Figure: Mackenzie Springs Nickel-Graphite Project – recent sampling

MACKENZIE SPRINGS NICKEL-GRAPHITE PROJECT
The McKenzie Springs project is located in the Kimberley region of Western Australia along strike to the Savannah Nickel Mine (Panoramic Resources Limited) and adjacent to the Macintosh Graphite deposits (Lamboo Resources Limited). The project comprises tenements E80/4808 and E80/4812 where first pass reconnaissance field work has recently been conducted.
The work included geological mapping, sampling and petrographic work following up on several areas of known mineralisation identified by previous exploration and further new areas of potential interest. The first areas visited were priority targets that contained nickel, copper and cobalt mineralisation in geological settings similar to the nearby Savannah Nickel operation and recently discovered graphite mineralisation (see figure).
NICKEL-COPPER
The East Kimberley region has excellent potential for hosting magmatic nickel-copper sulphide and PGM mineralisation (Platinum Group Metals). Two significant mineralised bodies have been discovered in this area to date within intrusive complexes of the Halls Creek Orogen. These are the Panton Project, with a resource of 14.3 Mt @ 4.5g/t PGM+Au (Panoramic Resources, March 2012) and the Savannah Cu-Ni sulphide deposit with a resource of 3.1 Mt @ 1.5% Ni, 0.89% Cu and 0.08% Co (Panoramic Resources, July 2013). These deposits, owned by Panoramic Resources Ltd (ASX CODE: PAN), are 30km and 9km away from Cazaly’s E80/4808 McKenzie Springs tenement respectively.

The Savannah Nickel Operation has been in production since 2004 and exports concentrate to China via the port of Wyndham (240km to the north via the Great Northern Highway). Recent near mine exploration by Panoramic has indicated potential to extend the resource and mine life beyond 2017 with the discovery of a new lode at Savannah North.
Mineralisation within the Company’s McKenzie Springs tenement is associated with the basal contact of mafic-ultramafic rocks in a similar geological setting to the Savannah Nickel Mine to the north. Gossan outcrops were rock chip sampled returning results confirming the potential for ore grade mineralisation and previous results. Of particular note is one very high grade result which returned 12.8% Cu, 1.92% Ni and 0.17% Co taken from the McKenzie Springs No.1 gossan. Previous work here included mapping, geophysics and rock chip sampling by Anglo American (“AAM”) and Dampier Mining Company Limited (BHP) in the early 1970’s. The gossan is of interest due to the consistent nature of elevated copper and nickel results and some IP anomalism (returned from an Induced Potential geophysical survey). Three very shallow holes were drilled by BHP to less than 60 metres confirming the elevated copper-nickel anomalism. Two further holes were drilled by Breakaway Resources Limited in 2006 at the southern end of the gossan, which outcrops for over 120 metres, but returned low level results.
The company sees potential for further work at McKenzie Springs No.1 and also more regionally over other gossanous and covered areas where similar stratigraphy to that hosting the Savannah deposit to the north exist in the project area. Compilation and sourcing of historic data sets, including airborne geophysics, is ongoing and will assist in further target prioritisation for follow-up on the ground.

GRAPHITE
During reconnaissance at McKenzie Springs, the potential to host significant high quality graphite mineralisation was recognised following the discovery of outcropping graphitic schist hosted within lithologies of the high grade Tickalara Metamorphic suite. Research of historic data identified further evidence of graphite bearing units associated with metamorphic rocks of the Tickalara Metamorphic suite which trend through the tenement for ~15 kilometres.
This is the same unit hosting Lamboo Resources Limited’s neighbouring Macintosh Graphite Project where an Indicated and Inferred resource of 7.135Mt @ 4.73% Total Graphitic Carbon for 337,700t of contained graphite has been released (ASX:LMB, January 2014). Of particular note is that the graphite has been identified as high grade flake graphite with the potential to be chemically converted into graphene.
Due to the highly friable/’soft’ nature of the host graphitic schist it is rarely seen in outcrop although the prospective stratigraphy could be accurately traced using airborne and ground electromagnetic (EM) geophysical methods. Samples assayed returned Total Graphitic Carbon (TGC) grades of 22.4 and 23.9% TGC. Follow up first pass petrographic analyses determined that the graphite is dominated by Large to Jumbo size flakes and appears similar to that occurring in the Macintosh graphite deposits. The graphite is generally free of inclusions.

The graphite industry has recently seen extraordinary growth largely due to the global shift into “smart and green” technologies. Graphite is an essential component of lithium ion batteries and is also used in super capacitors, nuclear reactors, steel and refractories.
Further investigations are planned by Cazaly within the McKenzie Springs tenement to test the extensive, essentially un-explored, target unit for coarse, high purity graphite.

Graphite Project Presentation

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