Increased resource for its WA project. However, our focus today is on Serbia, and joining us today about the recent progress and the outlook for this exciting asset, I'm delighted to welcome Strickland's Managing Director, Paul L’Herpiniere and Non-Executive Director, Dr. Jon Hronsky . Both Jon and Paul have played an integral role in shaping the direction and strategy of the Rogozna Project for a number of years, and we're very fortunate to have them both on hand to update us on where to next for this remarkable asset. Before I hand over to them, just a reminder that this is intended to be an interactive session, so please use the Q&A tab on the right-hand side of your browser to send in your questions. Paul and Jon are going to step through a short PowerPoint Presentation, including some 3D visuals.
I should also point out that you may not be able to see Jon, but he is there. His camera was working this morning.
Very nice.
Good morning, Jon, and welcome to you, and welcome to Paul as well.
Thanks, Nicholas. All right, I'll just jump into it now. Obviously, as Nicholas said, we released the updated resource late last week on Thursday. Really nice growth there at Shanac, now 5.3 million oz gold equivalent, so about 700,000 oz increase. Pretty happy with that. Taking total Rogozna resources now to about 7.4 million oz gold equivalent. That's about 2 milli on oz over the last sort of nine months since Strickland acquired the project. We think that's a pretty good outcome. There's a lot more to come, and I'll jump into the presentation and walk everyone through how we got there, what are some of the really key aspects of the deposit and the project, and what we're planning on doing moving forward.So, i nto Serbia w e continually sort of include this in our presentations.
We're constantly getting a lot of new shareholders, and so we kind of like to remind people why Serbia is such a great place to explore. It's currently Europe's second largest copper producer, so it's got a long history of gold and copper mining and lead zinc silver mining. Over the recent years, a lot of the majors have come into Serbia. At the moment, probably the largest one that's currently producing in Serbia is Zijin Mining. They're a large Chinese group. They're roughly the fourth largest mining company in the world. They're producing copper gold from the eastern part of the country, up around Bor. In fact, over the last year, they've also made a really nice discovery up there, 150 million tons at about 2% copper and about 0.6 g gold. They're kicking a lot of goals.
Rio have obviously been in the country for a long time with their Jadar Project. BHP, over the last few years, have entered the country doing exploration. You have Dundee Precious Metals. Dundee is a Canadian mid-tier miner. They have been around for a long time in Serbia. They have two projects. The Čoka Rakita one, they discovered a couple of years ago, really nice, almost a couple of million ounces of high-grade, sort of roughly five gram gold in skarn, a bit like our deposits. They also own the Tulare project in the south, which is a copper gold porphyry. Obviously, we have Adriatic Metals further along in Bosnia, over a billion dollar market cap, started out as an explorer.
It is really thanks to them that actually we own this project, because back in the early days, we were really looking for an opportunity to emulate what Adriatic had done. We thought that there was likely to be a lot of other unknown or off the radar sort of projects. Back when we were with Ibaera, we did a six-month project generation exercise here, looking for the next Adriatic Metals. What came out of that was Rogozna, which at the time was owned by Eld orado Gold. Ibaera bought it off Eld orado Gold, which is a mid-tier Canadian miner as well. Bought that in 2019, obviously did the deal last year to put it into Strickland. Other than having amazing geology and a really good mining code, really clear how to operate, we have really good infrastructure through the country.
For example, through our project, we've got a sealed road, high voltage power line running right through it. Really good workforce, really well educated, and they understand this geology really well. In terms of our project, Rogozna, what makes this really different to what most projects you'll see on the ASX is its scale. It is a world-class scale project. You can see on this map here where we've got outcropping geology with alteration. That equates to about 30 billion cu m . That is absolutely massive. That is unlikely to be the extent of the hydrothermal alteration. It likely extends further to the west, but there in the central part of the license, the host sequence goes under a younger volcanic cover. We don't see the alteration through that younger cover.
Certainly, whilst we're looking at all of these deposits, Shanac, Medenovac, Copper Canyon, Gradina, we're obviously advancing each of those as part of our ongoing development work towards going through to feasibility studies over the next couple of years. At the same time, we're also thinking about the bigger picture here. I might just pass over to Jon to sort of give a bit of commentary on that.
Thank you, Paul, because as you've just pointed out, this is indeed a massive magmatic hydrothermal system, and it looks like we've only got kind of one edge of it. I always like to look at systems in terms of the large-scale context, in particular, fundamental deep-seated structures, which we know are critical in forming all big ore bodies. When we look at this particular situation at Rogozna, we see we're really at the intersection of three of these major features, including this Vardar Suture, which is a fundamental lithospheric boundary. There is a sort of a northeast-oriented structure, which is coming through from the south. There is a kind of west-northwest sort of strike-slip corridor as well. These are really the things that are kind of all intersecting here. That has produced this multi-stage volcanic center.
It has all the characteristics of a giant complex. As Paul sort of said, so far what we found is a skarn mineralization. Oftentimes in these sort of complexes, the skarns are kind of at the edge of a central porphyry. A good example of that is sort of Grasberg, Ertsberg in, yeah, that's right, in Papua, where the skarns were what was found first, and then the giant Grasberg deposit was developed. Probably one of the most exciting districts that I've ever been directly associated with in my career. I think just the fact that the more you drill, the more you find is telling you something pretty important, because I think that is a characteristic of world-class camps. You continue to find new mineralization. We had the Kotlovi discovery last year.
We've got a big exploration program this year that almost certainly will find more mineralization. Yes, pretty exciting.
Thanks, Jon. The plan for this year across the project is to drill at least 50,000 m. That's split basically about 30,000 m of resource drilling and 20,000 m of really discovery-focused drilling, testing this target pipeline, trying to make another couple of discoveries. Okay, Shanac, currently the biggest deposit, it's over 35,000 m of drilling into this deposit now. We are starting to get much better definition than we were sort of a year or so ago. It's basically gold and copper make up about 75% of the metal here. Gold is the dominant with about 60%. Then you've got about 25% zinc lead silver, which the zinc lead silver is pretty much mainly associated with fairly discrete zones and breccia bodies and in the volcanics overlying the deposit.
Through the core of the deposit, we've got 300-m thick continuous mineralization running anywhere from sort of one to two and a half gram gold equivalent. One of the key differentiators is within that, we've got multiple higher-grade zones, which are controlled by the margins of these intrusions and also the base of the volcanics. We've got several of those which run through the deposit. It's those higher-grade zones which give us the optionality around how to mine this thing. The resource update: 150 million tons now. That's been optimized using sub-level cave stopes. That's a bulk tonnage-style mining method where you basically drill up into the ore body, blast it, let it naturally cave, and then take out the ore from drives underneath it.
Now, because of the scale, this thing can do up to about 7.5 million tons per annum. That is how it has been optimized at the higher throughput end, sort of the lower cutoff of 0.6. That gives us roughly about $35 a ton of operating cost. We have assumed 80% metallurgical recovery. That is based off initial work done a couple of years ago, but also ongoing work, which we kicked off last year, which we are actually getting some pretty good results out of as well. We have optimized that at a long-term gold price of $2,250. We think it is fairly conservative, both in terms of using the $2,250, but also the modeling method, which is called MIK. That stands for multiple indicator kriging. That is a relatively conservative modeling method that builds dilution into the model.
I'll talk a little bit about that when I actually walk you through the model. One of the key aspects of the deposit is through the core of the deposit, over a 300-m vertical extent, we've got about 15,000 gold equivalent oz per vertical meter, which is absolutely huge. One of the key differences between this model and the model that we had a couple of years ago is we can now see the higher-grade zones have emerged within the blocks. Previously, that wasn't the case, but after last year's really successful drilling, we've now been able to optimize this at a range of cutoffs. At a higher cutoff of 1.2, we've got about 1.8 million oz gold equivalent of higher-grade mineralization. That's a really positive thing. Those higher-grade zones are what are going to be the focus for our mining studies moving forward.
Okay, as we jump into taking a look at the block model, I'm going to switch out of this presentation format and go into Micromine. That seemed to be fairly popular last time, so I'm going to do it again. All right. Nicholas, can you see that okay?
Yeah, all good.
All good. Okay. Just to zoom out of the project scale. What we're looking at here is the soil geochemistry done over the last few years. You can see.
Paul, maybe remind everyone of scale here as well.
Yep. Across the project, that distance is sort of about 15 km wide. By north-south, we've got about 13 km. Where the key deposits are on the main license, Shanac here and Copper Canyon to the south of that, that's only about 1 km. Copper Canyon to Gradina is 1 km. Shanac up to Medenovac is about 3 km. They're all really close. As we sort of go into Shanac, you can see the drill traces here. The different colors are these drill hole intercepts. The magenta-colored ones are where the final intercept grade is greater than 4 grams gold equivalent. Red is greater than 3 g gold equivalent, and yellow is greater than 2 g gold equivalent.
I've used those colors and those intervals to really show that whilst the overall grade is roughly 1.1, what it's made up of is a heap of higher-grade mineralization. Okay. All right. I'm just going to turn off the drilling for a second. We're going to do a little bit of a look at the geology because there's a few key features. This is still looking down in plan view. What we can see is a number of dikes, these pink features running through the deposit. I'm going to do a cross-section through that, through the southern part of the deposit. What we're looking at here now that we're in cross-section.
Paul, east to the right-hand side, and we're looking north.
That's correct. Yep, we're looking north. In the geology here at the top, we can see the volcanic cover. Sitting within that, we have a zone of mineralization. That mineralization is mainly lead, zinc, silver, but it does carry some gold as well. Sitting beneath that, we have the main what we call magnetite skarn, which hosts most of the copper gold. In between and around that magnetite skarn, we get gold as well. Here to the right, to the east, this sort of feature here, this is the ultramafic unit, the serpentinite. This is a major geological boundary. I'll let Jon actually talk a little bit more about this.
This is what's called the Vardar Ophiolite. What we see very commonly in orogenic belts is that the ultramafic rock, such as this serpentinite, basically gets thrust up where two big blocks have come together. We are very interested in these positions. Why? Because they are telling you that you have got a very, very fundamental, very deep crack in the earth that then gets exploited by multiple geological events over time, including just any major ore body will always be coming up such a big feature. We are basically right in the core of a very, very fundamental structural zone. As Paul's going to demonstrate, it is not just one event. We are seeing multiple events. We have got this earlier massive fault, and then we have got these younger dikes, and we have got various phases of those. Probably younger again is the mineralization.
Within the mineralization, it's multi-stage. Collectively, it's this big blob of mineralization. In detail, and this is the power of the detailed geology, we start to work out these detailed units. Some of them are higher grade, some of them are more copper. This is a really important part of the work that we're doing at the moment. When we finish that work, or when we get it to a certain level, it's going to really help us domain high grades within this ore body.
Thanks, Jon. We will just step through here through the deposit, just looking at the geology, and then I will load up the block model. As we sort of step from south to north.
Just to highlight, Paul, the geological elements that you're highlighting are those sort of well-defined, coherent ones that host the higher-grade mineralization. I mean, obviously, the whole thing is in a—we're not even showing the skarn volume, which is the big.
Yeah. If I want to show this, I can show the overall scan volume.
Maybe just quickly for context, because I think what you're showing now is most important, but just so people have that context, I think.
Yeah. So that's the overall skarn alteration volume.
Just so people understand, what that is is a volume where the rock has been so intensely altered that what was originally a limestone is replaced by a garnet, right? Massive garnet, really, really intense alteration. So it is giving you.
It gives you an idea of the scale of that from one side to the other. That's 800 m across. Vertically, the skarn body is about 600 m.
Yeah.
Okay. As you'll see, as we step along, it's over 600 m long as well.
Yeah. It is not uniformly mineralized. The mineralization is concentrated on these high-grade units we want to show you, but there is sort of a disseminated low-grade mineralization throughout.
Yeah. Okay. I'll just scroll through from this southern end, moving north, and I'll turn off that scan volume.
That's the scan now. This is all within that big scan envelope, guys. Yeah.
We can see towards the northern end, the copper-gold skarn gets a bit smaller, and the volcanics get a bit deeper. If I sort of put the drilling on again through that, we do not have much drilling to the north now. That is probably the last section there. One of the reasons we concentrate further south is the southern part definitely does have the best grade within it. You can start to see it really here. Part of the reason for that, we think, is we have this large intrusion at the southern end, which we call the southern stock, which seems to be really controlling, particularly this spatial extent of massive sulfides, which carry a lot of the grade.
Having said all that, Paul, and I think as people can see as we go through the sections, the western side is not as well drilled at all.
Yeah, that's right. That's a key focus, which we're going to. This western side has got much less drilling. This year, we're going to be really focusing a bit more on the western side. Now that we've sort of looked at that geology, I might turn that off and put the block model on now. What does that all mean in terms of resources? All right. We're at the southern end, really at the southern end of the deposit. We'll come basically here.
Maybe put us on scale again, Paul.
Yeah.
When you show the block model, maybe. Yeah.
Yeah, yeah. There is the scale. All right. Moving forward now, we're at the southern end of the deposit. You can start to see we've got these sort of higher-grade zones. If I put that geology back on again, you can see the high-grade zones sit adjacent to the dike. Moving forward, I'll just turn off the mag scan. All right. We'll move through. I've still left up this feature here, the big southern stock. You can sort of see where the mineralization sits between these dikes. Stepping through, we start to get a really nice well-formed zone of high-grade mineralization through there. That drill hole in there was 132. That one had 32 m from, and in terms of gold equivalent, 5.4 g in there. Nice grade in there. Stepping through, it starts to expand.
Again, you can sort of see the high grade sitting either up against the stock or these other dikes. Also.
It really shows that.
At the base of the volcanics is a really important spot because the base of these volcanics, they form a seal to the system. Now, mineralization obviously does get through, and that's why we get the base metals in the volcanics. The best gold grades generally sit right at the base of those volcanics.
Which is quite a common feature in these sort of systems, that these seals localize breach of formation and high-grade ore. That's exactly what we see here. Once again, that western side is really constrained by drilling.
Yeah. I'll keep the drilling on, actually.
Yeah, because it really does. Give it an extra few. There you go. That is a big gap, right? Yeah.
Yeah. Okay. Here we start to get into the zone where we got the really high-grade skarn last year, where we hit 90 m at 4 g. In fact, that is coming there. This zone becomes really important because 4-g dirt through there, it's got up to an oz. We've got 6 m at an ounce in there. That'll likely be the earliest couple of years, maybe three years of mining, because it is the top of the ore body. Remembering how this deposit will be accessed will be from the side. It's basically 400-odd m to the edge of the ore body, as it's currently defined. Into the guts, it's about 500 m. That's the shallowest part of the ore body. That's the high-grade gold zone. That's becoming a really important position for us.
We don't have a lot of drilling in it yet. There's only four or five holes total. One of the key focuses for this year is to drill more holes into that position and also the western side through here so we can particularly the base of the volcanics. We need to get a lot of holes through that base of volcanics on the western side of the deposit to better demonstrate the grade through there and hopefully get more of this high-grade gold skarn on the other side of that central dike. Just continually moving through. Still hanging together really well through here. Hanging together well. Still pretty good. It starts to break up a bit and get a lot wider.
You can see now, if I zoom out, the width as we move north, the actual width of mineralization there, that's 500 m wide. There is a lot more low grade, which is the blue and yellow. The mineralization does seem to get a bit more diffuse as we head north. We think that's because at the southern end, it has been a lot more concentrated in relation to that southern stock. As we continue to move just towards the end now, moving through, it's still getting and it's starting to get even more diffuse now. We basically have not got much drill holes at the northern end. In terms of how we constrain that and how we look at mining it, heading back to the southern end, just through the core of the deposit here. Okay. That is the sub-level cave stopes.
That, as I said, they were 0.6 cut off. That is what it looks like. We also did the high right through to 1.2. That is what the higher-grade stopes look like within it. As I said, those higher-grade stopes, that is going to be the real focus for the scoping study that we are currently doing at the moment. The other thing I would highlight here, if we look at the resource model, I mentioned MIK sort of builds dilution into the model. If we label display, another way of looking at it here. Within this zone of high-grade mineralization, if we just select these higher-grade blocks through here, you can see here gold grades of about three, gold equivalent of 3.1. This was where we drilled the 90 m at 4 g .
It's basically 25% diluted to what was actually in the drill hole. That's a really important thing. As we are able to close up the spacing here, that dilution will become less and less. Generally, what happens when you're using MIK, the more you drill, the closer you space, you generally lose some tons, but you increase grade. When we're looking at what we're probably going to end up with mining here, I certainly am running models running sort of 2.5 g-3 g through these better parts of the deposit. Just in long section, that's the really important part of what this thing is going to look like in terms of continuity. We can see a really nice zone of continuous mineralization. This is on the immediate east of the central dike.
This is the best zone in terms of certainly the drilling coverage. If we go across the other side of the dike, you can see there's nowhere near as much drilling on the other side. That's where a lot of our drill holes, or most of our drill holes, are planned this year to get better definition on the other side of that dike. All right. I'll jump out there. Jon, did you have any comments on the sort of the high-grade zones or anything?
I just wanted to say that we do have an increasing geological understanding of what those high-grade zones mean. We've had a world expert, Professor David Cooke, he's the head of the CODES Research Centre at Tasmania and a recognized president of the Global Society of Economic Geology and recognized global expert in porphyries. We've had him to the site twice. He's very excited about it. One of the things he's really helped us with is identify the geological controls on these high-grade. He's determined that, yes, we've got the copper-gold magnetite skarn, but we also have a series of these breccia bodies that we can start to map out.
It looks like within the breccia bodies, as Paul was saying, we get some zonation where the high gold is sitting close to the andesite contact, a pretty common occurrence in these type of systems. I guess the key is, and it's a challenge when you're drilling a very big body of mineralization like this, that it's like the blind man and the elephant. You're trying to work out what's going on. You know it's big, but it's a bit complex. Why it's a bit complex is you just don't have enough drill holes. We're resolving that now. We're drilling more and more, and these patterns are emerging.
The key thing about this deposit, as opposed to, say, a big giant porphyry where the grades do not change much, you might have 100 million tons, but it might be like 0.4 copper, 0.4 gold, but it is never going to change much. We do see this genuine geological variability with continuity of these higher grades. We have this fairly unique combination globally of size and optionality. Optionality to develop early on high grade with relatively low capital. As a smaller company, that is obviously much more beneficial than some sort of deal where you have to put $2 billion on the table before you produce any ore. I think it is a unique aspect of this being a skarn deposit, but a very, very large skarn deposit, possibly one of the largest ever found, that gives us this opportunity.
Yeah, we'll continue to, the holes we drill this year will enable us to much better define the geology. This time next year, we'll have it really worked out.
Thanks, Jon. Okay. All right. I'll jump back into the presentation quickly. All right. Can you see that, Jon?
Yep. All good.
Yeah. Okay. All right. In terms of upside, plenty of upside. Up in the northern part, we've got a couple of old holes which hit sort of eight m at seven and nine at three. That's not been followed up. That's very close to that ultramafic contact. This whole volume really along the eastern edge has hardly been drilled through there. Obviously, to the north, we've got a few hits, mainly in the volcanics. We've got no real drilling beneath the volcanics up there. It's completely open. That's probably not an immediate focus for us. If we wanted to just get some easy growth for growth's sake, we could. The volcanics are getting fairly deep out there. Plus, as we saw in the block model, the grade's getting a bit more scrappy. Not really focused on chasing out there.
What is quite important is the Red Creek prospect over here. We are drilling that as we speak. This is only 500 m away. We have got a really strong geochemical anomaly, plus geophysical anomaly associated with that. We are drilling that one at the moment. That is, like I said, only 500 m away.
Paul, there's also the northwestern edge that is pretty good intersection there at Shanac. It's pretty unlikely that the ore body just that's right. It's more likely to feather north rather than finish a sharp wall like the current region.
Yeah. Yeah. If you keep going this way, it's basically directly along strike towards Medenovac. There's no drilling between here and Medenovac. This could easily get a lot bigger. It's not our immediate focus. We do want to, as I said, test Red Creek as a first point of call. Next steps for Shanac. We've got about 6,000 m currently planned for this year. That's about 10 holes, mainly looking at the western side of that central domain, testing that prospective andesite skarn contact there, and also getting some extra holes into that high-grade gold skarn that we discovered last year. All of this feeding into an updated model. We continually update our models generally every month. The focus of that is to continue to improve the model, keep better demonstrating, and mapping the distribution and continuity of those higher-grade zones.
In terms of met test work, obviously, polymetallic deposit, met is really important. Whilst we got really good results from the initial met test work we did a few years ago, we kicked off the second round of met test work a few months ago. That work is going really well. We're seeing actually some improvements, particularly associated with the fact that now we understand a bit better the zonation in the deposit. We've been able to sort of do test work specifically on each domain, both the high-grade gold domain and separately the copper-gold domain. Now that we're able to do that, we're actually seeing some improved recoveries. We are in the process of doing mine studies.
Obviously, the met test work feeds into that, but we're constantly running different models of bulk mining versus selective mining and what they each look like, what sort of infrastructure each of those sort of options needs. Obviously, the bulk tonnage mining needs a lot more infrastructure versus selective, and sort of trying to nail down the CapEx for each of those options. We have also recently kicked off a major expanded environmental piece of work where we're expanding the environmental impact studies to a very broad area. We're all saying the same thing with the social impact. It is really important that we're able to demonstrate a pathway forward here that sort of minimizes that impact and produces a really sustainable development pathway. To summarize, in part, Rogozna, how it's important to Strickland, we've got obviously 7.4 million oz of inferred resources currently.
The goal for this year is to grow that quite a bit, particularly we'll be putting a lot of holes into Gradina this year and aim to get a maiden resource out for that later this year and deliver a scoping study by the end of the year. With the current funding that we've got, we think we're able to really deliver on what is a pretty ambitious target. We will be pretty much the most active junior in the market this year with the drilling we're doing here and across the Yandal. Really exciting year for Strickland and its shareholders and stakeholders. Thanks for your time today. Look forward to answering some questions. Thanks very much, guys. Very slick presentation. We do have a few questions, so we'll dive straight in. The first one here might be a good one to throw over to Jon.
How likely is it that all or some of the major deposits at Rogozna are connected at depth?
I guess I would say that they're likely to be part of the same system in the sense that they're probably all sourced from the same underlying magma chamber. I mean, one of the things that we've recently begun to understand about porphyry-type systems through the work of people like Professor Bob Loucks is that the ore fluids actually form a lot deeper than we used to think they did, so probably at least 30 km deep. What we would imagine is that there's a big magma chamber down there about 30 km deep. Imagine that there's pulses of this ore fluid coming out of this magma chamber, but they're not all coming up exactly the same spot. Some of them might come up one pathway. Some of them might come up another pathway. That's why we see these individual deposits.
Sometimes multiple pulses do come up the same pathway, of course. What that does is that creates the bigger deposit. In one sense, yes, they almost certainly are all connected at depth because the way we understand these systems. Some of these deposits may actually be physically connected at depth, but not at the scale of 30 km, at the scale of within a kilometer or so. We look at Kotlovi and Medenovac. We look at Red Creek and Shanac. We think, "In three dimensions, could all this mineralization connect up?" Yes, it could. I mean, there are a number of different controls at the deposit scale. There is obviously the control of these structures and these various dikes, as Paul showed. Another control is the stratigraphy, the layering within the original host sequence.
The interaction of those elements can produce a moderately complex geometry. It does allow the possibility for some of these to connect. In summary, big picture, they all connect at some level at depth, and some of them may connect at a more shallow level.
Thanks very much, Jon. Very interesting. Next question here. Paul, an investor says that you have spoken in the past about targeting 10 million oz in Serbia, possibly even this year. Given that you've made big strides towards that recently, how confident are you that that 10 million oz target is achievable in the near to medium term?
Yeah. Look, I'm still very confident that there's 10 million oz there. I think we've got visibility on that now. In fact, I probably had visibility on that last year. It just comes down to timing. Will we get there this year? We're aiming to. That's certainly the goal. Really, the second part of that is, "All right, after 10, where to then?" That's why we've sort of got a fairly big part of our budget focused on exploration because we think there's so many targets here. From what we've seen, given how close all these deposits are, we think it's a no-brainer. There's definitely going to be more.
We really want to see get it to 10 million oz as quick as possible and then at least show some visibility towards more, a lot more, and at the same time progress through the study phase because we think this is the sort of project where we can avoid the Lassonde curve, right, where most companies go through the development cycle. Once they're starting to get into PFS and DFS and development, obviously, the share price goes through the valley of death. We think there's so much, obviously, geologically and resource-related upside here that we can really have the best of both worlds and progress the project through that development cycle, but at the same time, we're making new discoveries and growing resources while we do it. Yeah.
Just on that, Paul, just worth reminding, we haven't touched on it today, but reminding everyone about our exciting porphyry prospect at Jezerska Reka,
Yeah. Should start in a couple of weeks.
Yeah. My point there, I suppose, is that you do not need to get too much of those sort of widths. If it is 400 m at 0.6 or 0.7 g, all of a sudden, you are away to the races in terms of particularly at current gold prices in terms of a large gold inventory.
Thanks very much, Paul and Jon. I might just throw in a quick question here that was emailed in earlier. What effect does the changing gold price have on your gold equivalent calculations and how you think about things like cut-off grades, etc.?
Yeah. That's a good one, Nick. It's been a bit tricky playing with that. Obviously, these are polymetallic deposits, gold dominant. We report in gold equivalent when we're reporting drill results and also using headline numbers for resources. I know that kind of drives some people, more WA gold-focused guys, a bit nuts. I apologize for that, but it is just the way it is. In essence, since we did the last Shanac resource back in 2023, the gold price was obviously a lot less. We used $1,750 for gold in that gold equivalent calc. We've just updated that, and now we're using $2,250. What that has essentially done, it's reduced the gold equivalent headline number for grade reporting. Now gold is contributing more dollars per ton as opposed to copper, lead, zinc, silver, just by proportion.
I guess very simplistically, when you look at the current and the new resource update, all the grades for each of the individual metals actually increased, but the gold equivalent was the same. If we were to use the same formula that we used back in 2023, the gold equivalent grade would be 1.2. At the higher cut-off, it would be closer to two. Yeah, look, that's just a quirk. It does cause me a few headaches, both in terms of communicating to the market and also when we're looking at the cut-off grades and stuff.
When that's all moving around with those formulas, essentially how we treat the cut-off grade is we're actually treating the cut-off grade as dollars per ton, a bit more like a net smelter return model, where once we know what that dollar per ton of OpEx is, we then convert that back into gold equivalent.
Okay. Thanks, Paul. Let's go to the next online question here. Is the 80% recovery based on test work or just a conservative assumption at this stage?
No, it was based on initial test work that was sort of done back in 2021, 2022. I mean, we did get higher than 80% for gold, for example, and copper, but there's a little bit of an unknown on the zinc. We know from Medenovac's test work we can get 80% zinc recovery, but there hasn't been any test work done on the zinc yet at Shanac, and we're doing that now. It is probably slightly conservative. As I said earlier, I think we're seeing a little bit of upside, particularly for the gold and copper recoveries. Even if we're then conservative with the zinc recovery, we still think it'll be around the 80-maximum sort of 85% met recovery. That is pretty stock standard for polymetallic deposits.
Eighty to 85% is sort of the general realms as opposed to 90+ % for just a gold-only or a copper-only deposit.
Thanks, Paul. There's just one more online question here just about the political situation in Serbia. The investor says, "Is there anything to be concerned about that the shareholders should be concerned about with some of the recent events in Serbia?
No, sort of none of that has really affected us on a day-to-day basis. Obviously, it does get in the media a little bit. There's been quite a lot of protests against the government over the last couple of months in relation to an accident that occurred a few months ago. Particularly the students across Serbia have been protesting pretty hard against the government and wanting real transparency from the government. It has got a few headlines, but certainly from what we're doing, where we are, we're sort of well away from that. We're able to sort of knuckle down and get to work. The ruling party in Serbia has been in power and has been quite stable for over a decade. On a lot of fronts, it's business as usual.
Certainly, yeah, there has been quite a bit of protesting over the last couple of months.
Thanks, Paul. Look, probably an extension, I think you probably dealt with that question, but another investor just asked here that the problems that Rio had with their project, you do not see any issues?
Yeah. We get asked that one a fair bit for good reason. We are a very different situation to Rio where Rio's project is located in a valley in the northern part of the country, which is one of the major agricultural areas of Serbia. It does not have a history of mining through there. It is obviously lithium jadarite, which is a new mineral. There is not a lot publicly known about jadarite and the processing of jadarite. It was quite an easy project for opposition to get stuck into. Where we are, we are in obviously a historical mining district. We are up in the mountains. There is an operating mine 4 km away. There are not many people who live up in the mountains on the footprint where we are exploring. Very different situation to Rio.
Notwithstanding, the government are really strongly behind Rio's project and want it to be developed. Even last year, signed an agreement with the EU for the supply of critical minerals, including copper and lithium. That is a really positive sign that the government are very much wanting that mine to be developed. Rio just need to be able to demonstrate, do further work on the environmental impact and be able to demonstrate to some of the opposition groups that they can produce lithium from that project in a sustainable way with pretty low impact.
Thanks, Paul. Let's go back to a geological question. Can you please expand a little on the Red Creek prospect, please?
Yeah, I can. Jon, do you want to talk about that one?
Yeah. Look, I guess what we've had at Red Creek is some pretty interesting surface indications of the presence of skarn mineralization. It's sort of more or less along strike from the sort of Copper Canyon trend. You see Red Creek there.
Yeah. I'll jump in actually. Mic reminders though this, Jon.
Yeah. No, that's good. Paul, just remind me, what geochemistry are you showing there?
This is gold and arsenic.
Yeah. Okay. Okay. We see pretty big.
We're looking at IP. We're looking at IP. We've got some IP showing up here.
Yeah. Okay. Chargeability on it. All right. No, look, I think that's good. I just sort of remind people that when we're looking at the surface here, primarily we're looking at surface exposure of these andesite volcanics, which are actually sitting on top of the carbonate sequence, which hosts most of the skarn mineralization. The carbonates only crop out really in the Copper Canyon area. Maybe you could just highlight where that is, Paul.
Yeah. I'm going to draw a long section through here.
Yeah. Okay. Yeah. All right.
This is Red Creek over here. This is Copper Canyon on the left-hand side. We're looking west. We've got south on the left and north.
Put the topography on and the andesite on if you're going to do this. Yeah.
That's topography. Let's see if I can put that's the andesite coming through there.
Yeah. Okay. While it's not clear on this, the andesite, basically, the contact of the carbonate and the andesite hits the surface between Copper Canyon and so maybe, Paul, if you could just show that with your gear about there. At Copper Canyon.
Yeah. The andesite comes up and then it comes up there.
Yeah. Something like that, right? This cross-section is to the west of the Shanac, but it's in the same orientation as the center of Shanac. I guess what intrigues us is that, first of all, we are on that same north-northwest corridor that's localizing the Copper Canyon mineralization. The purple volumes are our IP chargeability volumes, which are responding to disseminated sulfide in the case of Copper Canyon, the actual ore body. We can see that extending towards Red Creek. When we look at the geochemistry, what focuses on Red Creek, it was two things, the geochemistry and the geophysics. That red volume is a low resistivity volume, if I'm correct, Paul?
No, that's the gravity.
Gravity. Okay. That is a gravity anomaly. Gravity anomaly was actually how we made the Medenovac discovery because these skarns, when you replace a carbonate with garnet, you do tend to increase the density of that. That was critical in our Medenovac discovery. I suppose what we are fundamentally looking at here in Red Creek, just to sort of maybe in plan would be better, Paul, if you do not mind.
Yeah.
Just to illustrate the basic concept is there's really three elements that make us like Red Creek. The first is that there's a north-northwest structure running through Copper Canyon into Red Creek. Maybe you could just draw that for me, Paul, please, along the axis of the, yep. Okay. You've got that structure there. That's clearly controlling the Copper Canyon mineralization. It's a subparallel structure to this main Vardar Suture Zone orientation. You can see that the IP anomaly is heading off in that direction. We're probably losing it. Maybe it's getting a bit deeper. You can see that there's a little blip of an IP anomaly coincident with another strong gold arsenic anomaly. Here, the carbonate rock that hosts the skarn is not exposed at the surface. What is exposed is the andesites.
Now, these andesites are actually premineral. Even though they sort of act as a seal on the mineralization, they're there before the mineralization. The ore fluids bleed up through it, and they produce these halos. When we look at that gold anomaly, arsenic gold anomaly there, we interpret that as fluids from something underneath along that structure. We're basically drilling holes to see whether there's a repetition of a skarn body. We're drilling that at the moment. I guess that'll be something that'll be announced in due time.
Thanks, Jon.
Thanks, Jon. There are some quite detailed questions here. Paul, I might just deal with a couple of them and then potentially take some of these offline. Just starting at the top, sub-level caving, can you please expand on what that is and are there alternatives?
Yeah. I'll do it on the screen again and sort of show the states. I'll turn off the drilling and put on the mining. Essentially, what sub-level caving does—I'll put on topography. Sub-level caving is you sort of will come in and come into sort of a portion down towards sort of starting off probably around the upper middle part of the ore body. You'll drive in here, for example, and they will blast this block above it. That will naturally cave down, and then they'll take the ore out. It's basically a bulk-tonnage scale mine method for sort of really thick mineralization zones. That's why it's got relatively low cost per ton. Really, the sub-level cave or even block cave is really the domain mainly of major mining companies. It's a pretty specialized skill.
It's the way they mine these big deposits. There's a reason why most of the biggest mines in the world are done by the largest mining companies. That's because they're the deposits that they want, but also they're the ones with the skills to be able to extract them. Now, importantly.
Yeah. No, I was just going to make a point, though. An important distinction to be made between sub-level caving and block caving in that sub-level caving has way more flexibility. Block caving requires a pretty significant pre-development capital expend. Once you start it, you're sort of committed. If you're mining a porphyry underground, even a relatively high-grade one, you're pretty much stuck with block caving because it's the only method that can work. Once again, the value of having the higher grades we have here is that we can use a much more flexible method like sub-level caving.
Yeah. That is really, as I said, when the large companies are looking at deposits like these, they are either looking at block caving or sub-level caving for the economies of scale. Importantly, in terms of alternatives for us, it is chasing just the higher-grade mineralization. Then you are looking at a more selective stoping method of mining. You do not need to mine it by caving. You can just come in and do long-hole open stoping, for example, which is a pretty common method, still relatively low cost. Yeah, we are still going to.
To the most WA gold deposits, for example.
Yeah. We're still going to have pretty high, pretty thick stopes, 30 m-40 m through the best parts. That's, again, fairly low cost, but much lower CapEx than the sub-level cave and especially block cave. We would be able to start mining this at sort of 1.5 million ton per annum sort of scale. If we're sub-level cave, it'll do up to 7.5 million ton per annum. That's really the difference. There are obviously repercussions for the amount of capital that each of those need. The higher-grade option needs a lot less capital.
Okay. I'll just deal with a couple more here. Observation in respect to the resource. Tons increased, grades stayed the same with increased gold, decreased base metals. Was any impact on metallurgy?
No. No. We haven't factored in the updated metallurgical test work yet. Probably the impact it has had a little bit is now that we understand the zonation a bit better. Back looking at this image here, the upper zone being the gold zone, we're seeing in the met test work that's focused on that zone, we're seeing really excellent recoveries, gold recoveries from flotation in that zone. Secondly, now that we understand the distinction, because the old test work took bulk samples from everywhere and put it together, now we're able to do it specifically by domain. Again, where we've got the met test work just on the copper-gold material, we're getting much better copper recoveries of up to 90% in there. That's probably the main effect. We haven't applied that to the resource model. We're still stuck with the conservative 80% recovery.
Yeah, we have got higher grades in here now, and they are going to impact on that recovery in a positive way.
Excellent.
You often see that relationship, don't you, where?
Yeah. Generally, the higher-grade material, you generally get better recoveries.
Yeah.
Yeah. The extensions at Shanac, do they have any geophysical or other support?
Sort of. There's always some degree of support. If I put on the geophysics, we've got the gravity anomaly here. We've got the IP. You've got IP chargeability further east, and we've got no drilling out there. That's an obvious extension here. If we look in plan view up here where we've got this mineralization, we've got an IP anomaly associated with that as well. If we look in the bigger picture, if I turn off the geophysic IP for a sec, we'll actually put on mag. Yeah. One of my actual favorite conceptual targets is sort of out here where I'll put on geology. All right. We're looking at a long section now view looking west. We've got the volcanics getting deeper. We've got an IP anomaly in the volcanics. We've got a massive mag anomaly sitting underneath the volcanics.
That is probably my favorite more conceptual target. It is a bit deep. To get into that, it is a kilometer. Certainly, geologically and the geophysical support for that is pretty strong.
Excellent. Paul and Jon, there's a couple of detailed technical questions, which I might just reach out to this gentleman individually afterwards, just in the interest of keeping this to an hour-long session. Perhaps if I could just ask you to wrap it up for us, any sort of parting thoughts?
I think the key thing here is the project continues to deliver as we do more work. I think it's like unwrapping a package and starting to see more. Every new bit of information is starting to shed light. For me, there's going to be a critical mass time when a lot of things are going to fall into play. I know there's this sort of bit of a cliché in our industry where you crack the code. I feel like that's where we are heading. You just got to have data. I mean, you can have all the geophysics and the geochemistry in the world, but you got to have good geological data. We've got a fantastic geological team there. They've been guided by a world expert in Professor Cooke. We are starting to work it out.
What's going to really help us work it out is the drilling we're doing. By the end of this year, we're going to have so much more drilling and, okay, hopefully so much more mineralization, but also so much more knowledge that we build back into our understanding, not just of our existing prospects, but the bigger scale opportunity. I mean, I'm fascinated by that Paul's slide. His first slide we showed was at 60 billion cubic m of alteration in kind of a half-moon shape. I mean, that's coming from a center somewhere. That's what I want us to try and find.
Yeah. I'll leave it at that. I think it's a good time to be a Strickland shareholder. I'm pretty excited about what the year is going to deliver us. We think by the end of this year, I think the wider market will have cottoned on to what we've got as well.
Thanks very much, Paul and Jon. Fantastic presentation. Really informative and very much appreciated. Thanks to everyone for your very constructive questions as well. A recording of this will be released later this morning. We thank you for joining us to catch up on the Strickland story. I'm sure we'll have Paul and Jon on again in the not-too-distant future. Thanks, everyone, for your time, and have a great day.
Thanks, everyone.