Corazon defines Lynn Lake discovery
Mining companies become excited when a drill hole provides an outstanding discovery and even more excited when they consider what it may be trying to tell them.
In May 2011 Canada-focused nickel exploration play Corazon Mining (ASX:CZN) announced drilling at its Lynn Lake nickel sulphide project had discovered high-grade nickel / copper sulphide beneath the historic EL Mine.
In its heyday the EL Mine was the highest-grade deposit in the Lynn Lake district, producing 1.9 million tonnes at 2.5 per cent nickel and 1.15 per cent copper until it was closed in 1976.
The recent assays confirmed high-grade nickel/copper sulphide at Lynn Lake, the best of which returned:
– 23.75 metres at 3.34 per cent nickel, 1.54 per cent copper and 0.079 per cent cobalt from 731.25 metres.
This included:
– 13.0m at 4.27 per cent nickel, 0.89 per cent copper and 0.099 per cent cobalt from 732m; and
– 2.46m at 3.80 per cent nickel, 0.34 per cent copper and 0.089 per cent cobalt from 751.94m.
As drilling progressed Corazon supplied the market with a positive run of news, which reaffirmed it had made a significant discovery.
This was supported by the revelation of a breccia body similar to the high-grade nickel / copper / cobalt sulphide mineralisation historically mined at the EL Mine.
By December, Corazon was reporting multiple nickel intercepts, grading more than three per cent nickel with individual results returning up to 7.4 per cent nickel over 0.7m.
Drilling highlights from this stage included:
– 44.75m at 1.55 per cent nickel, 0.65 per cent copper and 0.044 per cent cobalt;
– 3.85m at 2.83 per cent nickel, 0.24 per cent copper and 0.073 per cent cobalt;
– 11.03m at 2.31 per cent nickel, 1.01 per cent copper and 0.062 per cent cobalt; and
– 11.51m at 2.37 per cent nickel, 0.78 per cent copper and 0.062 per cent cobalt.
“The style of mineralisation we’re hitting now hasn’t been seen outside the area that was mined from the top of the EL Deposit,” Corazon Mining managing director Brett Smith told The Inside Story.
“What we’re hitting now is spectacular high-energy breccia, which previously hadn’t been identified.
“We feel we are getting into another breccia environment and, geologically, we are very excited about what we are seeing.”
What Corazon is seeing is confirmation the recently-identified EL Deposit extensions contain a high-grade sulphide breccia it considers to be of significant size and economic potential.
It is worth noting the drilling Corazon has carried out to date has only defined a small portion of the targeted EM conductor, while mineralisation remains open to the south at a depth well within the window of historical mining conducted in the region, from surface to 1,100m.
The intensity of the mineralisation identified so far is some of the strongest observed at the Lynn Lake project, and is significantly greater than anything the company has drilled in the upper parts of the EL Deposit and resource area.
“We have more than sufficient funds in the bank since completing a $4.32 million raising, so it is now a matter now to keep drilling,” Smith said.
“We have already drilled 13 holes, of which only one was unsuccessful in hitting mineralisation, but that defined the northern end of the deposit, which is good.
“Apart from that we have no other limitations on the mineralisation because the other 12 holes hit high-grade sulphides of various widths.
“We’re hitting a lot of faulting and those faults are also hosting high-grade mineralisation up to 20 per cent copper.”
It would be an understatement to say the drilling Corazon has completed so far at Lynn Lake has provided a great deal of encouragement.
One issue the company faces however is getting the drill holes to drill exactly where it wants them to go.
“We are drilling 800-plus metre holes and we are trying to hit a 40 metre by 40 metre square at depth,” Smith explained.
“We are doing quite well and have successfully defined that area but there is another 100 metres to the south that has never been subjected to any drilling.
“At 800 metres we are still well above the maximum mining depth for the region.”
When drilling began Corazon was confident of defining mineralisation at Lynn Lake but the company has been able to throw a lot more into the results basket than it originally expected.
The drilling strategy was to attempt to hit something of significance early, which the company has done, and from there work its way out in small increments.
Due to the depth of the drilling it is undertaking any small incremental change to a drill hole at surface creates a large change at the bottom of the hole.
“We are making small adjustments at surface to enable us to gain greater understanding of the deposit, which means we are conducting a hole by hole program,” Smith said.
At the end of 2010 the nickel market was reasonably strong with healthy demand and limited supply.
In January 2011 analysts were saying global nickel demand was rebounding from a battering it took in 2007.
By June 2011 the same analysts were forecasting growth in the supply of nickel resulting in negative market sentiment for nickel.
Just one month later, in July, the nickel surplus had narrowed.
What this indicates is that the nickel supply / demand curve is very tight and likely to flip based on market intent.
Depending upon the mood if the market in 2012 and if the global price for nickel is strong enough, Corazon may consider starting a second drill rig at Lynn Lake.
The company is keen to define the extents of the deposit by the middle of 2012 and is aware that should it drill successfully in certain areas it could be able to define a Resource.
“What we don’t want the Resource to do is understate what is there,” Smith explained.
“We want the Resource to reflect what is there, which is why we are working towards our exploration target of between 52,000 tonnes and 139,000 tonnes of nickel metal.”
Smith said he would like to see the market begin to focus on what the company is trying to achieve at Lynn Lake.
Fortunately, the company’s long-time shareholders do understand and once it announced the first discovery hole in May 2011 they developed a greater appreciation for the project’s value.
“Once we discovered that they were very happy to stay involved,” Smith said.
“Macquarie Energy and Metals has been buying stock on market and is a significant shareholder in the company.
“A lot of the analysts understood the project from the beginning. They recognised its value then and are beginning to understand it even more now.”
Corazon is well aware, however that it takes more than one hole to fully appreciate a project such as Lynn Lake.
The company is yet to drill a ‘definitive hole’ into the EL Deposit, which Smith concedes to be a complex style of deposit.
“We just want to focus on where we are going,” he said.
“We have the indicators that the grade is there; we have the indicators of the strength of the deposit.
“It’s all good; it’s just going to take time to get it all right.”
Corazon Mining Limited (ASX:CZN)
…The Short Story
HEAD OFFICE
Level 1
350 Hay Street,
Subiaco WA 6008
Ph: +61 8 6364 0518
Fax: +61 8 6210 1872
Email: admin@corazon.com.au
Web: www.corazon.com.au
DIRECTORS and MANAGEMENT
Clive Jones, Brett Smith, Jonathon Downes, Adrian Byass
SHARES ON ISSUE
137.9 million
MARKET CAPITALISATION
$13.3 million (at 25 Jan 2012)