We’re Talking Nickel – Are You Listening
The story of Perth-Based Canadian-focused nickel exploration play Corazon Mining Limited may not be widely known but it is one the company’s shareholders are eager to see through to the end.
Corazon Mining listed on the ASX in 2005 as Graynic Metals, an exploration company with a focus on base and precious metals, predominantly in Western Australia.
For a brief moment the company changed its name to Xanadu Resources and ventured off in search of nickel laterites in Guatemala.
Another change of name, this time to Corazon Mining, resulted in a subsequent change of focus to nickel sulphides in Canada.
“The board came to the decision that nickel laterites were probably not a right fit for a junior company,” Corazon Mining managing director Brett Smith told The Inside Story.
“Nickel laterites require an enormous amount of capital to develop, so we pulled out of the Guatemalan opportunity as the Canadian opportunity arose.
“This new project is unique in that we have inherited part of an old mining area, in which we see there is still a lot of potential.”
Corazon’s key focus is the Lynn Lake project located in the Canadian province of Manitoba.
The Lynn Lake project is located in the Lynn Lake nickel camp, Canada’s third largest nickel mining region.
“The current board is very value focused and we are all of the opinion that this project and nickel sulphide is the right option for us at this stage,” Smith continued.
“It is something we are familiar with and this project is something we believe we can add value to quite easily and its real potential has yet to be realised.
“It is a brownfields nickel sulphide play and our strategy is to define the remnant resources around the old mine we have inherited and to discover new deposits.”
Corazon has an option to acquire 100% equity in the Lynn Lake nickel sulphide project by spending CAD$3 million on exploration over 3 years, followed by a CAD$2 million vendor payment.
“Besides the regional prospectivity of the project, the main aspect that attracted us to the project was the EL Mine,” Smith said.
“The EL Mine is a mafic/ultra-mafic plug containing massive sulphide, nickel, copper, cobalt that historically has only been mined down to around 200 metres in an area where surrounding mines have been mined to a depth of around one kilometre.”
Corazon holds the largest land holding within the Lynn Lake region, which incorporates the historic EL Mine and an exploration land holding covering several drill-defined base and precious metal prospects, including six drill-defined VMS deposits, as well as numerous untested geophysical targets.
“We think we are a unique play in that we are a nickel junior with a sub $10 million market cap and nickel sulphide resources,” Smith said.
“Generally, if you are thinking nickel and nickel sulphides you have to go to mid-tier production companies or grassroots explorers. There’s no-one in between those two levels.
“We want to show there is an exciting path towards production by demonstrating the upside of the project and get some momentum – a base level of resource from which we can fly.”
That momentum began to take shape in October when Corazon released a maiden (inferred) resource for the EL Mine of 1.8 million tonnes at 1.0% nickel equivalent (0.6% nickel equivalent cut-off).
The resource included 14,000t nickel, 9,000t copper and 400t cobalt and was regarded by the company at the time to be a significant step towards determining the development potential of the project.
“We have defined a resource for the top 600 metres that is an interim resource,” Smith explained.
“We have been very conservative and have only included holes we have drilled, holes we can sample and holes on which we have survey information.
“We have discarded a lot of historical information; however we feel we can add a lot of value with a minimum of drilling in that resource above 600 metres.
“We don’t believe the resource we announced late last year truly reflects the exploration potential so we also put out an exploration target (3.5Mt to 4.6Mt at between 0.8% – 1.45% nickel, 0.4% – 0.7% copper and 0.01% – 0.03% cobalt) down to around one kilometre deep.”
Historic mining at Lynn Lake ran for 23 years with a run-of-mine grade of 1% nickel, 0.5% copper.
Although the EL Mine was the highest grade mine in the district (+2.5% nickel), these grades appear low when compared to the Kambalda styled narrow high-grade nickel sulphide deposits Australians are more familiar with. However, the Lynn Lake project hosts a very different style of deposit; one that is a large tonnage, low grade, low cost style of mining.
“We believe there is good potential for about 50,000 tonnes of nickel, with copper and cobalt credits, grading around 1% to 1.5% nickel,” Smith said.
Ironically this great potential is hindering Corazon’s share movement with the current shareholder base reluctant to sell. Around 50% is held by the top 20 shareholders.
“What we have been doing lately is getting out there and letting new, prospective investors know about the company, get more interest in the stock and be active in the field,” Smith said.
“Eventually if we’re out there drilling holes and people are buying and selling the stock then our liquidity should improve.”
Corazon is about to embark on an intensive exploration program it hopes will advance both the project and its share price.
The proposed work programs include 5,000 metres of drill core and down-hole EM geophysics, 420 line kilometres of aerial VTEM and magnetic geophysics, 40 line kilometres of ground IP geophysics, project coverage with detailed ground gravity geophysics and preliminary mining studies on the EL Nickel sulphide deposit.
The EL Deposit will be a major focus for this upcoming raft of exploration activity as it undergoes resource up-grade drilling at shallow depths, drilling and down-hole EM surveys of extensions to the mineralisation as well as mining/engineering studies of the resource.
The program will also test other nickel sulphide and zinc-copper-sliver VMS targets within the project.
“This area hasn’t really been extensively explored since the 1970s and we believe there is plenty of upside with good modern exploration techniques,” Smith said.
“It is a metal-rich project and we are proposing a very active exploration program for the next 6 months.
“Our main aim with our exploration strategy is to increase this resource. We are hopeful that, with this round of drilling, we can underpin some certainty in our exploration target for the EL Mine.
“What we would also like to achieve is the discovery of another nickel sulphide deposit.”
Corazon considers the place this is most likely to occur is directly beneath the EL Plug.
Indications that have boosted these hopes include improving grades and faults that have been mapped
“We think these faults are very good places to explore,” Smith continued.
“Want we will be doing is drilling one or two deep holes down to about 1.2 kilometres then perform downhole electro-magnetic surveys which will accurately locate massive sulphide targets for follow-up resource drilling.
“The previous exploration carried out at Lynn Lake was old-school. Nothing like we are capable of doing now with the processing and modelling of information.
“These days we can put exploration data into 3D packages and identify anomalies and drill targets that were missed back then.
“There’s a different level of investigation we can perform now, compared to what was done before.”
A recent successful fund raising means Corazon will be financially well placed to do what it has said it wants to do.
“We’re going to be hitting areas where we know there is mineralisation or a geophysical target that looks just as good as the area where we know there is mineralisation,” Smith said confidently.
“A coincident EM with a magnetic anomaly could be another EL Plug with sulphides or it could be a VMS. Either way we would be very happy.”
Corazon Mining Limited (CZN)
…The Short Story
350 Hay Street,
Subiaco WA 6008
Ph: +61 8 6364 0518
Fax: +61 8 6210 1872
DIRECTORS and MANAGEMENT
Clive Jones, Brett Smith, Jonathon Downes, Adrian Byass, Rob Orr, Andy Thompson
Dr AR Brown 6.5%
Merrill Lynch (Aust) 3.9%
Bullseye Geoservices 3.4%
UBS Wealth Management (Aust) 3.3%
SHARES ON ISSUE
$9.42 million (at press)