Plymouth Minerals managing director Adrian Byass is a man in a hurry.
Byass’ haste stems from his enthusiasm for the company’s recently-acquired Morille tungsten-tin project in Spain.
Morille is one of those projects that don’t come along often enough for junior companies such as Plymouth Minerals (ASX: PLH), but to fully understand why the company considers it to be such a significant opportunity involves a short history lesson.
The global tungsten price took a hammering in 1985 when the Chinese flooded the market, resulting in a number of tungsten projects around the world immediately ceasing production or development.
A steady rise in the price of tungsten since 2004 when China suddenly became a net importer of the metal has seen it enjoy a solid run, particularly in the past three years.
At the time of the China-induced tungsten coma, Morille was a patchwork of small-scale alluvial mines and two separate gravity separation processing plants.
The market collapse stopped these projects and nobody came back to them, a scenario Byass is familiar with having recently left ASX/AIM-listed Wolf Minerals after seven years on the Board.
“Wolf’s Hemerdon project was a case in point of development stopping on a dime, then being kick started,” Byass told The Roadhouse.
“Wolf is now a plus-$70 million company with funding in place and construction underway with mining scheduled to start 2014.
“I learned many valuable lessons at Wolf, which I will apply to Plymouth.”
In 2009, proving global financial upheavals provide opportunities, Antonio Areas Alonso, one of the original artisanal miners, consolidated Morille and sold it to AIM-listed company Aurum Mining, which was more focused on Joint Venture gold projects in the Province.
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“Aurum spent several million pounds drilling gold ore bodies in Spain while ignoring Morille; eventually, like many juniors in 2013, they ran out of money,” Byass said.
“Plymouth on the other hand, had cash to purchase and commit to the necessary exploration to drive the project to the next level in 2014.
“We opened negotiations in July and whilst they took a few months to complete and arrive at a deal, that was it.”
Plymouth announced an agreement to acquire an 80% beneficial interest in the Morille project in October.
The deal involved Plymouth acquiring a 100% holding in Spanish company, Castilla Mining S.L., which owns the 80%interest in the project, from Aurum Mining for €300,000 in cash and shares to be paid over 12 months, of which all cash has been paid and the final payment of €50,000 in shares is due in October 2014. This payment will be based on VWAP in October 2014.
The remaining 20% interest will be held by Aurum Mining as a free carry until decision to mine stage, at which time Aurum can elect to contribute pro rata in the funding and development, or if not, its interest is diluted to zero and a 0.5% NSR is granted.
Plymouth has the right to buy Aurum’s 20% interest for £2.5 million in cash at any time prior to the Decision to Mine point.
Morille is a brownfields exploration and development project with previous production results indicating its ability to produce high-quality tungsten concentrate until it closed in 1985.
Previously mined mineralisation at the project is characterised by two styles:
Mainly as “calcsilicate”, astratiform host unit, located between transported sedimentary material, with mineralisation predominantly in the form of coarse grained scheelite which form the bulk of mineralisation mined historically; and
As late-stage, quartz veins cross-cutting sediments and sedimentary hosted mineralisation typified by calcsilicate units. Quartz vein hosted mineralisation is typically as cassiterrite and lesser scheelite and wolframite. Some of these veins have been continuously mined over 400m strike, down 75m (Anarbellas) and have little surface expression.
The project is located in the Salamanca Province, a renowned tungsten producing area within the Castilla y León Region, in central Spain, which has historically produced a large portion of western tungsten supply.
Mines are currently in operation in the region. The closest is the Los Santos tungsten mine operated by Almonty Industries approximately 30km south.
Plymouth has been encouraged by the fact Los Santos has been permitted and brought into production in the recent economic environment.
“The Morille project remains, after all this time, an unexplored, highly-prospective brownfields tungsten prospect with much potential,” Byass said.
“Historically, it has yielded the best part of one million tonnes of ore grading 0.1 to 1.0 per cent tungsten, which we have records for.”
“This ore consistently generated excellent, high-quality concentrates, recovering around plus-70 per cent for 70 to 76 per cent tungsten concentrates.
“Such quality from rudimentary process plants is very impressive.
“We feel this is a starting point from which we hope to improve on with a modern plant, the benefits of potentially low capex and commensurate low opex as a result of the coarse mineralogy of scheelite at Morille.”
Testing of ROM stockpiles averaging 0.41% tungsten that were left when processing became cost prohibitive in 1986 returned excellent recovery and good quality concentrate in line with historical records.
The Morille tungsten-tin project comprises five Investigation Permits covering over 57 square kilometres, which historically hosted multiple underground and open pit tungsten and tin mines.
The larger historical mines are the; Alegria, Claudina, Mundaca and Anarbellas tungsten mines.
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Alegria was mined using both underground and open pit methods to 30m depth; Anarbells was underground over 400m strike and 75m depth
The Morille project was subjected to limited drilling in the 1980s by the Spanish Geological Survey.
Plymouth will be conducting exploration activities at Morille by the end of the year with a first phase of drilling to commence in 2014 on targets identified amongst the old workings .
“Our 2,500 metres of drilling will be the first on the tenements since they were consolidated and since the drilling of 12 holes by the Spanish Geological Survey,” Byass said.
“We are well-funded with $2 million dollars in the bank, which will drive this project well into next year.”
Plymouth’s aim is to establish a standalone operation at Morille and the 2014 drilling is aimed at defining a Resource as early as it possibly can.
“There is a mine 30 kilometres down the road, which has already processed several hundred tonnes from the old stockpiles, so we know it performs well in their processing, and we know their recovery is very good, so there is possibility to truck ore there if we can’t get standalone operation,” Byass said.
“I believe there is much value to be earned from this project as we go forward,” he said.
“We have acquired a project which has the right balance – we have mitigated through historical work any technical risk, the same for process risk, and we don’t have any legislative concerns.
“Mining stopped prior to depletion and no exploration was ever conducted to see more than what was in front of their faces at the time. “
“Our biggest risk is if, as a junior company, we don’t drive this project fast enough.”
Plymouth Minerals Limited (ASX: PLH)
…The Short Story
HEAD OFFICE
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DIRECTORS
Adrian Byass, Charles Schaus, Nicholas McMahon, Stephen Brockhurst
MAJOR SHAREHOLDERS
Board 16.3%
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32.15 million
MARKET CAPITALISATION
$3.57 million (at 21/11/13)
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