The Speculator: Is the Robust gold target a baby Lihir?

The Speculator is on holidays — his next column will appear March 4.

Junior gold prospector Robust Resources <ROL.AX> believes it is sitting on a mineralised system comparable in size to that of the giant Lihir gold mine off the north coast of Papua New Guinea’s New Ireland province.

"Robust what?" you might ask, for the company is a comparative tiddler with a market capitalisation of just $4.68 million, based on an issued capital of 36 million shares at a close last week of 13 cents.

At that price the company’s shares had dropped 1.5 cents over the week, despite initial encouraging drill intersections announced the previous week from a drilling program now under way on Indonesia’s Romang Island, some 500 kilometres north of Darwin and east of the island of Bali.

It's early days yet, but by way of comparison … Lihir Gold's mine, which has been in production since 1998, is located on a volcanic caldera within which the company estimates that probable reserves stood at 18.5 million tonnes of 2.87 grams a tonne estimation at the end of 2007. Production in calendar 2008 totalled 770,000 ounces.

Lihir carries a market capitalisation of $733 million.

Robust's Romang Island project also covers an entire volcanic caldera, which forms the 25,000 hectare island in Indonesia's Banda magmatic arc. The area is covered with five granted mineral titles with two more under application. In a report earlier this month, the company described the caldera as "a mineralising system comparable in size to that of the Lihir gold mine in Papua New Guinea".

Robust's chairman, geologist Ian Finch, knew he was onto a good thing when the offer of the Romang Island project came across his desk a year or so ago. Romang had been held within the UK company, Billiton Plc, before its merger with BHP. The English company had completed a 14-hole scout drilling program on the Lukawahi target on the south of the island in 1997 and 1999.

The holes intersected economically significant gold, silver, zinc, lead and copper mineralisation in 80 percent of all holes drilled. The best of those previous holes included –

• LWD-02: 1g/t Au over an entire length of 73.9m, including 34m of 2.10 g/t.
• LWD-06: 4m of 2.48g/t Au and 3m at 2.39g/t Au at shallow depths plus base; metals intersections of 4m of 3 percent lead and 3m of 4.8m zinc.

• LWD-07: Averaged just under 1g/t gold over its entire 67.4m length.

• LWD-08: 30m averaging 1.43g/t gold.

Robust, which owns two diamond drill rigs now on site, has begun a 2500m phase 1 drilling program scheduled to be completed by June 30. On February 5, Robust announced drill results for the first two of its diamond holes drilled on the southern Lakuwahi prospect.

The first hole, LWD-015, intersected gold and silver values equivalent to 2.72g/t gold over 41 metres beginning 1m from surface, including 17m of 4.33g/t gold equivalent.

The second hole contained elevated levels of gold and silver with strong lead, zinc, copper and barium over its entire 101.25m length. Both results correlate with assays from the earlier 14-hole Billiton program.

Assay results are awaited from a further six holes in the next week or two from core sent to Jakarta. Robust is considering the purchase of a third DD rig (diamond drilling rig) to accelerate the program. If success continues, this company is bound to attract more investor interest.

To finance the current field work, Robust placed 7.2 million shares at 20 cents to Trafford Resources <TRF.AX> in the December quarter to raise $1.4 million cash, taking issued shares to 36 million. Robust’s Finch is managing director of Trafford, which holds the right to take its Robust holding to 27 percent.

Most of Robust's other prospecting areas had been held in NSW. On February 11, the company announced it had farmed out an 85 percent interest in four out of five exploration licences to Ausmon Resources, which will spend $250,000 a year through to May, 2011, with Robust as operator.

It may be a long shot but we bought 50,000 for the portfolio at 13 cents.

How the portfolio stands

Company	ASX code	Shares	Bought	Purchase price*	Value 18.2.2009
Viralytics	<VLA.AX>	50,000	31.12.2008	$0.040*	$0.042
Laserbond	<LBL.AX>	20,000	04.07.2008	$0.100*	$0.100
EMT Corp	<ETC.AX>	20,000	01.08.2008	$0.240*	$0.220
Citigold	<CTO.AX>	50,000	16.09.2008	$0.274*	$0.225
FlexiGroup	<FXL.AX>	20,000	02.01.2009	$0.280	$0.320
Robust resources	<ROL.AX>	50,000	13.02.2009	$0.130	$0.130

Total value of portfolio: $32,650
Cash at bank: $5,340
Total: $37,990
Portfolio change since 1.1.2009: -5.025 percent
All Ordinaries change since 1.1.2009: -6.75 percent

Portfolio notes

Disclosure: The author's family holds shares in Laserbond