THE INSIDE STORY: Impact Minerals has managed to achieve what any number of ASX-listed companies would have been very happy to emulate in the past 12 months. By Mark Mentiplay

That has been to maintain positive momentum throughout the recent downturn, which is directly attributable to the company’s willingness to get out and do what exploration companies do best – explore.

This is one aspect that has set the company apart from most of its peers over the last couple of years and has paid off with it sitting in the enviable position of being well funded and able to sustain a good share price and market cap in that period.

Although its current focus is on its high grade precious and base metal Commonwealth project, Impact will still be keeping a close eye on the Broken Hill platinum-copper-nickel project where it intends to commence follow-up work on the highly-promising drill results achieved on the Red Hill propsect last year. Both of these projects are in New South Wales.

“It may appear to the market that we have taken our eye off the Broken Hill nickel-copper-PGE project by increasing our focus the Commonwealth gold, silver, lead-zinc and copper project,” Impact Minerals managing director Dr Mike Jones told The Resources Roadhouse.

“This is simply because the amount of aggressive exploration we have carried out over the two years has generated some very high-grade drill results for those metals on both of the projects.

So now we are beginning a new phase of significant follow-up drilling, starting at Commonwealth with the intention of heading then back to Broken Hill later in the year.”

Impact is now focusing on expanding the already outlined Commonwealth gold-silver-zinc resource for early production/cash flow. 

The Commonwealth project has an established mineable gold equivalent resource and a one million ounce – plus exploration target.

The company also has two powerful backers, which means it is now cashed up and ready to continue focusing its exploration spotlight on the Commonwealth gold project.

Commonwealth already has current Inferred gold-silver-copper-lead-zinc Resources of 720,000 tonnes at 4.5 grams per tonne gold equivalent (AuEq) containing 110,000 ounces AuEq, including 140,000 tonnes at 9.3g/t gold for 47,000 ounces AuEq, underlining the high grades being found.

According to Dr Jones, the 315 square kilometre project, located 95 kilometres north of Orange, has the potential for small scale, early production, with a one million ounce gold equivalent exploration target 

“The grades are coming up well and grade conquers all,” he said.

“That is necessary in this market.

“At the Commonwealth gold project, we believe we have found a starter pit, now we have to extend that.

“We haven’t had the discovery hole for a major deposit yet, but we are aiming for more than one pit and an underground operation.”

The 100 per cent-owned project sits within the Lachlan Fold Belt, a renowned region for major gold-silver-base metal mines.

Impact acquired the Commonwealth project in June 2013, since when it has demonstrated its potential to host two deposit types: a high-grade gold-volcanic massive sulphide (VMS), like the seven million ounce AuEq Woodlawn-style orebody; and porphyry copper-gold discoveries such as the 25 million ounce gold/4.9 million tonnes copper Cadia-Ridgeway project.

Impact has identified multiple targets at depth and along trend from the known resource as well as new, untested targets discovered by geophysics and soil geochemistry over 8sqkm and growing.

In all, the company boasts 50km of strike potential for the two types of deposits.

Previous exploration, including a ground electromagnetic survey, re-logging and sampling of previous drill core, is now being followed by ground radar and a major reverse circulation and diamond drilling program of up to 3,000m.

This will test the top dozen of 40 or so targets to have been identified at four prospects covering 5sqkm – these being the Commonwealth deposit, Silica Hill, Welcome Jack and Doughnut.

This work is designed to test Impact Mineral’s growing belief that the targets are all part of one large porphyry copper-epithermal system.

At the Commonwealth mine, intercepts from different holes have included:

4.7m at 5.5g/t gold and 253g/t silver from 54.3m; and
9.8m at 8.4g/t gold and 357g/t silver from 54.2m.

Commonwealth South has yielded:

4 m at 41 g/t gold; and
26m at 2.5g/t gold and 20g/t silver from 32m.

“Each time we’ve spent exploration money, we’ve had good results,” Jones said.

The Broken Hill PGM-nickel-copper project, located 20km east of the world-class Broken Hill silver-lead-zinc mine in NSW, has yielded the highest platinum grades ever found in Australia and has an exploration target of one million ounces PGMs.

Three priority targets have been identified over a prospective 40km belt within Impact’s 200sqkm EL in the SE part of the richly mineralised Curnamona Province.

The Platinum Springs target has yielded drill intercepts of 52.6g/t platinum equivalent and more recently, 0.6m at 11.5g/t platinum, 25.6g/t palladium, 1.4g/t gold, 7.6% copper, 7.4% nickel and 44.3g/t silver.

Red Hill has also yielded high-grade PGM, copper and nickel results.

Drill hole RHD012 demonstrated rare PGE rhodium of 4.6g/t, 7.2g/t iridium, 5.6g/t osmium, 3.1g/t ruthenium, 10.4g/t platinum, 10.9g/t gold, 294g/t palladium, 335.8g/t 6PGE+gold, 7.4% nickel, 1.8% copper and 19g/t silver over 1.2m.

This intercept sits within a high-grade 3.5m intercept of 1.7g/t rhodium, 2.6g/t iridium, 2g/t osmium, 1.1g/t ruthenium, 144g/t palladium, 5g/t platinum, 6g/t gold, 2.3% copper, 159g/t 6PGE+gold, 2.9% nickel, 2.3 copper and 14.5g/t silver.

In addition high grade zinc-lead-silver mineralisation has also been discovered and RHD018 returned 1m at 26.8% zinc, 2.8% lead, 133g/t silver and 1m at 21.4% zinc, 08% lead and 31.5g/t silver, within a 5.1m intercept of 10% zinc, 0.8% lead and 40.4g/t silver.

Spectacular high-grade rock chip and bulk samples have also been found over 9km of strike at Moorakai.

Work at the Broken Hill project is ongoing, with re-analysis and synthesis of previous exploration results expected to confirm the potential for bulk tonnage PGE mineralisation.

Jones said he expects follow up drilling at Red Hill after the current Commonwealth drilling, probably about 2,000m in the September 2016 quarter.

Impact is nicely cashed up with exploration funding of up to $8.3 million for its two prime NSW projects.

It has $4 million in the bank and another potential $4.3 million of funding when/if iron ore mining billionaire and Fortescue Metals boss Andrew Forrest’s Squadron Resources exercises its share options also an option to acquire a 19.9 per cent stakes in the Commonwealth and Broken Hill projects. This follows an earlier injection of $3 million cash by Squadron via a placement and convertible note. 

Impact has also received strong funding from 28 per cent major shareholder, the prominent German industrial Bunnenberg family.

There is a certain serendipitous aspect to Impact’s exploration and development of both the Commonwealth and Broken Hill projects.

Coincidentally, at the time of Impact’s interest, both projects were also being investigated by Squadron’s and Forrest’s right hand geologist, Dr John Clout, who along with Dr Jones, worked at pre-eminent Western Australian miner Western Mining in the 1980s-1990s.

Impact Minerals (ASX: IPT)
…The short story

HEAD OFFICE
26 Richardson Street
West Perth WA 6005

Ph: +61 (8) 6454 6666

THE INSIDE STORY: The broader market may be all doom and gloom after the boom, but gold producers and developers, such as Gold Road Resources (ASX: GOR), are relishing the opportunities being offered by a buoyant gold price.

Earlier this year the gold price to a peek over the $1700 mark, which was most encouraging for the sector given the all-time highs experienced during the ‘Good Days’ were in the $1800 per ounce range.

When the gold price was at these heady levels, operating costs, especially in Western Australia where the epicentre of the boom was located, were greatly inflated compared to today.

The oil price was almost double that now being paid, while the iron ore companies were relishing their time in the sun, subsequently driving labour costs up, and all other input costs were hitting the upper echelons.

“The gold space – particularly in Western Australia – is a very good space to be in at present,” Gold Road Resources executive chairman Ian Murray told The Resources Roadhouse.

“And, it’s also good to have a project like Gruyere, which is the largest undeveloped gold project in Western Australia, if not Australia.
 
“It’s no secret the other sectors are really suffering, so we have to make the most of the open window of opportunity.

“So that window of opportunity being open is providing us access to the best people, access to capital, allowing us to move a project of this size and scale on through development and to production as quickly as we can.

“In the past few months the cards have definitely fallen in our favour with the gold price sitting up near that top end of the spectrum, while operating costs have been at the opposite end.”

In February this year, Gold Road Resources released the results of a Pre‐Feasibility Study (PFS) for the development of the company’s 5.62 million ounce Gruyere project, located east of Laverton in Western Australia.

At the time the company boasted the PFS had confirmed the Gruyere project to be one of Australia’s best undeveloped gold deposits.

Its boasting would appear to be well-placed with the PFS demonstrating the project to be technically sound and financially viable, being capable of generating (off a $1500/oz gold price) over $1 billion in free cash flow (pre‐tax) over an initial 12‐year project life.

The total forecast capital cost is estimated to be $455 million, which includes a project contingency of $35 million.

The PFS produced a Whittle‐optimised open pit shell and Ore Reserve modelled at $1,400 per ounce.

All financial analysis was undertaken using an Australian Dollar $1,500 per ounce gold price, representing the five‐year historic average.

Other highlights from the study include development of the project to be based on a single large open‐pit mine and conventional SAG/Ball Mill Circuit, gravity/carbon‐in‐leach plant with throughput of 7.5 million tonnes per annum of fresh ore and up to 8.8 million tonnes per annum of oxide ore.

Estimated total forecast capital costs of $455 million, including $35 million contingency (US$335M and US$26M respectively), while estimated average all‐in sustaining cost (AISC) came in at $960 (US$700) per ounce over life‐of‐mine (LOM) with a payback of less than one third of LOM.

Following the completion of the PFS, Gold Road declared a Maiden Ore Reserve for Gruyere of 3.17 million ounces, which supports an average annual gold production of 265,000 ounces over the life of the mine, a rate that should elevate it into the ranks of Australia’s mid‐tier gold producers.

Based on the positive PFS outcome, the company approved the immediate progression to a Feasibility Study on the project to further define and support the case for project funding and development.

“Part of that Feasibility Study is looking for upside opportunities within the mine plan at Gruyere,” Murray said.

“We know the ore body carries on a lot deeper than the current picture, which goes to around 340 metres depth, as our deepest drill hole into the ore body intercepted gold mineralisation at around 1150 metres, so there is a lot of gold below the current picture.”

Having established there are 3.2 million ounces in the current Reserve, Gold Road now has further value adding work currently underway that is taking into consideration such aspects of the project as power efficiencies, in particular the cost of diesel.

The PFS looked at diesel costs at around 75 cents per litre, while current prices being paid for diesel by operating mines in the area around Gruyere have been around 45 to 50 cents.

The study also anticipated the Gruyere open pit will average more than 9,000 Reserve ounces per vertical metre to a final depth of 340 metres.

Recent work carried out as part of the Feasibility Study, however, suggest these numbers could also change dramatically.
 
“The pit slope angles in the PFS for the Stage 4 pit were 40 degrees, and that was because we didn’t have any geotech drilling down to that depth,” Murray explained.

“We have subsequently done 3,000 metres of geotech drilling and we now have more information telling us that for every one degree we steepen that wall angle we drop around $50 million of operating costs over the life of the project.

“That is a significant improvement in the operating costs from changing the wall angles.

“In addition to that, if we can steepen the wall angles – of course we already know that the Resource carries on deeper – the pit then actually pushes deeper providing the potential to increase the mineable ounces.”

The Gruyere project is a dynamic beast that basically changes on a day to day basis as gold prices and operating costs improve always adding value.

The PFS was completed based on a gold price of $1500 per ounce and the gold price is now sitting just over $1600 per ounce, and recently over the $1700 per ounce range.

Gold Road believes improvements to the gold price provide opportunities to improve the current mine plan, in conjunction with improvements to operation efficiencies allowing it to get more gold Resources into the mine plan.

Murray describes the PFS as a conservative model, enabling the company commence the Banking stage of the development process.

“The banks will conduct their Due Diligence and I don’t think they will be able to question any of the assumptions we have used because we can prove all of them to be conservative when they are compared to where costs are in the marketplace at the moment,” Murray said.

“Operating costs, certainly in Western Australia, continue to go down.

“Between the PFS and the Scoping Study – on the capital costs – we saw around a ten to fifteen per cent drop in costs on different items.

“Obviously costs cannot drop forever, but I would say that we are certainly not in an environment where the risks are that the costs will escalate enough to blow out a project.

“We will be able to build the Gruyere project and the costs should remain very close to what our studies have suggested that they should be.”

Gold Road Resources (ASX; GOR)
…The Short Story

HEAD OFFICE
2/26 Colin Street
West Perth WA 6005

Ph: + 61 8 9200 1600
Fax: +61 8 9481 6405

Email: perth@goldroad.com.au
Website: www.goldroad.com.au

DIRECTORS
Ian Murray, Justin Osborne, Russell Davis, Martin Pyle, Tim Netscher

MAJOR SHAREHOLDERS
RCF 9.8%
Platypus 8.6%
Van Eck 5.9%

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

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%

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

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George Bauk, Adrian Griffin, Bryan Dixon

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