entities. We are backing his giant stake in GAL as an indicator that he likes GAL’s Fraser Range ground in particular.

Lets not forget that IGO is also a major shareholder here owning 8.9% of the company. IGO are another entity with a deep knowledge base of the area & were the ones who purchased the Nova nickel deposit off Creasy’s Sirius Resources for $1.8BN - IGO also has a vested interest in finding the next large nickel discovery.

The cherry on the top for us is that GAL is being led by Brad Underwood as Managing Director who discovered the second nickel deposit in the Fraser Range - “Silver Knight” alongside Creasy.

We think the people backing GAL to pull off a major discovery are some of the best you could have when looking for the next large nickel discovery in the Fraser Range.

Ultimately the proof will be in the rocks though.

What's Next for GAL?

With massive sulphides intersected at shallow depth, we will turn our attention to seeing if any more sulphides are intercepted from the remaining 6,000m of Aircore drilling that is still scheduled.

Assay results from the entire drilling program should also start to come in just before the end of the year/early 2022.

The aircore drilling program is largely being used to generate potential follow up targets for RC/Diamond drilling in 2022 so we are mainly looking to see GAL generate some interesting follow-up drill targets. A good result for us will be to show that there is Palladium presence across most of the AC holes.

Whilst waiting for the Assays from the Norseman project, we are expecting drilling to start at the Fraser Range project sometime in December.

The next 6 months for GAL will be action packed and with a market cap of $42M, $10.4M in cash, giving an $32M enterprise value, we think there is leverage to a major nickel discovery here.

Company Milestones

Portfolio Launch
$5M Cap Raise @ 22c
IGO Group Becomes a Substantial Shareholder
✅ $6.5M Cap Raise @26c
🔲 Project Funding 2
🔲 Project Funding 3
🔲 Unexpected Positive Announcement 1
🔲 Unexpected Positive Announcement 2

Norseman (Palladium)

Soil Sampling
Promising Palladium Results from Soil Sampling
✅ Assay results from soil sampling
🔄 Aircore drilling at Norseman
✅ Massive-Sulphides intercepted during Aircore Drilling

🔲 More drill target generation work
🔲 New Milestones Added

Fraser Range (Nickel)

RC Drilling Commenced (Lantern)
First Assays (Lantern)
Advanced Drill Targets Finalised (Lantern)
RC Drilling (Lantern)
✅ Diamond Drilling (Lantern)
🟥 Drill Results (Lantern North)
✅ Drill Results (Lantern South)
✅ Drill Results (Lantern East)
Further Diamond Drill Targets Finalised (Lantern East & South)
Drill Targets Defined (Delta Blues)
Drill Results (Lantern East)
🟧 Drill Results (Lantern South)
✅ RC Drilling (Delta Blues)
Assay Results RC Drilling (Delta Blues)
🔲 Diamond Drilling (Delta Blues)
🔲 Drill Results (DB1)
🔲 Drill Results (DB2)
✅ New Drill Targets Identified (Easterly Prospect)
🔲 Drill Target Refined (Easterly Prospect)
🔲 Drill Testing Commenced (Easterly Prospect)
🔲 Assay Results (Easterly Prospect)

GAL Investment Milestones

✅ Initial Investment: @24.65c
✅ Increase Investment: @23.5c
✅ Increase Investment: @29.1c
✅ Increase Investment: @26c

🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
🔲 Price increases 2000% from initial entry
✅ 12 Month Capital Gain Discount
🔲 Free Carry
🔲 Take Profit
🔲 Hold remaining Position for next 2+ years

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities (including staff), own 1,935,000 GAL shares.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.