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Black Cat Syndicate Ltd. (BC8): Drilling Update 

Sector: Materials

Maiden RC drilling program at Bulong confirms previous work


Current Price: $0.28

Key Points

The aim of the maiden drill program at Bulong

- BC8 has released the first results from its maiden drill program at the Bulong Gold Project located 25km east of Kalgoorlie in Western Australia.
- BC8’s initial focus was to drill and study the economics of developing an open cut gold operation at Queen Margaret, within a project otherwise showing potential for a narrow-vein, high-grade underground mining environment.
- The development of an open pit operation would enable BC8 to generate a cashflow whilst undertaking development to establish a suitable position for an underground portal to access narrow-vein, high-grade mineralisation at depth.
- The first phase of the program was to verify the historic geology interpretation and grade information along the Queen Margaret corridor on a number of prospects and to extend the previous known mineralisation envelopes.
- Information gathered in this first part of the 2018 drilling program will be used to refine geological models and inform drill targeting for a Phase 2 program to begin in June.

Results achieved

Queen Margaret
- Previous drilling programs in the area around Queen Margaret included 3m @9.94g/t Au from 22m and 2m at 34.84g/t from 48m.
- BC8 believe the recent drilling to date at Queen Margaret, totalling 58 holes for 3,801m with an average depth of just 60m, has validated the conceptual 3D modelling and confirmed the structural position of the previously intersected gold mineralisation.
- Best results include 3m@ 116.3g/t Au from 0m; 4m @ 9.16 g/t from 33m and 4m @5.99 g/t from 42m.
- From a geological point of view, the drilling has confirmed the high-grade potential of a porphyry unit that sits in the footwall of the Queen Margaret Mine. Historic workings only exploited the Hangingwall position of the porphyry and ignored the footwall contact and numerous veins within the porphyry body itself.
- BC8 site plentiful veins within the porphyry body and a mineralised footwall position, both open along strike and down dip.
- Refining of the model will now commence with a view towards starting the next phase of drilling at Queen Margaret in June.
- Drilling of the Queen Margaret Deeps is slated to begin in September 2018.


White Horse and Melbourne United
- The 15 holes planned at this location as aimed to test the theory that the White Horse
mineralisation was off-set by a late-stage, NE striking fault.
- The drilling has confirmed this to be the case.
- Importantly, the new interpretation seems to suggest that the off-set would link to the mineralisation located 200m further north at Melbourne Untied, in an under-drilled area.
- An intersection of 2m at 11.01g/t from 31m provides encouragement that this is the case and interestingly, is in the same position as the footwall porphyry mineralisation seen at Queen Margaret (see above).
- Further drilling will test for extensions to the mineralisation in this structural position.

Slug Hill
- Eleven (11) holes were drilled into the Slug Hill Prospect. Located 200m east of Queen Margaret, this prospect has had very little historic information and drilling here was designed to gain geological knowledge and assess the potential of any mineralisation.
- Although no significant mineralisation was intersected, certain samples will undergo geochemical analysis due to the weathered nature of the material drilled.
- Modelling suggests the historic workings are located adjacent to a sediment / ultramafic contact, subsequently supported by logging from this phase of drilling.
- BC8 believes there is potential for deeper mineralisation at this lithological contact.

- 25 holes were drilled at Strathfield to test the northern strike extension of the Queen Margaret mineralisation.
- Drilling confirmed the continuity of the Queen Margaret stratigraphy further north and intersected mineralisation in several holes, typically in discrete quartz veins and associated +/- fuchsite (a green clay mineral often associated with gold mineralisation in the Archean) alteration.
- The porphyry unit seen at Queen Margaret appears to be displaced by small-scale faulting.
- Best intersection of 4m @5.03 g/t Au.


Queen Margaret South
- Located 800m south of Queen Margaret, a small 8-hole program was designed to test the stratigraphy and previous intercepts of 1m at3.91 g/t Au and 2m @ 3.51 g/t Au.
- The geology logged confirmed a similar stratigraphy to Queen Margaret, with mineralised footwall and hanging contact positions on the porphyry.
- Best results recorded 1m @ 4.53 g/t from 51m and 1m @ 3.2 g/t from 66m.
- The drilling has confirmed the structural position of the mineralisation and confirms that mineralisation potential continues for at least 800m south of the main Queen Margaret mineralisation. Future drilling will target this strike extension potential.

- The drilling program, consisting of 22 broad-spaced holes, was designed as a stratigraphic program in an area between Strathfield and Melbourne United.
- Again, the drilling confirmed that geology is consistent with Queen Margaret and Strathfield and again, anomalism within the felsic units.
- Best intercept of 1m @ 1.56 g/t from 15m.
- Further drilling will focus on the felsic units and south towards Melbourne United.

What’s next?

- Finalise the Phase 1 drilling program. At the time of the release last week, BC8 had drilled 139 holes of an original 200-hole Phase 1 program. The Myhree Prospect has yet to be drilled but remains as part of the Phase 1 program.
- Extensions to the Phase 1 program at Queen Margaret have already been approved to follow up the encouraging intersections and improve geological confidence in the model.
- The extension program will cover an area up to 200m further south and extend the depth of information a further 20m.
- BC8 anticipate completion of the Phase 1 drilling by Mid-August.
- Phase 2 will commence in June and target the Anomaly 38, Boundary, Queen Margaret Deeps and Trump. New target areas at Anomaly 38B and at Galore will also form part of the program.
- Phase 2 will also include follow-up drilling from Phase 1 results.

Our View

- In our view, the Phase 1 drilling program results released thus far, do confirm the previous results at the Queen Margaret Mine and associated proximal prospects.
- We would go further and say that the drilling has elevated the potential of the footwall position in the porphyry and other felsic units as valid exploration targets for future drilling, displaying significant gold mineralisation in the tested positions but also good geological continuity along strike at several prospects.
- BC8’s aim of the program seems to us to have been largely accomplished so far in Phase 1.
- It will now remain to be seen at the culmination of Phase 1 and follow-up to Phase 1 in Phase 2, how the mineralisation in and around Queen Margaret stacks up as an open pittable resource and whether the increase in geological information could be used to extend and enhance the existing mineralised envelopes.
- We are cognisant that the Phase 2 drilling campaign will target those areas much less well known, but importantly, still displaying high gold grades.
- The Queen Margaret Deeps program is essentially about defining the potential for narrow-vein, high-grade gold mineralisation. The results of the Phase 1 program seem, at this stage, to provide encouragement for Phase 2.

Head of Research

Paul Adams

Markets Summary
Markets Review
Local Markets

The Australian share market closed steady with strong gains by the healthcare and utilities sectors countering yet another fall by Telstra and weakness among the banks and miners. The ASX200 index closed down 0.05 per cent, at 6,084 points on Monday.

CSL leapt last Friday after improving its profit guidance and on Monday shares in the blood products and vaccine maker were up $3.17, or 1.7 per cent, to a renewed all-time high of $186.12.

Hearing implants maker Cochlear rose $2.15, or 1.1 per cent, to $198.93.

AGL shares added 23 cents, or 1.1 per cent, to $21.52.

Telstra dragged the telecommunications sector in the red as it suffered its second widespread network outage in a month on the back of an unfavourable trading update a week ago. Telstra shares hit a new all-time low of $2.80, down five cents, or 1.8 per cent.

There was weakness among the miners after iron ore fell overnight by 1.6 per cent to $US66.70 a tonne with Fortescue Metals down 15 cents, or 3.1 per cent, to $4.71 while BHP Billiton and Rio Tinto shed 0.4 per cent and 0.9 per cent, respectively.

The major banks were mostly lower, given the banking royal commission has restarted hearings on Monday, except for ANZ which bucked the trend to rise 0.5 per cent.

The weakness on the local market came despite a boost to US futures markets following positive moves on trade talks between the United States and China.

In company news, Santos was up 11 cents, or 1.8 per cent, at $6.36 after private equity suitor Harbour Energy increased its bid for the Australian oil and gas major to $US5.21 ($A6.95) a share from $US4.98 previously.

And Godfreys shares added 0.25 cents to 33.25 cents after 99-year-old co-founder John Johnston declared his takeover bid for the vacuum cleaner retailer was now unconditional as his stake passed 58 per cent.

International Markets

US stocks rallied on Monday after the United States and China put their trade differences "on hold" to work on a wider agreement, while sentiment was also boosted by the nearly $US28 billion ($A37 billion) worth of merger deals.

The truce sparked a broad rally, with the Dow Jones Industrial Average up more than one per cent. The small-cap Russell 2000 hit a record high for the fourth straight session, though it was underperforming large caps.

US Treasury Secretary Steven Mnuchin said on Sunday the United States and China had agreed to drop their tariff threats, while China on Monday praised a significant dialling back of tensions.

The S&P industrial sector advanced 1.7 per cent. Boeing, which sells about a fourth of its commercial aircraft to Chinese customers, jumped 3.5 per cent, the biggest percentage gainer on the Dow and lifting the blue-chip index higher.

General Electric advanced 2.7 per cent on an $US11.1 billion deal to merge its transportation business with rail equipment maker Wabtec, which jumped about 3.9 per cent.

Still, not all US business leaders were happy with the trade war truce, with some cautioning that Washington would find it tough to rebuild momentum to address what they see as troubling Chinese policies.

At the close of trade, the Dow Jones was up 1.21 per cent, the S&P 500 gained 0.74 per cent, and the Nasdaq added 0.54 per cent.

Source: Morningstar

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