Thunderbird PFS results drive Sheffield Resources straight into BFS

THE INSIDE STORY: Sheffield Resources’ (ASX: SFX) 100 per cent-owned Thunderbird mineral sands project possesses a number of very prominent attributes.

Located on the Dampier Peninsula, about 60 kilometres west of Derby, and 25km north of the sealed Great Northern Highway joining Derby and Broome, Thunderbird is the first major mineral sands discovery in the Canning Basin region of Western Australia.

Since its discovery, Sheffield has worked up the project to become one of the largest mineral sands deposits to be discovered in the last 30 years.

Thunderbird boasts a total Mineral Resource of 3.2 billion tonnes at 6.9 per cent heavy minerals (HM) across all three Measured, Indicated and Inferred categories at 3 per cent HM cut-off.

The Resource contains 18.5 million tonnes of zircon, 61.8 million tonnes of ilmenite, 6.9 million tonnes of leucoxene, and 5.9 million tonnes of HiTi leucoxene.

A recently-completed Prefeasibility Study (PFS) update concluded the project’s current Mineral Resource can support an initial 40 year mine life with substantial room opportunity to increase this in the future.

The project will eventually ramp-up to an 18 million tonnes per annum throughput, at which time it will become one of the world’s largest dry mining mineral sands operations.

Zircon is the key value driver of the project making up 59 per cent of forecast revenue, with the remainder generated from substantial amounts of high grade sulphate ilmenite and HiTi leucoxene.

Over 50 per cent of the world’s zircon supply is used in the production of ceramics, including tiles, sanitary ware and tableware.

Zircon is also used in refractories and foundry applications.

Globally, zircon demand reached an estimated 1.1 million tonnes in 2014.

Zircon prices trebled during 2011 to peak around US$2,400 to $2,600 per tonne, but since then they have come back to around the US$1,050 per tonne mark, however industry boffins do anticipate the longer-term outlook for zircon prices to be positive, due to increasing demand and a limited pool of new projects in development.

Key outcomes to emerge from the recent PFS update include a 26 per cent reduction ($96.6M) in pre-production capital expenditure to $271 million, a 13 per cent increase in annual EBITDA to $135 million, improvement of capital payback to 3.4 years and a 25 per cent increase in mine life to the initial 40 years mentioned above.

The PFS update was based on a conventional dozer trap mineral sand mining operation involving an initial 12 million tonnes per annum throughput, increasing to the much-anticipated 18 million tonnes per annum in year eight, and a low risk, conventional processing flow sheet with all infrastructure located on site.

The results of the PFS update attracted a lot of attention for the company and also the attention of highly credentialed mining executive Bruce McFadzean, who joined the company as Managing Director in November.

McFadzean brings to the company more than 35 years’ experience in the global resources industry, having led the financing, development and operation of several new mines around the world.

Across his journey, he has spent 15 years with BHP Billiton and Rio Tinto in a variety of positions and four years as managing director of Western Australia gold miner Catalpa Resources.

It was during his time at Catalpa, McFadzean oversaw the construction and operation of the Edna May gold mine, the acquisition of 30 per cent of the Cracow gold mine and the company’s eventual merger into Evolution Mining (ASX:EVN), after which Catalpa’s market capitalisation grew from $10 million to $1.2 billion.

“Accepting the appointment was an easy decision as I believe the Thunderbird project presents such a wonderful opportunity,” McFadzean told The Resources Roadhouse.

“The results from the PFS update were very hard to ignore as they confirmed what I considered the Thunderbird project to be – a strategic, high margin, zircon-rich asset located in one of the world’s most stable mining jurisdictions.”

The PFS update demonstrated Thunderbird to be a project requiring a modest capital expenditure that will eventually generate strong EBITDA margins over a very long mine life.

Sheffield took meticulous care in running the study using proven, cost-effective conventional mining and processing techniques, which determined Thunderbird will generate a highly marketable suite of products.

The primary zircon is of premium quality whilst the upgraded ilmenite demonstrates characteristics that are superior to other sulphate ilmenites in the market, meaning it should become a preferred feedstock. 

The quality of the zircon found a cheer squad in leading global mineral sands consulting group TZMI, which confirmed Thunderbird’s primary zircon and LTR ilmenite to be high quality products that will very likely receive strong market support.

Collectively, these products represent 81 per cent of the project’s total projected revenue and the company has already had some interest registered in these products by leading marketing specialists and industry groups. 

“Although we have received some strong interest in relation to Thunderbird’s products, we have, at this stage, chosen not to commit to offtake agreements until after completion of the Bankable Feasibility Study (BFS),” McFadzean said.

Just after the release of the PFS update, Sheffield announced an Access Agreement with the Shire of Derby-West Kimberley over the bulk handling facility at the Derby Wharf, confirming Sheffield as the preferred proponent and providing exclusive access to the bulk handling facility.

The agreement allows Sheffield exclusive access during the BFS to complete all work required to submit a development application and to complete terms of a sublease agreement by June 2017.

The company considers securing port capacity to be a major step towards development of the Thunderbird project as efficient and unconstrained access to export infrastructure is essential to establishing a cost effective mine-to-port logistics chain for its products.

The Derby wharf is well suited to the export of mineral sands products.

The PFS established that final products will be transported in bulk form by quad road trains from the mine site to the Derby wharf for storage and export.

Bulk ilmenite, zircon and HiTi88 products will be off-loaded at the port export facility to then be conveyed to a ship loader for transhipment via barge.

As a company that likes to keep things moving at a steady pace, Sheffield recently announced its intentions to raise up to $5 million through a placement of up to 11.4 million shares at an issue price of 44 cents per share to domestic and international institutional, sophisticated and professional investors.

This was supported by an offer to eligible shareholders to participate in a Share Purchase Plan (SPP) to raise up to $2 million.

Sheffield has earmarked the funds raised for the BFS at Thunderbird, to accelerate offtake and financing negotiations, to undertake regional exploration at the Dampier Mineral Sands project and the company’s Red Bull nickel project in the Fraser Range and for general working capital purposes.

“This capital raising will strengthen our balance sheet, which will ensure we can deliver on some very significant upcoming milestones we will have to achieve on the way to finalising the Bankable Feasibility Study in late 2016,” McFadzean explained.

“We are already well-advanced into this exciting phase, which is to include a number of catalysts including permitting, grant of the mining lease, a maiden reserve for the Thunderbird deposit and key offtake and financing negotiations.”

Sheffield Resources Limited (ASX: SFX)
…The Short Story

HEAD OFFICE
Level 1, 57 Havelock Street
West Perth WA 6005

Ph: + 61 8 6424 8440
Fax:   +61 8 9321 1710

Email: info@sheffieldresources.com.au
Website: www.sheffieldresources.com.au

DIRECTORS and MANAGEMENT
Will Burbury, Bruce McFadzean, Bruce McQuitty, David Archer

PFS de-risks Matilda Gold Project

THE INSIDE STORY: As it moves closer to becoming the next Australian gold producer Blackham Resources (ASX: BLK) rarely has time to stand still.

The company recently finalised a Pre-Feasibility Study into its 100 per cent-owned Matilda gold project, located near Wiluna in Western Australia.

Although impressive, the PFS results were quickly outdated with Blackham well advanced into a Definitive Feasibility Study (DFS), for which a number of drilling programs that are likely to increase the current Resource base have been completed.

In just nine months, the PFS increased the mineable Resource at the Matilda project by over one million tonnes from the Scoping Study, while confirming the project’s robust economics including a low capital requirement, short timeframe to production, fast payback and operating costs.

The Matilda project is benefitting from the current market forces with all associated cost reductions resulting in a low capex due to substantial plant and infrastructure already at site and relatively minor plant refurbishments required to re-start the project.

The PFS added an additional year to the mine life forecast in the Scoping Study and converted Inferred Resources into Indicated Resources and Scoping Mineral Inventory into Reserves.

“The de-risking of the Matilda gold project as a result of the PFS is something that should not be overlooked,” Blackham Resources managing director Bryan Dixon told The Resources Roadhouse.

“Not only did it come back with a mining inventory of six million tonnes at 2.8 grams per tonne for 540,000 ounces of gold, it also presented us with another pleasing figure in the extremely low capex of $28 million.

“What that means is that, at today’s prices, we only need to spend $28 million over five months building the project, which will then make over $200 million in cash flow over the next five years.

“It has emerged as being a very capital-efficient project, which should produce high returns for our shareholders.

“It has a Net Present Value (NPV) of $124 million and an Initial Rate of Return (IIR) of 105 per cent.

“The only way a gold project is capable of hitting those sort of numbers is to be doing what we are doing, which is leveraging off a brownfields asset with an existing plant in-situ.”

Blackham scored well from drilling associated with the DFS from Golden Age and Matilda and more recently from two other targets within the project area, Galaxy and Williamson.

An RC drill program of 26 holes carried out at Galaxy included holes GARC0065, GARC0066, and GARC0067, which returned impressive oxide intercepts of 12m at 4.57g/t gold, 4m at 7.93g/t gold, and 10m at 2.54g/t gold, respectively.

An additional small, three-hole diamond program was also completed in order to provide further geological confidence and metallurgical samples.

This program identified further high-grade mineralisation within the optimised pit shell, with holes GLDD0005 and GLDD0006 (10m at 4.52g/t gold from 82m; and 5m at 6.33g/t gold from 18.5m) confirming mineralisation continuity at depth, and along strike.

“Galaxy came out of the recent Pre-Feasibility Study as a high-grade shallow deposit suitable for open pit mining with good metallurgical recoveries,” Dixon said.

“The latest DFS associated drilling has given us greater confidence within the Galaxy pit while also identifying further high-grade mineralisation outside the PFS pit design.”

The Galaxy and Golden Age deposits are ranked as early targets in Blackham’s mine plan as both are high-grade, free milling quartz reefs located in close proximity of the Wiluna gold plant.

The first round of drilling completed at the Williamson deposit also paid dividends, hitting a new shallow high-grade zone of oxide mineralisation.

Blackham completed a program of 19 RC holes, which it claims has discovered a new zone of mineralisation along the western (footwall) flank of Williamson.

Results from the new high-grade footwall zone discovered in the Williamson pit include:

WMRC0012
2 metres at 95.14 grams per tonne gold from 33m;

WMDD0002
1.45m at 5.73g/t from 70m;

Interpretation of the drilling results determined the shallow newly-discovered lode extends into the PFS pit design, which the company considers is likely to improve the pit’s economics.

The drilling also infilled the southern extensions of the resource to a spacing that is likely to support an Indicated resource classification.

Five diamond core (DD) holes were also completed to provide geotechnical and metallurgical samples for the current Definitive Feasibility Study (DFS).

Blackham expects these results to expand and add further confidence to the free milling, open pit mining inventory prior to the planned recommissioning of the Wiluna gold plant in 2016.

As a bulk-tonnage gold deposit Blackham considers Williamson to possess a number of geological similarities to others in the Yilgarn region, such as the Thunderbox deposit of Saracen Mineral Holdings (ASX: SAR) and the Gruyere deposit of Gold Road Resources (ASX: GOR).

“The gold mineralisation at Williamson is associated with disseminated pyrite and arsenopyrite and sulphide-bearing quartz veinlets within monzogranite dykes and sheared monzogranite – dolerite contacts,” Dixon explained.

“High-grade pods are noted along the monzogranite contacts, and visible gold has been seen in historical drill core.

“Although the overall grade of the Williamson resource is modest at 6.3 million tonnes at 1.7 grams per tonne for 350,000 ounces, the relative large tonnage of the deposit is typical of this style of mineralisation.

“For us, that makes it an attractive exploration and development target that ensures a sustainable base load mine plan for the Wiluna gold plant.”

The results of the PFS confirm mining and processing parameters are very similar to the results of the Scoping Study.

From this Blackham has gained a sound understanding of the technical and operational aspects of the project that has further de-risked the development of the Matilda gold project.

“The PFS has confirmed the robust cash flows the Matilda gold project is capable of generating, its capital efficient nature and that it can be bought into production rapidly,” Dixon said.

“Since finalising the PFS Resource, we have enjoyed significant exploration success and we plan to keep growing the mine life through aggressive drilling programs.”

The progress Blackham has already been able to achieve with the Matilda DFS gives gold industry watchers something to anticipate over the holidays.

The drilling programs and resource, metallurgical, environmental and engineering studies the company has underway are expected to enable it to completion of the DFS in a condensed timeframe, which would further de-risk the project and increasing confidence levels.

Blackham has agreed an early drawn down of $7 million on its $30 million undrawn debt facility with Orion Mine Finance to fast track Matilda towards production.

The funds will be used for ordering long lead items, initial plant and infrastructure refurbishment, additional drilling aiming at extending the reserves and mine life inventory and completion of the Definitive Feasibility Study by January 2016.

“Blackham is pleased to have agreed with Orion the early drawdown of funds under the debt facility,” Dixon said.

“A lot of the DFS work programs have been completed and the early drawdown of these funds allows the team to look beyond the studies and begin the first stages of development work.

“Starting the refurbishment of the plant and infrastructure will allow a more orderly progression into gold production planned for the middle of next year.”

Blackham Resources Limited (ASX: BLK)
… The Short Story

HEAD OFFICE
Level 2, 38 Richardson St.
West Perth WA 6005

Ph: +61 8 9322 6418
Fax: +61 8 9322 6398

Email: info@blackhamresources.com.au
Web: www.blackhamresources.com.au 

DIRECTORS
Paul Murphy, Bryan Dixon, Alan Thom, Greg Miles, Peter Rozenauers

Sheffield Resources prepares to launch Thunderbird DFS

THE INSIDE STORY: A recent Pre-Feasibility Study on its Thunderbird mineral sands project, pretty much told Sheffield Resources (ASX: SFX) what it has long suspected.

The PFS confirmed Thunderbird to be a world class project with an anticipated mine-life of 32 years producing high-quality zircon and ilmenite products, boasting robust mine-to-port-to-market logistics.

It was based on a Mining Inventory from the northern central portion of the Thunderbird Mineral Resource of 580 million tonnes at 11.7% heavy minerals (HM), with in-situ grades of 0.94 per cent zircon, 0.29 per cent HiTi leucoxene, 0.29 per cent leucoxene and 3.32 per cent ilmenite from Measured and Indicated Resources.

Kicking off the 32 year run is anticipated for 2018 with forecast life of mine (LOM) revenue of $9.5 billion and LOM operating cash flow of $4.3 billion ($163 million per annum for first 10 years of production).

Average LOM annual EBITDA has come in at $120 million ($148 million per annum for first 10 years of production).

The study predicted pre-production capital expenditure of $367 million, plus $26 million of contingency, however some wriggle room has been identified to these costs.

The capital payback period is expected to be only 3.6 years, which when taken into consideration of a 32 life-of-mine run, is pretty good in anybody’s money.

Average annual production is projected to be 114,000 tonnes zircon, 439,000 tonnes ilmenite, and 30,000 tonnes of HiTi84 leucoxene.

“The main thing to come out of the Pre-Feasibility Study is that we have been able to firm-up the project’s parameters,” Sheffield Resources managing director Bruce McQuitty told The Resources Roadhouse.

“That includes our logistics chain for the products, so we now have a robust mine-to-market solution by identifying aspects people tend to overlook.”

A PFS tells a company more about a project than just digging up its value and selling it.

It explains how that is to be achieved by highlighting finer details such as how many trucks are required to shift products, how many kilometres of roads will need to be upgraded to take them and, most importantly identifying a port from which to export.

 

Sheffield is currently in negotiation with the Shire of Derby and the Department of Transport for access to the bulk-handling facility at the Derby Wharf, which would provide the ability, as a miner of bulk products, to get its products to market, which in the end is a very important part of what mining companies do.

Timing is also an essential element to any project and to be in the development and construction phase at present, given the lower scales of associated costs, is advantageous for the company.

“It certainly is, although having said that we didn’t factor in current prices to our PFS,”McQuitty said.

“We had to use estimates and quotes provided to us, so as we move into the Definitive Feasibility Study we expect we will see some more competitive pricings to work into our cost estimates.”

A project as large as Thunderbird is anticipated to be produces big numbers because it is going to be a big project with a very long mine life and anticipate big paybacks.

The company received some negative feedback in regards to costs in the PFS, particularly those for development capital compared to its Scoping Study, however, McQuitty remains confident when held up against mineral sands projects of similar scale, it does fall into line, especially when you take into consideration those projects were built during a boom time.

“We’re looking at building something of similar size in a time when materials and labour costs have become cheaper and waiting times have shortened,” McQuitty said pointedly.

“We will pick our timing for the development of the project in relation to the market forecasts.

“Currently we are receiving advice that suggests widening supply and demand gaps for both our principal products of ilmenite and zircon around 2018-2019.

“So at this stage our development schedule and targeted first year of production sit in very well with the timing of those predicted supply gaps.”

 

As impressive as the PFS results were they still require some fine tuning before Sheffield moves into its Definitive Study.

The update is to focus on three areas in particular, the first being a Resource update (due to come out at time of writing) that will form the basis for updated mining studies and mine scheduling.

The second is working on an option to upgrade the produced ilmenite to gain a better price on the market.

Sheffield believes it can produce a higher-grade ilmenite fetching around US$199 per tonne versus the US$155 per tonne that ran in the study for the non-upgraded, raw, ilmenite.

Thirdly, the company believes there is scope to greatly improve both operating and capital costs for the project.

“We are working on those three aspects and we expect that PFS update to be ready by the second half on this year,” McQuitty explained.

“We are confident Thunderbird is a project that deserves mining and we have been progressing the permitting in regards to Native Title and Off-take Agreements in conjunction with this Pre-Feasibility work.

“We are also still exploring it to some degree.

“We have completed three Resource upgrades on the project, including the maiden Resource, so we are looking at the fourth Resource for Thunderbird and we are still to close it off.

“What’s important now is for us to firm-up the high-grade zone in the up-dip region, because that is where we will be mining in the initial years during the payback period.”

It is important to recognise the important role zircon plays in the Thunderbird project.

As it stands currently, 64 per cent of the project revenues come from zircon, which sets it apart from other mineral sands projects whose principal revenue driver is ilmenite or ilmenite plus rutile with zircon as a by-product.

Thunderbird is a zircon project first with ilmenite-HiTi leucoxene playing a supporting by-product role.

“There aren’t too many other large zircon projects out there in the development pipeline that look as though they are going to come on stream in the near future,” McQuitty said.

“There doesn’t appear to be too many new discoveries being made that we can see, or are aware of, so Thunderbird is really the next one to be incubated and delivered into the production pipeline in two to three years’ time.

Although Sheffield’s focus is squarely on Thunderbird it caught the market’s attention recently with the identification of 12 substantial new nickel and gold targets on its Fraser Range project.

The tenements are within the northern foreland region of the Tropicana Belt adjacent to the Fraser Complex approximately 240 kilometres south of the Tropicana gold mine and 30km northwest of Sirius Resources’ (ASX:SIR) Nova/Bollinger deposit.

Sheffield has identified five new nickel targets, only one of has been drilled, as gold was the principal focus of previous explorers as well as seven gold targets, which were defined by previous explorers targeting Tropicana style gold mineralisation.

“The early stage exploration over these tenements provides some well-defined nickel and gold targets demanding follow up work,” McQuitty said.

“We have some very attractive targets there in the Fraser Range and, depending on availability of funds, we would very much like to continue to explore those”

Sheffield Resources Limited (ASX: SFX)
…The Short Story

HEAD OFFICE
Level 1, 57 Havelock Street
West Perth WA 6005

Ph:    + 61 8 6424 8440+ 61 8 6424 8440
Fax:    +61 8 9321 1710

Email: info@sheffieldresources.com.au
Website: www.sheffieldresources.com.au

DIRECTORS
Will Burbury, Bruce McQuitty, David Archer

MAJOR SHAREHOLDERS
Will Burbury            5.9%
Bruce McQuitty        5.9%
David Archer        5.7%
Top 20             43%

Peel Mining charges up Mallee Bull

THE INSIDE STORY: How do you surpass making a significant copper discovery? By making a potentially even-more-significant zinc-lead-silver-gold discovery, sitting on top of it.

Copper-focused exploration play Peel Mining (ASX: PEX) came to prominence in 2012 when it announced the discovery of the Mallee Bull copper deposit, located within the Cobar Superbasin in central New South Wales.

Mallee Bull is part of the company’s Gilgunnia project (EL7461), a tenement holding of around 80 square kilometres, located about 100 kilometres south of Cobar in NSW. The project also hosts the May Day gold-base metal deposit (ML1361).

Peel Mining says it operates on a pretty simple philosophy: one that is difficult not to agree with for a junior explorer – to drill as often as it possibly can as this to be the best way to make discoveries.

This philosophy lead to the discovery of the Mallee Bull copper deposit, which lies adjacent to the historic 4-Mile Goldfield, after its initial identification as a coincident EM and magnetic geophysical anomaly in March 2011.

 

The company received early encouragement when subsequent preliminary RC and diamond drilling encountered silver-lead-zinc mineralisation.

Further drilling intersected a massive and stringer/breccia sulphide zone with strong copper-silver-gold-lead-zinc-cobalt values characteristic of major Cobar-style deposits.

This drew the attention of CBH Resources, a wholly-owned subsidiary of Tokyo-based Toho Zinc Co Ltd, and in May 2012 a binding Heads of Agreement was struck covering EL7461 and ML1361, which included the Mallee Bull deposit.

Under the agreement, CBH earned the right to a 50% interest in the project over a three-year period via staged $8.33 million expenditure on exploration and contribution to previous exploration costs incurred by Peel.

In March 2014, CBH Resources paid its final Farm-in payment in relation to the agreement, to earn its 50% interest, after which the two companies formed a 50:50 Joint Venture.

Drilling carried out during CBH Resources’ earn-in period confirmed Mallee Bull to be a deposit of some note, returning what were some of the best copper results reported anywhere in the world in 2012/13, including:

MBDD009
69 metres at 3.48 per cent copper, 34 grams per tonne silver, 0.14g/t gold from 533m;

MBDD009W1
53m @ 4.08 per cent copper, 42g/t silver, 0.22g/t gold from 470m; and

MBDD009W2W1
84m at 4.42 per cent copper, 38g/t silver, 0.14g/t gold from 575m.

The impressive nature of the results enabled the JV to establish a Resource for Mallee Bull of:
3.92 million tonnes at 2.7% copper equivalent (2.3% copper. 32g/t silver, 0.3g/t gold) for  about 107 thousand tonnes of copper equivalent (90,000t copper, 3.97Moz silver, 43,000oz gold).

“CBH Resources farmed-in about a year after our initial discovery and Mallee Bull has, in my opinion turned into one of the best copper discoveries in Australia in recent times,” Peel Mining managing director Rob Tyson told The Resources Roadhouse.

“The main mineralised system at Mallee Bull is copper-rich and very high-grade – some of the mineralised intervals we hit a couple of years ago were amongst the highest grades reported anywhere in the world.

 

“We pushed the deposit to a high-grade copper Resource and have completed an in-house scoping study – but more recently we have gone back to exploration in order to add to what we have already achieved at the deposit.

“That has culminated in some high-grade zinc, lead, silver and gold mineralisation.”

Peel has announced some outstanding results from drilling carried out on what has been designated as the T1 target.

T1 is one of two strong chargeable IP areas Peel identified using a new form of testing survey – Orion 3D DCIP.

The Orion 3D survey defined T1 as a shallow (approximately 150m below surface), strong chargeable and low resistivity geophysical response.

It is also located in an area that had been subjected to hardly any previous drilling.

Initially, four holes MBRC013, MBRC016, MBRC017 and MBRC018 were drilled to test the T1 target.

MBRC013, MBRC016 and MBRC017 all intersected zinc-lead-silver mineralisation predominantly occurring as stringer sulphides.

MBRC016 provided a highlight of:
7m at 6.1 per cent zinc, 3.4 per cent lead, 76g/t silver and 0.25g/t gold from 131m.

MBRC018 returned an intersection of sphalerite-galena-pyrite rich massive sulphide mineralisation from 106m of:
10m at 15.8 per cent zinc, 7.6 per cent lead, 322g/t silver and 1.28g/t gold.

These results alone were enough to rouse the market from its Rip Van-Winklesque dozing, however Peel had more to come and quickly followed up with:

MBRC024
12m at 20.3 per cent zinc, 14.81 per cent lead, 308g/t silver and 1.59g/t gold from 83m, including 7m at 31.44 per cent zinc, 19.37 per cent lead, 440g/t silver, 2.53g/t gold from 83m;

MBRC023
6m at 10.57 per cent zinc, 4.81 per cent lead, 53g/t silver and 0.39g/t gold from 121m, including 2m at 26.65 per cent zinc, 11.88 per cent lead, 121g/t silver, 0.69g/t gold from 122m;

MBRC021
6m at 10.30 per cent zinc, 4.98 per cent lead, 159g/t silver, 0.76g/t gold from 95m, including 2m at 27.7 per cent zinc, 13.4 per cent lead, 430g/t silver, 1.9g/t gold from 96m;

MBRC019
4m at 8.21 per cent zinc, 3.35 per cent lead, 113g/t silver, 1.02g/t gold from 88m, including 2m at 14.11 per cent zinc, 5.7 per cent lead, 194g/t silver, 1.93g/t gold from 89m; and

MBRC028
7m at 21.39 per cent zinc, 12.74 per cent lead, 203g/t silver and 0.58g/t gold from 71m, including 5m at 29.54 per cent zinc, 17.52 per cent lead, 280g/t silver, 0.80g/t gold from 71m.

The question most likely to be asked is why this target wasn’t drilled earlier?

The reason is because sphalerite, galena and pyrite in combination are generally poor EM conductors, which made the zinc-lead-rich mineralisation Peel has intersected effectively invisible to previously completed EM surveys.

“We had a suspicion the mineralisation existed, but unfortunately we ran out of budget to test this area in previous rounds of drilling,” Tyson explained.

“The Orion 3D survey really lit this area up and the T1 target emerged as the most obvious to hit first.

“T1 is shallow, starting around 80 metres below surface with very strong chargeability, it remains open to both the north and the south and to date we have only drilled about 60 metres of 300 metres of strike.

“We have also only drilled around 60 metres of the gravity anomaly there that also measures around 300 metres.

“The shallow nature of the target did surprise us as previous EM work hadn’t given any indication that this was sitting there.”

The nature of the mineralisation, being of such high-grade, encouraged Peel to carry out a close-spaced drilling program, which it considered to be the best way to get an understanding of the deposit’s geometry.

Peel completed a total of 21 RC drillholes (MBRC013, MBRC016 to MBRC035) to test T1 with all drillholes intersecting zinc-lead-silver mineralisation to varying degrees, and others encountering sphalerite-galena-pyrite rich massive sulphide mineralisation, to within 50m of surface.

Peel plans to complete follow-up drilling at T1 when all relevant approvals are in.

Peel Mining Limited (ASX: PEX)
… The Short Story

HEAD OFFICE
U1/34 Kings Park Road
West Perth WA 6005

Ph: 08 9382 3955
Fax: 089388 1025

Email: info@peelmining.com.au
Web: www.peelmining.com.au

DIRECTORS
Rob Tyson, Simon Hadfield, Graham Hardie

MAJOR SHAREHOLDERS
Hampton Hill Mining and assoc        17.15%
Point Nominees Pty Ltd            11.64%
Ariki Investments Pty Ltd        8.72%

German deal enriches Potash West aspirations

THE INSIDE STORY: When Potash West (ASX: PWN) listed on the Australian Securities Exchange in 2011, its key focus was production of phosphate and potash products from the company’s Dandaragan Trough project, located north of Perth in Western Australia.

Potash West had identified a growing market was emerging for fertiliser, not only within Australia, but also into Asian markets.

With statistics showing the amount of arable land per person worldwide decreasing (currently around 0.25 hectares per person and expected to be approximately 0.15 by 2050), the company believed the fertilizer market had a potential global reach rather than regional.

On a regional basis Western Australia has no domestic production of potash, while south-east Asia currently imports nearly all of its phosphate and potash needs.

Western Europe is also a net importer of potash and with that in mind Potash West entered into an agreement with private interests to earn 55 per cent interest in a German Joint Venture with East Exploration Pty Ltd, which is developing high-grade potash deposits in Germany.

The attraction for Potash West was the application by East Exploration’s 100 per cent-owned subsidiary, East Exploration Gmbh, (EEG) for two exploration licences Küllstedt and Graefentonna, for potash in established potash producing areas in South Harz, Thuringia, Germany.

These licences, covering approximately 450 square kilometres, were granted to EEG earlier this year by the Thuringian Mining Authority for a period of five years, with the option to renew for a further three years.

A review of available geological data for the Küllstedt licence was conducted by consultancy ERCOSPLAN, an internationally recognised potash exploration company that was associated with exploration drilling in the South Harz region in the 1970s and 80s and has access to most of the summary exploration data.

The results of the review indicated large tonnages of high-grade potash material present in the Küllstedt licence area, allowing for the calculation of an exploration target of between four and five billion tonnes at 7 per cent to 25 per cent potassium oxide, to contain between 292 and 1,285 million tonnes of potassium oxide.

There were two potash mines established on Küllstedt in the 1910s that were subsequently shut down in the 1920s, only to be rehabilitated in the earlier part of this century.

 

“There are around 35 existing holes drilled on this tenement, which for potash is quite a large number,” Potash West managing director Patrick McManus told The Resources Roadhouse.

“The data chain is, however, incomplete, so there is some twinning of these holes required in order to calculate a JORC 2012 compliant resource.”

The next stage for this project is to plan and permit two or three exploration drill holes, this will be completed over the coming months”.

“We are excited by the potential of the South Harz project, it shares similar attributes to the Dandaragan Trough, with great infrastructure in place, low sovereign risk and located in a region that is a nett importer of our products,” McManus said.

“But our main focus will remain on our domestic projects, in particular the Dinner Hill project in the Dandaragan Trough, its phosphate potential and its ground-breaking extraction technologies, the 100 per cent-owned K-Max technology and the 25 per cent-owned Li-Max technology.”

The 22 square kilometre Dinner Hill prospect, which is just one of several mineralised areas Potash West has identified within the Dandaragan Trough tenement package, has emerged as the front runner for development.

Potash West recently announced a substantial increase to the potash and phosphate resources at the wholly-owned prospect.

Using a cut-off grade of 1.45 per cent phosphate, the company established an Indicated Mineral Resource of 250 million tonnes at 2.9 per cent phosphate.

One important aspect of the recent increase in the Dinner Hill Resource is that the phosphate resource increases in grade to the north within an area that had not been drilled previously.

The new Resource will form the basis of pit design and mine scheduling studies Potash West will conduct as part of a feasibility study into phosphate production at Dinner Hill, which is scheduled for the third quarter of 2015.

Of particular note is that the principal potash (K-Max) mineralisation occurs within Molecap Greensand, which is now estimated to contain 175 million tonnes at 4 per cent potassium oxide, representing a 43 per cent increase in tonnes.

 

Apart from delivering the Resource upgrade, the recently-completed drilling program achieved further objectives, including:

•    Identification of the extent of mineralisation to allow the definition of the deposit in order to delineate a mining area, for permitting purposes; and

•    To obtain samples so the company can complete metallurgical and process development testwork, for future feasibility studies.

These were all achieved while leaving a substantial area of the Dinner Hill tenement to be explored.

Potash West updated its development plan for the Dinner Hill project in January, using the previous Resource, which looked at integrating the K-Max potash and phosphate projects that had been considered as independent operations.

The integrated project recognised synergies of using a common mining and beneficiation plant and lower operating costs associated with a larger scale operation.

The financial evaluation was based upon a mining rate of 4.2 million tonnes per annum for a 20-plus year life-of-mine operation.

In the first five years only the phosphate-rich part of the ore sequence would be mined to produce single superphosphate (SSP) while the potassium-rich glauconite layer will be exposed, but not mined initially.

The study assumed the K-Max plant and an upgraded phosphate plant will be constructed after five years, providing benefits of:

Lower Capex of $136 million to start Stage 1, using well known technology, so reducing financial and technical risk.

Areas of exposed K-Max ore will allow low mining costs for first few years of Stage 2; and

Free cash flow from Stage 1 operations can contribute to the feasibility study for stage 2 and the equity component of an anticipated $590 million Stage 2 capital cost.

By the time Stage 2 kicks in, operating costs move from Stage 1 of US$19 per tonne of ore to US$44 per tonne with revenue shooting up from US$35 per tonne to US$110 per tonne respectively.

“We have two Resources in the K-max potash and the phosphate, which overlap,” MacManus said.

“We can start off with the phosphate project, operate that for five years, which will help fund the commencement of the K-Max potash project.

“It’s a good, strong project with a very strong operating margin.”

Recent development work by Potash Wests’ technology partners, Strategic Metallurgy, has established an innovative process to extract lithium from micas. Potash West owns 25 per cent of this IP.

“We are committed to working with Strategic Metallurgy to demonstrate the strong value of these technologies and their potential to exploit micas with high contents of lithium and potassium” McManus said.

Potash West (ASX: PWN)
…The Short Story

HEAD OFFICE
Suite 3
23 Belgravia Street
Belmont WA 6104

Ph:     +61 8 9479 5386+61 8 9479 5386
Fax:    +61 8 9475 0847

Web:    www.potashwest.com.au
Email:    info@potashwest.com.au

DIRECTORS
Adrian Griffin, Patrick McManus, Chew Wai Chuen, Gary Johnson

MAJOR SHAREHOLDERS
Venture Frontier Ltd    15.97%
Choy Thai Yap        6.51%

Uob-Kay Hian Pte Ltd    4.77%

 

 

Lithium Australia’s disruption leading to lithium eruption

THE INSIDE STORY:     Lithium Australia (ASX: LIT) makes no apologies for developing a new, disruptive hydrometallurgical process for the production of lithium carbonate from micas.

Lithium Australia managing director Adrian Griffin prides himself on his good manners; however, his enthusiasm for the disruptive qualities of the company’s technological breakthrough might just result in more than a few industry toes being stepped upon.

The company’s new lithium focus is reflected in its recent name change from Cobre Montana to Lithium Australia.

As Cobre Montana, the company struck a technology agreement with Strategic Metallurgy to commercialise extraction of battery-grade lithium from lithium micas, ores that, until now, have been pretty much ‘forgotten’ by the mining industry.

The agreement with Strategic Metallurgy provides Lithium Australia with:

– Exclusivity within Western Australia for up to 25 years (an initial period of 5 years, then an extension of 20 years if a plant is commissioned in WA within that first 5 years), plus exclusivity at the company’s choice of two other national or international locations; and

– A gross product royalty of 2 per cent.

The partnership recently claimed a world-first for continuous production of lithium carbonate.

While lithium carbonate has been produced previously, it hasn’t been done in the way this partnership devised, nor from the type of ore it’s using.

The innovative lithium extraction technology is both a major scientific breakthrough and a simple solution to lowering the costs of production of lithium carbonate.

A key ingredient of the innovation is removing the energy-intensive processing step of roasting, which historically rendered processing of micas uneconomic.

 

 “For micas, the roasting step has been problematic, as mica ores generally don’t have a grade higher than about 4 per cent lithium oxide,” Griffin told The Resources Roadhouse.

“Conventional lithium producers – hard-rock producers – mine spodumene or petalite, and those spodumene and petalite concentrates have a grade of about six per cent lithium oxide.

“If that grade drops to two or even four per cent, you simply can’t afford to pay for the energy, so the process doesn’t work – you can’t achieve a commercial outcome if you have to roast first.

“We’ve designed a process flowsheet that removes the roasting step and makes the process self-sufficient with respect to energy requirements.”

Recent testwork on lithium mica ore samples from the Lepidolite Hill deposit near Coolgardie in WA (80% Lithium Australia and 20% Focus Minerals (ASX: FML)) demonstrated the new technology’s ability to produce lithium chemicals from mica, on a continuous basis, without the need for roasting.

Those results followed production of lithium carbonate from froth flotation and leaching testwork carried out on tin tailings from the Cinovec project in the Czech Republic, where the company has an agreement with European Metals Holdings (ASX: EMH) to process lithium mineralisation on a 50/50 joint venture basis.

 

The Cinovec tests achieved excellent flotation yields and good recoveries of both lithium and potassium, the latter being a significant by-product credit, in the form of potassium sulphate, for marketing directly into the fertilizer industry.

The results impressive the JV partners, which have since recovered bulk samples to be used for continuous testing and production of lithium carbonate for market evaluation.

Accessing ore from tailings dumps and other, similar areas, has advanced Lithium Australia towards production by completely circumventing one of the most fundamental, and time-consuming, aspects of any mining operation – the actual mining itself.

“By removing the energy step, you get a process with an operating cost that’s significantly less than the price of the product you’re selling,” Griffin continued.

“It means too that all the deposits which are available – the ones people haven’t used in the past because they weren’t economic at the time – are suddenly back in the game.

“There are any number of lithium mica-rich mine tailings, mine dumps and deposits that simply haven’t been mined, or even explored, because people didn’t know what to do with the stuff.”

Lithium Australia has strategic alliances with ASX-listed companies Pilbara Minerals (ASX: PLS) and Tungsten Mining (ASX: TGN), to scrutinise lithium and rare metals in prospective locations within WA, and has acquired lithium exploration assets near Greenbushes and Ravensthorpe, also in WA.

Recently, a Memorandum of Understanding with Pilbara Metals was extended, to evaluate potential for developing a lithium mica processing operation in the Pilbara region of WA.

The extension of the MoU followed geological results Pilbara Minerals achieved from drilling at the Pilgangoora project, located 150 kilometres southeast of Port Hedland in WA, where it has calculated a JORC 2012 Inferred Resource estimate of 8.6 million tonnes at 1.01 per cent lithium oxide for 87,000 tonnes of lithium.

“Following Pilbara Minerals’ Resource upgrade, and our successful steady-state lithium production tests, we agreed to extend the evaluation term for assessing the lithium mica potential,” Griffin said.

“Under the terms of the agreement between the parties, Lithium Australia will evaluate the commercial potential of the lithium micas and provide Pilbara Minerals with a proposal to develop them.”

If the company can repeat the success achieved to date at Cinovec in any of these domestic locations, then it looks set for an interesting ride.

When European Metals approached the company late last year, seeking ideas on what to do with the substantial lithium mica credits within its Czech tin and tungsten deposit, it ran some samples through the lab and produced the results mentioned above.

“All the principal building blocks were there and, having proved we could extract lithium carbonate, we went back and looked at the ore body – instead of modelling it for tin and tungsten we modelled it for lithium,” Griffin explained.

“At Cinovec we’ve taken something that wasn’t considered a lithium deposit of any significance and, by simply knowing how to process the material, converted it – in the space of three or four months, without drilling a single hole – into the fourth largest hard-rock lithium deposit in the world.”

Based on drilling carried out during the 1970s and ’80s, European Metals has reported a JORC Inferred Resource estimate for Cinovec of 514.8 million tonnes at 0.43 lithium oxide (0.1% lithium cut-off) for 5.5 million tonnes lithium carbonate equivalent (LCE), plus a further exploration target of 350 to 450 million tonnes at 0.39 to 0.47 per cent lithium oxide for 3.4 to 5.3 million tonnes LCE.

Lithium Australia is confident of hitting full-scale lithium production at current ‘brine-like’ cost levels from its global portfolio of lithium mica deposits.

It estimates operating costs for production of lithium carbonate at the world-leading Cinovec project will come in at well less than US$2,000 per tonne after potassium credits.

The Czech project is ideally situated in terms of its proximity to infrastructure: there is a sealed road adjacent to the deposit; two rail lines are located nearby, and an active 22-kilovolt transmission line is already in situ at the mine.

Studies by European Metals have demonstrated Cinovec’s suitability for bulk underground mining, with more than 400,000 tonnes already trial-mined as a sub-level open stope.

“Whether people realise it or not, the lithium industry as we know it is about to undergo a dramatic transformation,” Griffin enthused.

“The whole thrust of that transformation is disruptive technology”.

“We don’t just intend to lead that charge, we aim to control the largest lithium resource base in the world.”


Lithium Australia NL (ASX: LIT)
…The short story


HEAD OFFICE

Suite 3, 23 Belgravia Street
Belmont WA 6104

Ph: +61 8 6145 0288
Fax: +61 8 9475 0847

Email: info@lithium-au.com
Web: www.lithium-au.com
 
DIRECTORS
George Bauk, Adrian Griffin, Bryan Dixon

MAJOR SHAREHOLDERS
Dennis Bell         8.23%
Directors         4.9%

Rox drives exploration triple

THE INSIDE STORY: Rox Resources (ASX: RXL) is fast becoming the ‘Triple Threat’ of the Australian exploration sector developing three separate projects focusing on three different commodities.

It’s little wonder then that when attending industry shows, Rox becomes a star attraction as punters line up to glean information on the company’s Fisher East nickel project, its Reward zinc Joint Venture with Teck Australia – a subsidiary of Canadian major Teck Resources, and its emerging Bonya copper project.

The Fisher East nickel project is part of the company’s larger Mt Fisher project, located in the North Eastern Goldfields region of Western Australia 150 kilometres northeast of Leinster, where Rox has made four substantial nickel deposit discoveries over the last two and a half years.

A JORC Code 2012 Mineral Resource has been established covering two of these prospects, Camelwood and Musket, of 3.6 million tonnes at 2% nickel (1% nickel cut-off) for 72,100 tonnes of nickel.

This includes an Indicated Mineral Resource of 1.8 million tonnes at 2.2 per cent nickel and an Inferred Mineral Resource of 1.9 million tonnes at 1.8 per cent nickel.

Rox anticipates releasing a Resource covering the Cannonball prospect where drilling has confirmed nickel sulphide mineralisation, including:

MFED057
5.3 metres at 2.7% nickel from 255.3m;

MFEC082
9m at 2.8% nickel from 154m;

MFEC102
5m at 3.4% nickel, including 2m at 6% nickel from 114m;

The most recent discovery at Fisher East is the Sabre prospect, which was confirmed when follow-up RC drilling proved an earlier aircore intersection of 5m at 1.1% nickel from 74m was no orphan.

 

Just two years since the first discovery at Fisher East, Rox has progressed the project by completing a Scoping Study, which found it to be financially robust and technically low risk.

Two conceptual development options were examined:

Build a 500,000tpa process plant on site (Base Case); or Toll mill at a nearby processing facility (Toll Case).

Up-front capital requirements were relatively low at $73 million for the Base Case and $20.8 million for the Toll Case.

“At this stage toll milling certainly looks to be the preferred option,” Rox Resources managing director Ian Mulholland told The Resources Roadhouse.

“We need to strike a deal with a third party – and fortunately there are options within economic proximity to the project.

“The Scoping Study came through unscathed as far as technical issues go and there are no environmental or Aboriginal heritage issues.

“We also carried out some metrics, based on mining 350,000 tonnes per year for cash flow of $38.9 million (before taxes and finance costs), which means the up-front capital costs of $20.8 million are paid off within the first year of production.

“Admittedly this is only for a short period – initial life-of-mine of three years – but once we get into the production phase and start generating cash, then we can carry out deeper drilling.”

Rox’s strategy entails getting the Fisher East nickel project into production quickly in order to fund future expansion of Resources and ongoing exploration and to provide a way of allowing the company to maintain its 30 per cent interest in the Reward JV with Teck Resources, which is earning 70 per cent by funding exploration to $15 million ($10M spent to date).

The main target at Reward is the Teena prospect where a new program of drilling has commenced targeting points within the mineralised basin.

Previous drilling at Teena intersected high-grade zinc-lead mineralisation over a strike length of 1.9km, including:

TNDD009
26.4m at 13.3% zinc and lead from 1060.1m;

TNDD010
20.1m at 15% zinc and lead from 944.3m;

TNDD011
20.3m at 13.9% zinc and lead from 901m; and

TNDD017

14.7m at 13.3% zinc and lead from 801m

 

Rox expects further drilling at Teena will demonstrate the large size and strong continuity of the deposit, its confidence stemming from results the JV has already achieved, which have provided no reason for it to think otherwise.

“We have had no shocks at all,” Mulholland said.

“Every hole we have drilled has returned pretty much what we expected to see.

“Having said that we certainly didn’t expect to hit 26 metres at 13 per cent zinc with the first hole.

“The style of mineralisation was classic stratiform zinc, it’s just beautiful stuff.”

Although the JV is yet to establish a Resource at Reward, Mulholland is confident a mine will be developed at the project.

“The primary goal for any small company is a Resource so you actually have something people can look at and see what you have and what it is worth,” he explained.

“Big companies don’t think that way, and Teck is not overly concerned about calculating a Resource, as they are satisfied there will be a Resource established there.

“What Teck is endeavouring to establish is, whether or not the project is actually mine-able.”

Teck will be conducting much of the work this year focused on the metallurgy and geotechnical aspects of the Reward project in terms of mine-ability.

“It is theoretically at the stage before a Scoping Study, because we don’t have a Resource as yet,” Mulholland continued.

“The grade is there, the size is there, and an exploration target of 60 to 80 million tonnes – that’s at least as good as a number of other deposits around that are currently being looked at for development.”

More drilling is also the mantra for the company’s Bonya copper project located 350km east of Alice Springs in the Northern Territory.

This will be conducted on the back of results achieved at the deposit last year, which included:

BYRC008
11m at 4.4% copper from 30m, including 3m at 6.1% copper from 33m; and

BYRC009
38m at 4.4% copper from 60m, including 6m at 8.8% copper from 60m, and 8m at 7.9% copper from 82m. (ended in mineralisation with last sample returning 6.8% copper)

An exciting aspect of the Bonya discovery is the high-grade zone of massive copper sulphide mineralisation remains open at depth and along strike.

Rox considers this to be of significance, especially as the discovery was made in an area where no drilling had previously been undertaken.

“We are looking forward to getting in and conducting more drilling at Bonya, as well as a number of other prospective targets,” Mulholland said.

“Exploration at Bonya is still at an early stage, however from what we have already seen there is evidence of mineralisation in numerous outcrops of copper oxide, which give us confidence of encountering more copper sulphide mineralisation at depth.”

Mulholland believes the strategy Rox is adopting – using Fisher East to fund its expansion – has similarities with story of Independence Group.

“For a long time they were an exploration company, then they bought a nickel mine at Kambalda – suddenly there was cash flow – and they ran on the back of a really good nickel price at the time, which really kicked them along,” he said.

“They had the Tropicana project in their portfolio for a very long time, and we refer to the Reward zinc project as our ‘Tropicana’.

“This meant they were able to fund their interest in Tropicana and we can see parallels in what we are doing.

“For the rest of this year – we will be conducting some more drilling – but we are focused on bringing Fisher East into production.”

Rox Resources Limited (ASX: RXL)
…The Short Story

HEAD OFFICE
Level 1, 30 Richardson Street
West Perth WA 6005

Ph: +61 8 9226 0044+61 8 9226 0044
Fax: +61 8 9322 6254

Email: admin@roxresources.com.au
Web: www.roxresources.com.au

DIRECTORS
Jeff Gresham, Ian Mulholland, Brett Dickson

MAJOR SHAREHOLDERS
Drake Private Investments   4.7%
Rox Directors        2.8%

Down came a Jumbuck

THE INSIDE STORY: A merger of ASX-listed stalwarts Trafford Resources and IronClad Mining has resulted in the creation of Tyranna Resources (ASX: TYX)

In project terms, Trafford Resources brought a great deal of value to the merged entity, in the form of a portfolio representing some nine years of exploration prospect accumulation, boasting an independently-rated value of around $30 million.

The task of getting the affairs of the new mining/exploration house in order fell to the Board of IronClad Mining until a recent ratification by a shareholder meeting for the change of name to Tyranna Resources.

IronClad Mining almost pushed the start button on its Wilcherry Hill iron ore project, located on the Eyre Peninsula of South Australia.

Even though it had received all major approvals for the mine in October 2013, IronClad found raising the $23 million capital required to commence stage one of the project difficult, which was exacerbated by the iron ore price crash.

“Had we pressed the button we would have been committing to a capital outlay, which would, in all probability, now be left as a debt,” Tyranna Resources executive chairman Ian Finch told The Resources Roadhouse.

“What that means now, for the new company, is that we have emerged debt-free with a fantastic asset waiting for its time to come.”

With a new name comes a new focus for the company, which has shifted its gaze from iron ore to gold.

Tyranna Resources sees its future resting on the back of its Jumbuck project located in the Western Gawler Craton of South Australia, covering approximately 7,100 square kilometres of highly-prospective and under-explored ground surrounding the million ounce Challenger gold mine operated by Kingsgate Consolidated (ASX: KCN).

Part of the Trafford legacy is a 53 per cent interest in a Joint Venture with Kingsgate for gold exploration surrounding the Challenger mine, which has so far identified over 300 gold anomalies that have yet to be fully investigated.

“The Jumbuck project is our way forward, even when we have so many other good projects such as our tin and manganese projects, elsewhere in South Australia” Finch said.

Jumbuck’s place at the top of the project pile resulted from five months of review and research that has increased the company’s knowledge and appreciation for the potential of the area.

“We have been a bit like a duck on water, appearing to be sitting calmly while we have been doing a lot of research work that has piled a great deal of new information into our data base,” Finch explained.

According to Finch the Gawler Craton is similar to most cratons world-wide, which are circled by what are called mobile zones.

 

“In short these are the areas where you get major plumbing systems – areas where you can find really big mines like Olympic Dam, Carapateena, and Prominent Hill,” he continued.

The three big mines identified by Tyranna have one important thing in common: they were all discovered on one side of Gawler Craton mobile belt.

Not much work has historically been carried out on the other side of the belt, simply because it was the Woomera prohibited Area, under the Federal Defence Force, and therefore off limits to earlier explorers.

The area was opened up around five years ago, which is when Trafford made its move taking out a large landholding and subsequently purchasing its part of the Joint Venture with Kingsgate from a company called Southern Gold.

“We are convinced the Challenger deposit does not just sit out in the middle of the craton on its own,” Finch declared.

Historic exploration work reviewed by IronClad identified over 300 targets, which are about the same or greater than the single point anomaly on which Challenger was discovered (185ppb gold).

Tyranna aims to bring a number of these targets into production, processing ore through the mill at Challenger as part of the JV with Kingsgate.

 

The field of 300 targets been narrowed down to eight – four Tier 3, Three Tier 2, and one Tier 1.

Third tier prospects include: Mainwood (4m at 9.5g/t gold), Atlantis (1m at 1.32g/t gold), Breakaway Bore (1m at 8.96g/t gold), and Black Knight (1m at 7.85g/t gold).

Second tier targets include the Campfire Bore prospect, which has been earmarked as the likely second prospect for production.

Intersections recorded at Campfire Bore include: 14m at 4.17g/t gold; 6m at 4.97g/t gold; 1m at 25.29g/t gold; 2m at 9.5g/t gold; and 8m at 3.5g/t gold.

“Campfire Bore is the only project that has had any drilling below 65 metres,” Finch said.

“That is why we feel the potential is greater there as some of that drilling encountered higher grade deeper ore.”

The second Tier 2 prospect is Typhoon – just to the south of Challenger and another that is yet to be drilled deeper than 65m.

Intersections recorded at Typhoon include: 7m at 6.01g/t gold; 8m at 5.5g/t gold; 1m at 33.67g/t gold; and 12m at 2.2g/t gold.

“Again, the economic intersections at Typhoon, as at Campfire Bore, are cohesive – they stick together – there is just not enough drilling here, which is something we intend to rectify,” Finch said.

The third Tier 2 deposit, Monsoon, is another prospect not drilled to any great depth – only 50m, however it has also returned cohesive intersections, including: 12m at 2.2g/t gold; 15m at 1.39g/t gold; and 3m at 3.03g/t gold.

The first deposit expected to be mined will be Golf Bore, another prospect to attract the attention of various explorers over time.

The company’s review of historical data suggested that  a 77,000 ounce gold resource for Golf Bore had previously been established, however, not enough information could be found to support bringing that up into a JORC Code-compliant Resource.

The only Resource the company does have for Golf Bore is one Southern Gold defined of 3.26 million tonnes for 102,600 ounces.

“What we intend doing here is to strip away all the preconceptions about this prospect,” Finch declared.

“We are deconstructing it and then we are going to reconstruct it as a viable Resource.

“Whilst it has had a lower-grade boundary drawn around it, there are very clear high-grade areas – they are very discreet – and we believe those to be the shoots – similar to Challenger – coming through and coming close to surface.

“That is our prime target”

The next 12 to 18 months will be extremely busy for the new Tyranna Resources as it embarks on a determined drilling and exploration program designed to bring its pipeline of projects through to achieve a two million ounce inventory of gold.

“The first target is to get the near-surface ore mined and through the mill to pay for the rest,” Finch said.

“Under agreed circumstances we do have access, through the JV with Kingsgate, to the centrally-located Challenger mill, which is very important, as it brings all our costs down massively.

“As there has been very little drilling carried out deeper than 50 metres, we can see massive potential here and we have an area of some 7,000-plus kilometres in which to work.

“I believe this is potentially another Tropicana and we will be exploring to prove that because this area is polluted with gold – there is no doubt about that.”

Tyranna Resources (ASX: TYX)
…The Short Story

HEAD OFFICE
Level 2, 679 Murray Street
West Perth, WA, 6005

PH: +61 8 9485 1040
Fax: +61 8 0485 1050

Web: www.tyrannaresources.com

DIRECTORS
Ian Finch, Neil McKay, Peter Rowe, Bruno Seneque

MAJOR SHAREHOLDERS

Admark Investments PL         7.63%
New Pages Investments Ltd     3.17%
Ian Finch                 2.91%

Impact Minerals builds confidence on high-grade exploration success

THE INSIDE STORY: Depending on your glass-half-empty-half-full perceptions, a time frame of six months can seem an eternity or an instant, depending, of course, if you are willing to take control and make things happen.

For Perth-based multi-commodity-focused exploration play Impact Minerals (ASX: IPT) the past six months has gone by in a flash.

The Roadhouse last visited Impact Minerals in October 2014, as it was preparing a maiden drilling program for the Broken Hill Joint Venture nickel-copper-PGE project, in New South Wales, where it had just earned a 51% interest in the rights to nickel-copper-PGE mineralisation from Golden Cross Resources (ASX: GCR).

In March, Impact’s interest increased to 87% on the back of the discovery of high-grade copper-nickel-PGM at the Red Hill prospect.

An exciting development at Red Hill has been further assays of drill core confirming the presence of high-grade and potentially economic platinum group metals (PGM), including the rare PGMs osmium, iridium, rhodium and ruthenium, which Impact believes has increased both the mineralised and economic appeal of the prospect.

Drill intercepts from the Upper and Lower Zones at Red Hill upgraded to: (Note 3PGM = platinum-palladium-gold and 7PGM = 3PGM + osmium, iridium, rhodium, ruthenium where assayed)

Upper Zone:
9.5 metres at 9 g/t platinum equivalent (4.7 grams per tonne 3PGM, 1.5% copper and 0.8% nickel), including 5.1m at 15 g/t platinum equivalent (11g/t 7PGM, 1.9% copper and 0.9% nickel in RHD001); and

5.2m at 12.7 g/t platinum equivalent (7.9g/t 7PGM, 1.1% copper and 1.6% nickel in RHD006).

Lower Zone:
9.9m at 9 g/t platinum equivalent  (6.7g/t 3PGM, 1.4% copper and 0.3% nickel, including 4.2m at  15 g/t platinum equivalent (11.8g/t 7PGM, 2.6% copper and 0.5% nickel in RHD001); and

13.8m at 8.1 g/t platinum equivalent (6.6g/t 7PGM, 1.1% copper and 0.3% nickel in RHD006).

 

The market reaction to the improved drilling assays clearly demonstrated an appetite for good news from the exploration sector with the company’s share price jumping a healthy 60% with approximately 1.3 million shares changing hands over a four day period.

The investment community was obviously impressed with Impact’s claim the assays confirmed Red Hill contains some of the highest grades of PGM ever reported in Australia with the rare PGMs almost doubling the total grade of PGM’s within the Broken Hill mineralised zones.

The market reaction was hardly surprising when you consider the approximate current spot metal prices in Australian dollars per ounce for these metals are rhodium: $1,506 per ounce; iridium $763 per ounce: osmium $500 per ounce and ruthenium $65 per ounce, in addition to platinum $1,528 per ounce, palladium $1,015 per ounce and gold at $1,581 per ounce.

The market attention for the Broken Hill announcement, however, was not the only time Impact has turned investor heads this year.

At our last meeting Impact had just completed a maiden drilling program at its 100%-owned Commonwealth gold, silver and base metals project, located 100 kilometres north of the major mining centre of Orange, also in NSW.

In February this year, Impact released a JORC 2012 Code-compliant maiden Inferred Resource at Commonwealth of 720,000 tonnes at 4.7 grams per tonne gold equivalent for a contained 110,000 gold equivalent ounces comprising 2.8g/t gold, 48g/t silver, 1.5% zinc, 0.6% lead and 0.1% copper using a 0.5g/t gold cut off.

The resource is open along trend and at depth and Impact is of the opinion further drilling could rapidly increase the size and grade of this deposit.

The resource also contains a lens of high-grade massive sulphide mineralisation at the Main Shaft prospect and Impact has calculated a separate Inferred Mineral Resource for this of 145,000 tonnes at 10g/t gold equivalent for a contained 47,000 gold equivalent ounces comprising 4.3g/t gold, 142g/t silver, 4.8% zinc, 1.7% lead and 0.2% copper to demonstrate the high-grade nature of the type of deposit its exploration program is targeting.

Impact’s confidence of discovering new gold-rich massive sulphide lenses stem from results such as 4m at 41g/t gold, 93g/t silver, 5.5% zinc and 2.3% lead at the edge of the current resource which have not been closed off.

Impact was also watching its Mulga Tank project, located on the Minigwal greenstone belt in the eastern part of the Yilgarn Craton in Western Australia, where it had identified priority target areas for nickel-copper and copper-gold deposits.

Impact recently purchased the remaining seven exploration licences in the Mulga Tank project that were in JV with Golden Cross for $275,000 in cash taking a 100% interest in all 13 licences within the project area.

The company has discovered three styles of nickel sulphide mineralisation at Mulga Tank with drilling encountering high tenor veins at the base of the Mulga Tank dunite: 0.25m at 3.8per cent nickel, 0.7% copper and 0.7g/t PGE and 0.3m at 0.7% nickel.

The drilling also hit high tenor nickel sulphide in multiple komatiites returning results of: 0.75m at 0.85% nickel, 0.35% copper and 0.28 g/t PGE (Pt+Pd+Au); and 6.7 m at 0.5% nickel.

Extensive disseminated nickel was identified in the Mulga Tank Dunite with drill results of: 2m at 1.3% nickel, including 1m at 2% nickel and multiple zones of 0.5m at 0.5% to 1.2% nickel within an intercept of 115m at 0.3% nickel.

“Every dollar we have put into our three projects has been paid back with increasingly better results,” Impact Minerals managing director Dr Mike Jones told The Resources Roadhouse.

“It’s not often you see that, and so all three of these projects are still well and truly alive – and each one of them demonstrates huge potential.”

Jones puts Impact’s recent exploration success down to the fact the company is out on the ground and not sitting in the office ruminating over its next move.

“The projects are telling us we are on good ground,” he said.

“Telling us we are in the right areas, we just have to buckle down and do the work to prove them up.

“The Board’s position has always been to keep pushing ahead, judiciously spending money of course – but we have been determined to continue with our exploration activities.”

Impact has a drill program planned soon for Broken Hill focusing on six targets with the aim of extending the known mineralisation.

One of those targets is around the known mineralisation and the other five have been identified around the edge of the host intrusion.

Impact is confident this round of drilling at Broken Hill will determine the extent of the mineralisation of the deposit, and hopefully provide indications of further mineralisation.

 

At Commonwealth, the company aims to follow-up the high-grade intersections it encountered whilst drilling out the current Resource.

“The purpose of the two programs is to really open up both deposits and to establish whether or not we really are on to something substantial,” Jones continued.

“We are really excited about the potential, however the truth – as they say – is always at the end of the drill bit and that is what we are waiting to see.

“We have lots of activities planned for the next six months and if the trends we have established at Broken Hill and Commonwealth continue this could – fingers crossed – be the year we find ‘the big one’.”


Impact Minerals Limited (ASX: IPT)
…The Short Story

HEAD OFFICE
26 Richardson Street
West Perth WA 6005

Ph: +61 (8) 6454 6666
Fax: +61 (8) 6454 6667

Email: info@impactminerals.com.au
Website: www.impactminerals.com.au

DIRECTORS and MANAGEMENT

Peter Unsworth, Dr Mike Jones, Paul Ingram, Dr Markus Elsasser, James Cooper-Jones, Leo Horn

MAJOR SHAREHOLDERS

Bunnenberg Family 31%
Directors 11%
Top 20 58%
Top 50 69%

Anatolia prepares to advance Temrezli

THE INSIDE STORY: A strong pre-feasibility study result has cashed up uranium play Anatolia Energy ready to take its Temrezli uranium project to the next level.

Anatolia Energy (ASX: AEK) managing director Paul Cronin is such a busy man at the moment the Resources Roadhouse had to make two appointments during his recent flying visit to Perth in order to make sure we caught up with him.

Although his voice was a bit scratchy, Cronin still took the time to retell his company’s story, a tale he seems to enjoy telling, which is hardly surprising given the results the company received from a recently-completed pre-feasibility study of its Temrezli uranium project.

Anatolia’s high-grade Temrezli ISR uranium project – to give it its full title – is located in central Turkey in one of the richest uranium districts in the country, approximately 200 kilometres east of the country’s capital, Ankara.

Anatolia claims Temrezli to be the largest and highest grade uranium deposit known in Turkey.

 

“The completion and strong results of the PFS is a major advancement for Anatolia as it takes us a large step closer towards our stated objective of becoming a high margin producer of uranium in the near-term,” Cronin told The Resources Roadhouse.

“Even at present uranium prices the Study has demonstrated Temrezli to be a robust project with a strong foundation, from which we can launch project financing and uranium sales discussions.”

The PFS for the Temrezli project was carried out by engineering firm and uranium specialists Tetra Tech and was based on Anatolia’s development plan, involving construction of a central processing plant at the Temrezli site, capable of producing 1.2 million pounds per annum of uranium.

The Study confirmed the financial return potential of the Temrezli project, including:

Development case NPV of US$ 191.1 million ($247.4 million) pre-tax;

Cash operating costs of US$16.89 per pound of uranium;

Projected life of mine gross revenue of US$644 million ($833.7 million) and operating cash flow of US$345.5 million ($447.3 million) based on US$65 per pound uranium price;

Initial capital cost of US$41 million, including US$4.3 million in contingencies;

Total uranium recovery (Development Case) of 9.9 million pounds; and

Project payback occurs within the first 11 months.

The current Resource at Temrezli stands at 5.2 million tonnes at 1,157ppm uranium equivalent (eU3O8) for 13.3 million pounds uranium, from which 9.9 million pounds of uranium are anticipated to be recovered over an initial mine life of 12 years.

The Study by Tetra Tech estimated the cost for the central processing plant using US dollars.

Anatolia doesn’t consider this to be an accurate reflection of the project’s potential to reduce upfront capital costs, even though the Study found Temrezli to be a very robust project making money at a uranium price of US$40 per pound.

The company believes using US dollar figures overlooks construction of the plant can be achieved using local suppliers – of equipment and manpower – which it says would bring the price down considerably.

“We feel we can improve the economics of the project further and we are currently working on doing that through such elements as a more detailed plant design, and we hope to engage a Turkish-based group to carry out all the EPC and oversee the construction of the plant,” Cronin explained.

“As far as construction of the plant goes, it is pretty much a simple, modular water treatment facility.

“There’s nothing in there that is particularly high-tech, apart from the control systems.

“We know we can get that built in Turkey for a fraction of the figure Tetra Tech has come up with in the PFS that was costed on US dollar-built numbers.

“So we think we can bring our upfront capex down considerably, and it’s my expectation that we will reduce the upfront capex to be in the region of US$33 to US$34 million.

“That would really make the project financing a lot simpler, decreasing the pay-back and improving the leverage available.”

As it considers a Turkish redesign on the Temrezli plant, Anatolia is once again out in the field drilling at its Sefaatli uranium project, just 40 kilometres away.

The company is conducting Phase 2 drilling at the Deliler and Tulu Tepe prospects where it encountered some promising uranium hits late last year.

Highlights from Deliler included:

6.2 metres at 810ppm eU3O8 from 59.8m, including 1.7m at 1,490ppm eU3O8;

1.8m at 940ppm eU3O8 from 75.4m, including 0.6m at 1,940ppm eU3O8; and

1.3m at 580ppm eU3O8 from 51.9m, including 0.5m at 1,520ppm eU3O8.

 

Drilling at Tulu Tepe returned:

1.4m at 540ppm eU3O8 from 82.4m, including 0.6m at 1,270ppm eU3O8;

2.5m at 2,150ppm eU3O8 from, 81.7m including 1.2m at 3,980ppm eU3O8; and

4.3m at 930ppm eU3O8 from 80.5m, including 0.5m at 2,240ppm eU3O8.

The Phase 2 drilling program is being completed at a density expected to be sufficient to produce an initial Resource estimate.

“The recent drill results we released from Sefaatli were much better than what we were expecting,” Cronin said.

“We hit some very high-grade zones there and we think they could all be connected.

“The results we achieved at Sefaatli encouraged us to think it likely it will be capable of being developed as a satellite operation to feed into the Temrezli project.

“So what we are doing now is bringing the drill spacing in to take a much more structured approach to our exploration efforts there.

“Just by drilling where we are, knowing that we have already hit some high-grade zones – I anticipate we will be able to announce a Resource on Sefaatli by mid-year.”

To match the robust nature of the Temrezli project, Anatolia has beefed up its management team recently appointing Cevat Er as general manager – Turkey.

Er has over 25 years of professional experience, at various stages of mine project development, in Turkey, which was put to good use when he was general manager at the Caldag nickel project discovered by European Nickel.

Er will manage operational activities in Turkey including a Plant Optimisation Study and the Sefaatli drilling program, and will oversee the remaining EIA and permitting requirements at Temrezli.

His appointment follows Cronin’s elevation to CEO and managing director and the appointment in January of Tom Young as chief operating officer.

Young was formally vice president of operations for Cameco Resources, where he was responsible for the Smith Ranch Highland and Crowe Butte ISR uranium mines in the United States.

Anatolia is hoping to be able to announce some uranium offtake contracts in place over the next few months to underwrite the development of Temrezli.

However, with the results of the PFS now in, Anatolia’s first move will be to commence the final plant design seeking cost estimates from local Turkish suppliers, which it sees as its best option to potentially reduce capital and partially reduce operating costs.
 
“All in all we are playing the whole thing reasonably conservatively, with the strategy being to place us in the ideal position where we can fund our progress with lower cost capital,” Cronin said.

“We are currently very well-funded in comparative terms with $3.9 million in the bank.

“We don’t need to rush back out to raise further capital.

“More importantly, we expect there to be some positive news flow in the near future.”

Anatolia Energy Limited (ASX: AEK)
…The Short Story


HEAD OFFICE

Unit 3, 80 Colin Street
West Perth WA 6005

Ph: +61 2 9321 5245
Fax: +61 2 9321 5036

Email: admin@anatoliaenergy.com.au
Web: www.anatoliaenergy.com.au

DIRECTORS

Dr Hikmet Akin, Paul Cronin, Robert Annett, Patrick Burke