Hawk Resources (ASX:HWK) - High-Grade Copper Drilling Underway With Scandium Upside

Hawk Resources: Project Updates - Transcript Summary

Key Concepts:

• Cactus Copper-Gold Project (Utah, USA): Near-term catalyst project with historical production and potential for high-grade mineralization. Focus on breccia-hosted copper deposits.
• Scandium Project (Western Australia): Early-stage project with a large soil anomaly and potential for rapid development due to shallow drilling requirements.
• Capital Raise: Successful $5 million AUD raise to fund drilling programs at Cactus and Scandium projects.
• Geophysical Targeting: Utilizing induced polarization (IP) and magnetic surveys to identify subsurface mineralization signatures.
• Geochemical Analysis: Employing soil sampling and XRF analysis to identify anomalous zones and vector towards mineralization.
• Breccia Pipes & Intrusive Stocks: Two primary geological models being investigated at Cactus, focusing on copper mineralization within brecciated rock formations.
• Critical Minerals: Positioning Hawk Resources as a company focused on critical metals, particularly copper and scandium, for future supply chain security.

1. Capital Raising & Funding Allocation

Hawk Resources successfully completed a $5 million AUD capital raise, closing within an hour of opening due to strong investor demand. The raise was primarily driven by Australian investors, though some existing US shareholders were identified during recent marketing efforts in North America. Approximately $3 million will be allocated to drilling at the Cactus copper-gold project, with $1-1.5 million earmarked for advancing the Scandium project in Western Australia. Remaining funds will support ongoing operations and exploration for the Brazil lithium projects, though these are currently lower priority.

2. Cactus Copper-Gold Project – Geological Model & Targeting

The Cactus project in Utah historically produced copper and gold between 1905-1920 at grades of 2% copper, 0.3-0.4 g/t gold, and 7 g/t silver. Previous exploration (1960s-2004) identified residual mineralization, with intersections up to 40m at 1.9% copper and 6 g/t gold, and smaller, higher-grade zones (5-10m at 3-6% copper).

The geological model focuses on two primary targets:

• Breccia Pipes: Copper mineralization within brecciated rock formations, potentially sourced from a deeper intrusive stock.
• Intrusive Stocks: Potential for larger-scale disseminated copper mineralization within the underlying intrusive source.

Targeting is based on integrating historical data (drilling, geochemistry), geophysical surveys (drone magnetic, induced polarization – IP), and new soil sampling data. IP surveys are key for identifying subsurface signatures indicative of disseminated sulfide mineralization. Six drill targets have been ranked based on geophysical response and surface geochemistry, with one target having limited prior drilling. Soil samples have revealed up to 0.9% copper and 1.2 g/t gold. A key focus is understanding the gold credit, with historical drilling near the Comet mine showing intersections of up to 26m at 1.5 g/t gold from surface.

3. Cactus Drilling Program & Timeline

A 4,000-meter drilling program is underway, targeting the “sweet spot” within the identified geophysical anomalies. Drilling aims to:

1. Explain the Geophysical Anomaly: Determine the source of the anomalies identified through IP surveys (e.g., pyrite, chalcopyrite).
2. Confirm Mineralization: Identify the presence of copper and/or gold mineralization.
3. Vector Towards Higher Grades: Utilize geochemical data to guide further drilling and refine the geological model.

Drilling will be conducted in two holes per target (six targets total). Core samples will be analyzed, and handheld XRF will be used for preliminary assessment. Results are expected to be released in batches, approximately every 3-4 weeks, with initial lab results anticipated in March. The drilling program is expected to continue into the second quarter.

4. Scandium Project – Opportunity & Exploration Strategy

Hawk Resources recently acquired a scandium project in Western Australia characterized by a 4km x 7km soil anomaly with scandium grades exceeding 500 ppm (up to 1,200 ppm in some samples). Previous exploration focused on nickel, copper, PGEs, and gold, with limited scandium-specific work. Historical RAB drilling (shallow, ~30-40m depth) intersected anomalous scandium, but the main soil anomaly remains largely undrilled.

The project’s potential is highlighted by scandium’s high value (~$3,300-3,400/kg, twice the value of silver). The exploration strategy involves:

1. Community Engagement: Securing access and building relationships with local communities.
2. Verification Sampling: Re-sampling historical soil lines to confirm the anomaly and validate previous XRF data.
3. Detailed Soil Sampling: Infilling soil grids to better define the extent and grade distribution of the scandium anomaly.
4. Shallow Drilling: Conducting shallow drilling (20-30m depth) to confirm mineralization and assess economic viability.

Metallurgical testing will be conducted on drill core to determine optimal extraction methods (likely high-pressure acid leach and SX-EW). The project is considered potentially fast-trackable due to the shallow drilling requirements. Full exploration, assuming no impediments, could be completed within 6 months.

5. Risk Assessment & Future Outlook

Hawk Resources acknowledges the inherent high-risk nature of mineral exploration. Success depends on accurately interpreting fragmented historical data, effectively utilizing geophysical and geochemical data, and executing a targeted drilling program. The company emphasizes a pragmatic approach, prioritizing projects with near-term potential (Cactus) while maintaining optionality with projects like Scandium.

Scott Caes emphasized the importance of community engagement and responsible exploration practices, drawing parallels to respecting landowners and building trust. He also highlighted the company’s ongoing search for new opportunities to create shareholder value.

Technical Terms:

• RAB Drilling: Rotary Air Blast drilling – a cost-effective drilling method for shallow exploration.
• IP (Induced Polarization): A geophysical technique used to detect subsurface chargeability, often associated with sulfide mineralization.
• PXRF (Portable X-Ray Fluorescence): A handheld analytical tool used for rapid geochemical analysis.
• SX-EW (Solvent Extraction – Electrowinning): A common hydrometallurgical process for extracting metals from solution.
• Breccia: A rock composed of broken rock fragments cemented together.
• PGEs (Platinum Group Elements): A group of rare and valuable metals including platinum, palladium, rhodium, ruthenium, iridium, and osmium.
• ppm (parts per million): A unit of concentration used for geochemical analysis.
• g/t (grams per tonne): A unit of concentration used for gold and silver grades.
• % (percent): A unit of concentration used for copper grades.

Notable Quotes:

• “We think we’ve got a good opportunity there [Cactus], and it’s exciting, but also nerve-wracking to start the drilling.” – Scott Caes
• “Scandium’s a very high value commodity… it’s real upside in terms of that as a commodity and project going forward.” – Scott Caes
• “You need to make sure that you have permission. You need to make sure that you get on with the people. You need to make sure that you’re doing the right thing so their backyard isn’t destroyed.” – Scott Caes (on community engagement)