November 26, 2018 / 7:21 AM / in 19 days

Rio Tinto leads copper charge into Western Australia's Paterson region

MELBOURNE (Reuters) - A hive of mine exploration activity is underway in a remote corner of Western Australia’s Great Sandy Desert, led by Rio Tinto Ltd, which has boosted its holdings 10-fold in the little explored Paterson province in the past year.

FILE PHOTO: A sign adorns the building where mining company Rio Tinto has their office in Perth, Western Australia, November 19, 2015. REUTERS/David Gray

Rio’s interest in the area – flagged by its application for nearly 30 exploration licenses - has sparked a stampede into adjacent lots by other explorers, who see Rio’s aggressive activity as an indicator of a highly promising find.

Interest was further intensified by the global mining giant’s recent application to build an airstrip in Paterson - roughly halfway between Perth and Darwin, indicating it’s in for the long haul.

“The smoke signals are all telling us they have made a discovery but it remains to be seen ... whether they will consider it significant enough to go and release to the market,” said analyst James Wilson of broker Argonaut Securities in Perth.

Aerial photographs circulated in local media this month showed signs of a camp being set up and analysts said drill rigs they could identify suggested the miner was preparing for some very deep and expensive holes.

A spokesman for Rio Tinto said the miner typically does not comment on exploration.

(GRAPHIC - Paterson play: Mining exploration firms with stakes around Paterson province in Western Australia have seen share prices rise in recent weeks - tmsnrt.rs/2RfKzTO)

Excitement about the region has been further fueled by London-based explorer Greatland Gold which this month reported “world class” copper-gold drill results from its Havieron license in the province.

Rio Tinto is also exploring Antipa Minerals’ Citadel project after agreeing to spend up to A$60 million ($43 million) to earn up to a 75 percent farm-in.

PROSPECTIVE GROUND

Lying east of the better-known Pilbara iron ore region, the Paterson province has long been recognized as an area prospective for copper. It hosts two of Australia’s biggest copper and gold mines, Telfer operated by Newcrest Mining, and Metals X Ltd’s Nifty.

(GRAPHIC: Australia's major minerals provinces, highlighting the Paterson region - tmsnrt.rs/2R8NyND)

However, sandy soil and the remote desert location have made exploration both difficult and expensive.

Renewed interest has come as miners have increased exploration spending following a commodity price recovery and as technological advances have opened the region’s potential.

“The thing that stopped people has been the sand dunes. As we are running out of places to look for mineralization that is sticking out of the ground, the obvious place to start to look is underground,” said Lynda Burnett, managing director at Sipa Resources, which is active in the region.

“People are drilling better. There are other more experimental techniques, people are sampling the sand dunes and picking up trace elements of mineralization, they are sampling plants,” said Burnett, who as a geologist first worked in the region in the 1980s.

Sipa Resources has stepped up its exploration in the Paterson region in the past three years and in August applied for more ground. It’s not the only one, as shown by an analysis of government data for Reuters by McMahon Mining Title Services, with unclaimed tenements now scarce.

Metalicity lodged nine permit applications in the first half of November, while Independence Group took a stake in exploration rights holder Encounter, at a 60 percent premium to its 20-day share price average mid month.

(GRAPHIC: Rio Tinto is the biggest holder of exploration licences in the Paterson - tmsnrt.rs/2RjunBa)

Iron ore miner Fortescue Metals Group, led by billionaire Andrew Forrest, is also exploring in the region, taking out six exploration permits in March and another six in June.

“There’s now absolutely no ground available. You’d struggle to find a square kilometer,” said McMahon principal Shannon McMahon.

Reporting by Melanie Burton; editing by Gavin Maguire and Richard Pullin

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