Demetallica reveals new South Australian copper frontier as demand forecast to boom

Wed 05 Oct 22, 11:45am (AEST)
Two individuals shaking hands
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Key Points

  • Oz Minerals has committed to spend $4m to earn a 51% interest
  • Assays pending for copper grades; further drill targets planned
  • No word from Demetallica yet on its takeover offer from AIC

Demetallica’s (ASX:DRM) South Australian ‘Peake and Denison’ copper project is on the radar today with Oz Minerals (ASX:OZL) committing to stage 1 of a JV farm-in agreement.

In its latest drilling on-site, the drilling team hit visible copper mineralisation. 

Oz Minerals, should the company desire, can earn up to a 70% interest in the Demetallica-operated project by spending $10m. 

Oz has so far confirmed to Demetallica it will spend $4m to earn a 51% equity position in the project, which shareholders should note gives the former a majority interest. 

While not at 70% yet, Oz Minerals has decided to hang around, which the market is interpreting as a testament to the project’s potential. 

Visible copper, you say?

Initial drilling on-site the 2,500km2 acreage has returned a 264m core section with visible copper sulphides, and visible copper mineralisation at the ‘Mawson’ and ‘Wills’ anomalies. 

Mawson and Wills were the two targets selected for drilling. A third target, Wentworth, is temporarily on ice as the company re-works its drilling strategy following geotechnical difficulties. 

The Wills target, identified in magnetic data, ran to a depth of 720m and hit the ‘basement’ target at 408m. 

In that ‘basement,’ volcanic rocks were proven to contain copper sulphide mineralisation, though, pending results from the assay laboratory remain to be seen. Demetallica notes “overall copper tenor is expected to be modest.” 

While a high-grade hit may not come back, the company is excited to learn the massive magnetic anomaly its targeting continues to show indicative evidence of broad copper mineralisation. A step-out drillhole is planned for Wills in the near future.

Same story for Mawson 

Like the Wills target, Demetallica is waiting on assay results to prove what kind of copper concentrations are present at the Mawson target. 

Also identified in magnetic data, the company notes Mawson provides “ample space for higher grade copper to be developed within other parts of this target.” 

A follow up drill run to the east of the Mawson drillhole will be sunk some 600m away, probing an eastern lobe of the magnetic anomaly underground. 

No word on takeover offer 

As Demetallica teams up with Oz Minerals, a question remains: what happened with the takeover offer?

Last month, Demetallica received a $36m takeover offer from AIC Mines, sending shares up 43%. 

At the time, Demetallica advised shareholders to do nothing until the board had published a formal response. So far, there has been no response from Demetallica, who received the offer after only 5 months on the market. 

Given that AIC tried to buy the company out, and now Oz Minerals is taking an interest in the company’s Peake and Denison copper project, it’s easy to see why investor sentiment remains strong. 

Demetallica’s share price is up 8.9% in late morning trade to 30.5c. 

In its quarterly released yesterday, Demetallica revealed it had $8m in cash at the end of September.

UPDATE: In late afternoon trade on Wednesday (October 5th), Demetallica published an announcement outlining its intention to provide a decision on AIC's takeover offer around the 10th of October. At this time, Demetallica is still advising shareholders take no action.

A look at Demetallica's six monthly charts
A look at Demetallica's six monthly charts
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Demetallica was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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