Metalicity ready to meet new zinc and lithium demands

THE INSIDE STORY: Aspiring base metal developer Metalicity (ASX: MCT) has added a clutch of highly-prospective lithium projects to the company’s Admiral Bay zinc deposit, located in the Kimberley Region of Western Australia.

Metalicity managing director Matt Gauci raised a few eyebrows when the company’s former incarnation, PLD Corporation, acquired the project with a deal totalling $7 million that entailed an initial outlay of $500,000 cash, a $500,000 convertible note with $1 million, in cash or shares, payable on completion of a Scoping Study.

Forthcoming payments subsequent to the Scoping Study completion involve $2.5 million on first production and $2.5 million after the third anniversary of first production.

The zinc market in particular has attracted a great deal of spectators of late, due in no small part to the recent closure of some of the sector’s major suppliers, including the Century mine of MMG (500,000 tonnes per annum), which shipped last ore in late 2015, and the Lisheen mine of Vedanta (160,000 tonnes per annum) in Ireland in early 2016 reason.

In January, CRU Head of zinc market research Graham Deller said, “Excess concentrate stocks are already almost exhausted, and metal inventories will soon start to fall quickly too, as price-induced mine cutbacks add to the effects of last year’s ore exhaustions.”

With that in mind, the Admiral Bay deposit is shaping up to be a worthy replacement to these – and other anticipated closures – as it is considered to be the largest undeveloped pure zinc project in Australia, and ranking as the tenth largest in the world.

The Admiral Bay project comprises two granted Mining Licences, M04/244 and M04/249, and one Exploration Licence E4/1610.

Metalicity has taken advantage of around $50 million of previous exploration conducted by the project’s former owners Kagara Zinc and CRA with work to date identifying a flat-lying structure over a mineralised trend of 18 kilometres.

This currently includes an Inferred Mineral Resource over a strike length of 2.1km of:

111.3 million tonnes at 5.7 per cent zinc equivalent (ZnEq) (2.3% zinc, 2.7% lead, 15 grams per tonne silver).

Metalicity may have been one of the early movers in recognising the potential of the project, but it was quickly followed by international mining-focused private equity firm Resources Capital Funds (RCF), which came on board for a one per cent Net Smelter Return (NSR) to the tune of US$5 million plus the subscription of 9.9 per cent of the company’s shares.

A favourable exchange rate meant the company was able to bank around $7 million without diluting its current shareholders.

The money has been put to good work with the company obtaining the majority of the previous operators’ drilling data, which is currently being reviewed as part of a comprehensive Scoping Study that is near completion.

“We recently conducted a review of the Scoping Study with our consultants SRK Consulting and CSR Global, from which we identified the chance to enhance the project’s value, with particular reference to the Mineral Resource Estimate,” Gauci told The Resources Roadhouse.

“Before we finalise the study we want to take a look at applying a new geological model, which we have updated by re-logging historical drill core from drilling carried out by CRA and Kagara between 1968 and 2008.

“The new geological model is an important step for us when it comes to understanding the high-grade zones occurring within the system to enable us to target them for future Resource upgrades.”

Metalicity describe the new geological model being compiled as a modern approach to assessing the Admiral Bay deposit.

The methodology consists of the acquisition, compilation and interpretation of data that, has until now been unavailable, and is now being evaluated for the first time by experts with considerable experience in Mississippi Valley-type (MVT) systems.

The company anticipates the modelling will deliver greater understanding of the mineralisation and its continuity as well as generating new drill targets.

The modelling has already identified thick, higher-grade zones of zinc and lead mineralisation within the existing MRE.

In December 2015, Metalicity again provided the market with an obtuse conversation point when the company lodged three Exploration Licence Applications (ELAs) covering an area of over 450 square kilometres.

The reason for the market interest was the company’s decision to diversify with the three ELAs (E45/4675, E45/4676 and E45/4677) being prospective for lithium, tantalum and tin.

The prospects are located in desirable addresses for each commodity, namely the Pilgangoora district of Western Australia, just five kilometres south west of Pilbara Minerals’ (ASX: PLS) Pilgangoora lithium deposits –touted as the world’s second largest spodumene deposit – and adjacent to Global Advanced Metals’ Wodgina tantalum mine, which is one of the world’s largest tantalum deposits.

Earlier this year Metalicity demonstrated its allegiance to its portfolio diversity by lodging a further 11 ELAs across seven prospects – all in WA – and considered to be prospective for lithium, tantalum and tin, covering a combined area of approximately 2017sqkm.

The first of these to come to prominence was the lithium tenements at Pilgangoora South, where the company identified high-priority targets (L1 and L2) within the Stannum project in E45/4677, adjacent to the Wodgina Mine.

Recent rock chip sampling work on the L1 and L2 targets at Stannum confirmed the presence of lithium bearing rare metal pegmatites at the prospects, returning results up to 24,544ppm lithium oxide and up to 22ppm tantalum.

“Being able to confirm – so early on – high lithium assays within the spodumene from only one kilometre of the five kilometre area was very important for the project,” Gauci said.

“It immediately elevated Stannum to become one of the most lithium-prospective new areas sitting in Pilgangoora District, which is rapidly emerging as a world-class region for lithium discoveries.”

Three of the later ELAs (E70/4809, E70/4816 and E70/4817) cover 870sqkm to make up the Greenbushes Regional lithium project and are located with 35km of the world’s largest and highest grade deposit of spodumene (hard rock lithium), the Greenbushes lithium deposit of Talison Lithium.

First pass field work at Greenbushes surpassed expectations with the collection of a healthy number of pegmatoidal veins and greisens for chemical analysis.

Although outcropping pegmatities are common in the Pilbara, it is a different story in the southwest of WA where the Greenbushes project is located.

In this region exploration requires a more systematic approach involving sensing surveys to identify drill targets.

“Our first pass results at Greenbushes were a pleasant surprise as we thought the amount of lateritic cover would prevent us from identifying any outcropping pegmatites,” Gauci explained.

“Our applications cover similar geological settings to the Greenbushes deposits so our field work was aimed at mapping geological structures, and taking rock chip samples.

“Now we intend getting our hands on radiometric data set we know to be available to assess the area for potassium alteration haloes that are usually associated with pegmatites.

“We also hope to acquire hyperspectral data over the project are to help define further detailed exploration programs.”

Metalicity (ASX: MCT)
…The Short Story

HEAD OFFICE
6 outram Street
West Perth WA 6005

Ph: + 61 8 9324 1053
Fax: +61 8 9388 3006

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

DIRECTORS
Andrew Daley, Matthew Gauci, Christopher Bain, Mathew Longworth, Mike Hannington

MAJOR SHAREHOLDERS
Founders 22.5%
RCF Fund VI 9.9%
Associates 9%
Management 4%