634fa7aa1ca5c4a3528767.pdf
SIPA RESOURCES LIMITED
ANNUAL REPORT 2015
Sipa Resources Limited (ASX:SRI)
Sipa Resources Limited
Listing on the Australian Stock Exchange in 1987, Sipa Resources Limited is a Perth-based Australian gold, base metals and nickel exploration company with a proven track record.
Contents
1 Chairman's Address
3 Review of Operations
14 Board of Directors
16 Corporate Governance Statement
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Financial Report
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Directors' Report
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Auditor's Independence Declaration
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Consolidated Statement of Cash Flows
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Consolidated Statement of Changes in Equity
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Notes to the Financial Statements
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Directors' Declaration
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Independent Auditor's Report
76 Additional Statutory Information
79 Corporate Directory
www.sipa.com.au
Sipa Resources Limited
Chairman's Address
The exploration activities have significantly advanced our knowledge of the Ugandan projects enabling a greater focus on certain parts of the 7,300 square kilometre area.
My fellow shareholders
It is with considerable pleasure that I write to you having been Chairman of your company for just under seven months, in what has been a very eventful period, which
I have summarised below:
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Announcing some stellar early stage exploration results from Diamond drilling at its Akelikongo and Akelikongo West projects in Uganda
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Completing a $6.1m capital raising in July 2015, by way of share purchase plan and placement in what has been an extremely challenging and volatile equity market. My thanks go to the many shareholders who participated in this raising which will be used in ongoing exploration.
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Acquisition of the 20% minority interest in the Kitgum-Pader Projects in Uganda previously held by Geocrust Pty Ltd, a company owned by the late Nick Archibald's family.
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The sale of the Thaduna project for $2M of shares in Sandfire Resources which now results in your company's sole focus being on its Ugandan projects
The exploration activities have significantly advanced our knowledge of the Ugandan projects enabling a greater focus on certain parts of the 7300 square kilometre area.
While nickel and copper are the primary mineral targets at the Akelikongo/Akelikongo West projects, the Pamwa Zinc-Lead project remains interesting, as well as the
opportunity for base and precious metals in a region which has to date exhibited significant mineral endowment. In
this regard sampling for gold is also being undertaken. Our approach is to ensure technical excellence is combined with commercial rigour in order to achieve commercial success and enhance shareholder value.
There are many people who have contributed to your company's success. These people are Lynda Burnett, your highly committed and very capable Managing Director, who has spent four of the last twelve months in Uganda. Lynda is ably assisted by Tara Robson, your CFO and Company Secretary in Perth, and Bill Willmott who is a most competent country manager and in-country Director. I would also like to thank Joshua Tuhumwire our Ugandan Chairman. When I visited the exploration project based
in Kitgum in late July, I was extremely impressed by the commitment of all our employees.
I would also like to thank my fellow board members whose contribution and assistance to me have made my joining the board a smooth transition. I would also like to thank your outgoing Chairman, Ian Pearce, for his contribution
to your company's board over 14 years, 12 of which were as Chairman.
On behalf of the Board I would also like to thank the various stakeholders in your company for their contribution, not the least of which are you as the shareholders, the government of Uganda and the Directorate of Geological Survey and Mines, the Northern Ugandan Acholi people in whose region we operate, and our team of very capable geological and geophysical consultants.
Craig Ian McGown
Chairman
30 September 2015
Review of Operations
2 Sipa Resources Limited
Uganda: Kitgum-Pader Base Metals & Gold Project
The Kitgum-Pader Base and Precious Metals Project covers 7,300 square kilometres in central northern Uganda, East Africa.
Sipa 100%
East
UGANDAAfrica Kampala
Background
The Kitgum-Pader Base and Precious Metals Project was generated following the acquisition in 2011 of relatively new airborne magnetic/radiometric data sets over East Africa, and the subsequent geological/ metallogenic interpretation of the data sets.
During field reconnaissance in December 2011, rocks were recognised as being strikingly similar to the host 'Mine Series' sequence at the giant Broken Hill Lead-Zinc-Silver Deposit in NSW, Australia, to the northwest of Kitgum, Uganda. It was this observation, coupled with the compilation of East African geological, geochemical, and geophysical data which was the catalyst for embarking on the Kitgum-Pader project. Since that time, the company has collected over 60,000 soil samples, along
with geological mapping by the late Nick Archibald, Brett Davies and Russell Mason. The results of the field work and subsequent
drilling of soil targets has led to the discovery of 3 potentially economic mineral systems.
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The Intrusive hosted Nickel- Copper sulphide mineralisation at Akelikongo and Akelikongo West; and
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The Broken Hill-style Lead-Zinc- Silver, at Pamwa.
Akelikongo is one of the standout Nickel-Copper-Platinum Group Element soil anomalies identified to date. The element association and shape of the anomaly led Dr Jon Hronsky to interpret this as a possible 'chonolith' being a fertile host for nickel sulphides within a mafic- ultramafic intrusive complex.
At Akelikongo a high Magnesium Oxide intrusion hosts a zone of disseminated nickel and copper sulphide mineralisation above a zone of brecciated more massive nickel and copper sulphides. The mineralisation extends into the country rock felsic
gneiss indicating further remobilisation.
At Akelikongo West a second high Magnesium Oxide intrusion hosts disseminated nickel and copper sulphide mineralisation with 41m at 0.5% Ni and 0.1% Cu returned from 38m in AKD009. At the date of this report, follow up drilling to test strike and dip extents is currently underway.
The Pamwa Zinc, Lead, Silver and Cadmium soil anomaly was first pass drilled using RAB during July 2014 and resulted in the discovery of a Broken Hill Type Zinc, Lead, Silver and Cadmium mineralised system.
Diamond drilling confirmed thin zones of base metal sulphides (sphalerite and galena) in all three holes.
These intercepts are located within a wider Zinc, Lead, Silver and Cadmium anomalous zone defined by a 1000ppm Zinc contour and an even larger 1000ppm Manganese anomalous zone defined as the 'geological host sequence'.
Diamond drilling indicates the orientation of the mineralisation is broadly parallel to the foliation and can be correlated to the detailed soil data. The geochemistry shows a
strong association between Zinc, Lead, Cadmium, Manganese, and Silver a characteristic element suite of Broken Hill style of mineralisation.
Nickel Copper Akelikongo
Following the discovery of
disseminated nickel copper sulphide mineralisation in June 2014 using shallow RAB drilling, an attempt to use geophysics to look more widely in three dimensions was made. The initial RAB program had intersected a
number of mineralized intercepts from surface like:
- LMR002: 38m at 0.40% Ni (0.1%
cut off) from surface to end of hole (EOH).
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LMR003: 46m at 0.65% Ni from surface to EOH & 33m at 0.19% Cu (0.1% cut off) from 2 metres
- LMR004: 29m at 0.50% Ni
from 4m
- LMR009: 5m at 0.47% Ni (0.1%
cut off) and 0.13% Cu from 2m and 3m at 0.66% Ni and 0.18% Cu from 22m
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LMR022: 55m at 0.62% Ni EOH
including 20m at 1.00% Ni and 0.25% Cu from 1m.
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LMR023: 33m at 0.34% Ni EOH
- LMR036: 27m at 0.46% Ni
Following the RAB drilling a number of fixed loop electro-magnetic (EM) surveys were undertaken over
the Akelikongo area. The surveys identified some strong late time EM conductors which were drilled in early 2015. These surveys highlighted some zones of abundant pyrrhotite in upper amphibolite to granulite facies para-gneisses which are spatially related to the known mineralisation in ultramafic intrusive rocks. The zones lie immediately in the footwall to the known mineralisation at Akelikongo and as such may have masked the mineralisation.
The initial Diamond core drill tests in February 2015 returned results from AKD002 and AKD004 confirming the presence of a nickel copper sulphide bearing mafic/ultramafic sequence.
A high Magnesium Oxide ultramafic sequence was intersected around 50 to 80m wide with the lower 30m
containing disseminated nickel-copper- sulphides generally in the order of
>0.3% Ni. Intercepts such as 33m @ 0.36% Ni and 0.21% Cu from 103m from AKD002 and 24m @ 0.30% Ni and 0.08% Cu from 58m in AKD004 are examples of this mineralisation. This high Magnesium Oxide ultramafic is overlain by a pyroxenite with a brecciated footwall of felsic granulite gneiss.
The base of the nickel copper sulphide sequence includes breccia fragments (typically
- AKD002 0.5m @ 1.77% Ni and
0.06% Cu, 0.3m @ 0.23% Ni and
3.43% Cu, 0.24m @ 1.15% Ni
and 0.02% Cu
- AKD004 3.4m @ 0.93% Ni and
0.10% Cu, 1.3m @ 1.49% Ni and
0.11% Cu and 0.4m @ 1.59% Ni and 0.2% Cu
These breccia fragments are interpreted to have been remobilised suggesting the potential for a larger, more massive source zone nearby.
Following a detailed gravity survey in early 2015, a second drilling program was conducted. Results from the second drilling program conducted
in May to July 2015 confirm other mineralised intercepts along this prospective horizon which now extends 500m and is open in all directions with intercepts such as:
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25m at 0.4%Ni and 0.1% Cu from 95m returned from AKC001 within 126m averaging 0.25% Ni and 0.07% Cu from 0 to 126m
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115m averaging 0.31% Ni and 0.09% Cu from AKD005 from 116m to 231m including:
- 5m at 0.69% Ni and 0.12% Cu from 202m including
- 1m at 1.15% Ni and 0.3% Cu from 202m
- 23m at 0.48% Ni and 0.13% Cu from 208m including
- 1m at 1.86% Ni and 0.11% Cu from 214m
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141m averaging 0.28% Ni from AKD006 from 110m including
- 22m at 0.4% Ni and 0.15% Cu from 173m
- 7m at 0.48% Ni and 0.18% Cu from 229m
- 14m at 0.45% Ni and 0.23% Cu from 241m.
- 12m at 0.42 % Ni and 0.12% Cu was returned from AKD007 from 275m
Section B -B' (Figure 1) shows the continuity of both the disseminated and also the higher grade semi to massive sulphide zones.
Figure 1: Geological Section B - B'
of Akelikongo
Figure 2: Drill Hole Locations and Residual Gravity Image Inset at Akelikongo
The orientation of the dip of the footwall varies from 45 degrees to the north east, as observed from AKD004 in the south to vertical as interpreted from AKD002 and AKD005 to steeply dipping to the west from AKD006.
Our interpretation from the drilling, coupled with the gravity modelling, is that the host intrusion has a moderate plunge of the body to the north west under gneissic rocks.
The detailed ground gravity survey over a local area at Akelikongo in March 2015 was successful in spatially defining the known occurrences
of ultramafic intrusive and the fault/contact controlled footwall stringer, massive and breccia hosted mineralisation to the disseminated sulphide mineralisation.
Figure 3: Akelikongo and Akelikongo West drill hole locations showing location of inset located at Figure 2.
Akelikongo West
In July 2015, shallow RAB drilling 800m South West of Akelikongo tested a detailed 25m by 25m soil anomaly. The drilling resulted in
a second discovery of nickel and copper sulphides. Diamond drilling of AKD009 returned a wide interval of coarse disseminated pyrrhotite chalcopyrite and pentlandite mineralisation returning 41m
at 0.5% Ni and 0.1% Cu.
Figure 4: Section through Akelikongo West Nickel and Copper Sulphide System which shows the section through the mineralisation drilled
to date.
Figure 5: Polished NQ Core from 45.5m AKD009 showing pyrrhotite mineralisation and minor pentlandite
In summary, the combination of detailed 25m by 25m soil sampling, drilling and the ground gravity modelling has assisted us to locate outcropping mineralisation at Akelikongo and Akelikongo West and potentially other prospective ultramafic mineralised host bodies.
To date both mineralised systems identified are open along strike and down dip.
Follow up Diamond drilling is currently underway to determine the nature and shape of this newly discovered system at Akelikongo West and to further understand and vector towards high grade nickel at Akelikongo.
Regional Nickel Potential
Figure 6: Location of key drilling targets named in text
As part of the ongoing screening of exploration tenements using soils analysed by pXRF, a number of additional nickel anomalies have been defined in the Akelikongo Region and further afield. Targets such as Katunguru, Awach, Bidota and Akelikongo Regional were defined and initial RAB testing of these targets conducted. Other targets have had infill soil sampling to closer spacing such as Mt Goma to help finesse drill targeting.
Mt Goma
Soil sampling, mapping and rock chip sampling in the Mt Goma area has delineated a mafic ultramafic complex. Within this complex a strongly weathered zone of approximately 700m by 200m shown in red on Figures 7 and 8 has been defined
with pXRF soil sampling returning between 0.5% and 1.9% nickel. Figures 7 and 8 show the nickel and copper soil data and the location
of the rock chip samples with the geological mapping. One rock chip was assayed at the laboratory in addition to the many of anomalous rocks assayed by spot XRF. The rock chip returned a result of 2.64% nickel with the presence
of garnierite (a common oxidised nickeliferous mineral) identified.
Shallow RAB drilling is planned once environmental approval has been obtained to push an access track to facilitate the drilling in the second half of 2015.
Figure 7: Nickel in soil anomaly Mt Goma.
Figure 8: Copper in soil anomaly Mt Goma.
Lead Zinc Pamwa
Diamond drilling of three shallow holes for 581m at the Pamwa Lead Zinc target defined previously by soils and RAB drilling
was completed in March 2015. The results confirm that there are thin but correlatable zones of Zinc and Lead in all holes with best intercepts as follows:
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PAD001: 1.1m @ 5.76% Zinc (Zn) and 1.58% Lead (Pb) with associated Silver (Ag) and Cadmium (Cd) of 14.7g/t Ag and 256ppm Cd from 80-81.1m;
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PAD002: 2.2m @ 3.9% Zn and 0.86% Pb with 16.5g/t Ag and 152ppm Cd from 109-111.2m; and
- PAD003: 0.4m @ 0.96% Zn from 106.6m - 107m and 0.5m @0.87% Zn and 0.2% Pb. from 137.1-137.6m
Anomalous Cadmium and Silver results in the core associated with the mineralisation are also consistent with the soil anomalism. The association continues to point to a Broken Hill type mineralisation style. For this style of mineralisation to be economic it is considered that zones of structural complexity such as flexures or fold hinges are likely positions where wider accumulations of sulphides may occur.
Infill 25m by 25m soil sampling and XRF assaying at Pamwa indicates that the original soil anomaly has resolved into two zones orientated parallel to the regional foliation as mapped in the area. The soils also outline a number of discreet Lead-Zinc anomalous zones completely untested by drilling.
Figure 9: Image of 25m by 25m Lead and Zinc soil data with RAB drill hole locations.