MNN Awards: Breaker’s Bombora a rarity
9 July 2018
DESPITE a mixed response to Breaker Resources’ maiden Bombora resource earlier this year, it confirmed the deposit as a significant discovery in a tier one jurisdiction.
Geologist Tom Sanders, who previously floated and led Navigator Resources, founded Breaker and floated the company in 2012.
The company had been focusing on the Yamarna region, but exploration under thick cover was burning through the cash.
It led Breaker to the decision to find a more advanced project – potentially a brownfields site.
Breaker senior geologist Michael Outhwaite was looking at ground in the Yilgarn and came across the Lake Roe tenements, 100km east of Kalgoorlie.
“This area just happened to be vacant,” he told MNN.
Lake Roe sits on a salt lake between two major gold deposits – Carosue Dam and Karonie – and between two major shear zones that converge, with mineralisation occurring in fractionated dolerite.
“If you’ve got structure and a host rock there together, you’re in with a good chance,” Sanders told MNN.
Historical RAB and aircore drilling in the 1990s identified a 4km-long zone of strong gold anomalism that Breaker was keen to follow up.
Western Mining Corporation had previously held the ground and while it had not hit anything above 1 gram per tonne gold, Breaker was encouraged by the data.
Drilling started in mid-2015 and in August of that year, Breaker emerged from a trading halt to announce that a new gold system had been identified at Lake Roe.
It was only when the company started aircore drilling to the north of the initial find that it identified the 2.2km-long Bombora prospect.
“It lit up in a couple of different areas,” Sanders said.
Sanders recalls presenting at the RIU Explorers Conference in early 2016 and telling delegates the company had hit primary gold with assays pending.
“We spent the next year sussing out the system,” he said.
That work culminated in a maiden resource for Bombora, released in April, of 11.8 million tonnes at 1.6gpt gold for 624,000 ounces of gold.
Breaker’s share price almost halved.
Breaker geologist Christine Shore said the company was incredibly proud of the maiden resource.
“We were absolutely gutted by the response,” she said.
Breaker shares last traded at 26c, but Sanders pointed to Bell Potter’s price target of 96c.
“In our view the hammering of the Breaker share price represents a mismatch in the market where risk has been reduced and reward has gone up,” Bell Potter analyst David Coates wrote in May.
“The maiden resource was a major de-risking event and while it clearly did not meet the expectations of some corners of the market, it set a foundation consistent with the discovery of a significant, economically attractive greenfields deposit with plenty of scope for further growth.”
Sanders again reiterated that it was only a partial resource.
“We’re not finished – we’re still going,” he said.
“The market has almost forgotten what a greenfields discovery looks like.
“These things take time to establish controls and build understanding.”
Unlike WA’s last major greenfields gold discovery, Gold Road Resources’ Gruyere which was a more tabular orebody and could be drilled out quickly, Bombora has three orientations all stacked together.
“It translates to really good ounces per vertical metre and that creates mineability.”
The length of time between the discovery and the maiden resource caused some impatience in the market.
“I wouldn’t have changed the rate of drilling from what we’ve done,” Sanders said.
“It’s hard to belt something with a drill rig if you don’t know what it is.
“The reality is, this thing has got better, the risk is lower, and it’s going to make lots of money.”
“We’re confident because the technicals stack up.”
Breaker took analysts to site last month and it impressed Patersons Securities analyst Xavier Braud enough to upgrade the stock to a speculative buy from hold
“Talking to the geological team on site whose job it is to understand the system increased significantly our confidence in the project,” Braud wrote after the trip.
The system at Bombora/Lake Roe is complex but the Breaker team has a solid understanding of it which, we feel, was not clear enough in the company marketing.
“At 28c/share for a market capitalisation of $40.6 million, Breaker Resources now looks somewhat undervalued.”
Breaker has released two sets of results since the resource that shows the resource is still growing, and the resource only extends to 200m below surface and is open at depth.
“We fully expect that if we cut the earth another 300m we’ll see the same thing,” Outhwaite said.
“It’s an undercover discovery and it’s completely blind – but it’s still shallow.
“It’s interesting and we hope it motivates discoveries for others.”
Sanders noted that Gold Fields recognised its Invincible discovery – also under a salt lake – as “one of the most significant discoveries … possibly in the history of the Goldfields”.
Invincible was discovered in 2012 with its maiden resource of 250,000oz released later that year.
“If you look at the pit shells we put out in the maiden resource, we’re in that ballpark already,” Sanders said.
“We have a high expectation that we can have a standalone operation based on our maiden resource – which hasn’t been done for a while.
“It just hasn’t sunk in for the market.”
Breaker is aiming to reach 700,000-800,000oz in the interim, and 1.2 million ounces down to 400m depth.
Breaker also revealed a possible lithium discovery at Lake Roe around 20km to the south of Bombora.
“There’s no recorded lithium in the area so that’s also greenfields,” Sanders said.
Breaker has fended off a lot of interest from other miners, more in the early stages of the Bombora discovery, but still some even now, but the answer was always a no thank you.
“Commercially, you don’t give away a discovery,” Sanders said.
“This is a company maker – no doubt about it.”
Breaker Resources’ Bombora discovery is a nominee for Explorer of the Year in the 2018 MNN Awards.