Red Metal, Chalice Mining link up in hunt for next copper-gold frontier

Red Metal Ltd has linked up with ASX-listed, $560 million mid-tier explorer Chalice Mining under an earn-in joint venture (JV) on ground prospective for copper-gold at Red Metal’s Callabonna project in South Australia’s Curnamona Province.

The JV will focus on a series of potentially significant magnetic and gravity targets along the northern margin of the site, where wide-spaced historic drilling has identified large hydrothermal breccias reminiscent of an iron oxide copper-gold (IOCG) mineralised system.

Red Metal says the project has not been sufficiently tested by the drill bit due to its remote location, opening the door to a modern systematic exploration and drilling blitz to unearth a potential new frontier discovery. An exploration program will target large hematite-style or magnetite-style copper-gold deposits. 

The company’s ground comprises two tenements on the northern fringe of the project within the Curnamona Province, a 300 kilometre-by-300km block of shallow to outcropping basement rocks 450km northeast of Adelaide.

Notably, the province extends east across the border into New South Wales and hosts the Broken Hill orebody, an underground deposit lying beneath the famous mining town. It arguably contains the world’s largest and richest zinc-lead ore deposit.

Red Metal holds a 51 per cent interest in one tenement with the right to earn up to 70 per cent in a heads of agreement (HOA) previously negotiated with ASX-listed Variscan Mines. Chalice can now step up to the plate and earn between 65 per cent and 72.5 per cent of Red Metal’s rights under the HOA with Variscan, by stumping up a minimum of $6 million in exploration across the next four years.

Chalice’s $6 million spend includes a commitment to complete a minimum of two basement drill tests within the first year. Variscan’s rights remain unchanged by the new JV agreement between Red Metal and Chalice.

An additional tenement, wholly owned by Red Metal, is also on the table, with Chalice able to earn up to 65 per cent by kicking in a further $6 million over the next four years. At least one basement drill test needs to be completed within the first 12 months.

Red Metal retains the right to contribute its 35 per cent share if Chalice completes the minimum earn-in spend.

Preparations for drilling in the 2026 field season are due to begin shortly.

Red Metal Limited managing director Rob Rutherford said: “It is within underexplored frontier regions like Callabonna where Australia’s next giant copper-gold deposit may well be uncovered.”

Elsewhere, the company is continuing to make progress on its flagship Sybella rare earths project in northwest Queensland, with results eagerly awaited from a metallurgical column heap leach test on its granite-hosted rare earths ore.

Sybella hosts a colossal 4.795-billion-tonne mineral resource grading 302ppm neodymium and praseodymium – the key ingredients for high-strength magnets – alongside valuable heavy rare earths including dysprosium and terbium at 28ppm, with yttrium coming in at 136ppm.

Heavy rare earths are worth their weight in gold, as they are critical in producing high-temperature permanent magnets used in wind turbines, medical imaging devices and electric vehicles. 

Chalice set the sharemarket alight during the depths of the COVID-induced market panic, when it revealed a game-changing palladium-nickel-copper discovery in March 2020, at Julimar, part of its Gonneville project 70km northeast of Perth.

The greenfield discovery sent Chalice’s share price on a rocket-like trajectory, surging from 20 cents at the beginning of  2020 to touch a high of $10 in November the following year. It has an existing resource of 17 million-ounces of platinum group metals (palladium-platinum-gold), 960,000 tonnes of nickel, 540,000 tonnes of copper and a cobalt inventory of 96,000 tonnes. Management says it is the largest undeveloped platinum group metals project in the Western world.

Red Metal’s decision to tackle its South Australian ground with a cashed-up mining firm like Chalice, holding more than $70 million in cash and listed investments and no debt at the end of December, may prove to be a strategic masterstroke.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au