THE INSIDE STORY: To an industry observer it is interesting to watch how different companies are reacting to the current investment haze.
It wasn’t too long ago the resources industry was walking on sunshine, now – it could be said – it is swimming in quicksand.
Readers of the daily doom and gloom peddled around by mainstream publications would be surprised at the number of exploration companies that are still out there doing what they do so well – which is to develop the potential of the very same projects people were so excited about before the GFC gave Hollywood some new subject matter to make movies about.
One such company working up one such project is Peel Mining (ASX: PEX) at its 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 New South Wales. The project also hosts the May Day gold-base metal deposit (ML1361).
During the good old boom days Mallee Bull caught 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 per cent 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 per cent interest, after which the two companies formed a 50:50 Joint Venture.
A maiden JORC compliant Mineral Resource estimate was completed in May 2014, comprising 3.9 million tonnes at 2.3 per cent copper, 32 grams per tonne silver and 0.3g/t gold.
Testament to the strong potential of the Mallee Bull deposit is that Peel’s JV partner, CBH isn’t going anywhere in a hurry and is eager to remain an active participant, and supporter, of the project.
The faith of the JV partners was rewarded with results from drilling carried out at the project late last year of seven RC/diamond drillholes for a total of 3,405 metres, and a diamond tail on hole 4MRC021, which had initially been RC drilled to 270m in 2012.
The RC/diamond drilling at Mallee Bull returned multiple new extensional mineralised intercepts, including:
62m at 3.15 per cent copper, 42 grams per tonne silver, 0.28g/t gold from 465m, including 34m at 4.6 per cent copper, 63g/t silver, 0.44g/t gold from 475m.
5m at 2.1 per cent copper, 59g/t silver, 0.72g/t gold from 385m;
4m at 1.18 per cent copper, 23g/t silver, 0.12g/t gold from 398;, and
4m at 1.87 per cent copper, 18g/t silver, 0.87 per cent lead, 0.22 per cent zinc from 403m.
13m at 0.86 per cent copper, 33g/t silver, 1.39g/t gold, 0.34 per cent lead, 0.68 per cent zinc from 407m.
4m at 1.52 per cent copper, 111g/t silver, 0.21g/t gold, 2.52 per cent lead, 4.2 per cent zinc from 197m.
The aim of the campaign was to test for new mineralisation near the northern edge of the current Mallee Bull resource model, where substantial zinc-lead and copper-rich mineralisation had already been defined to more than 500m below surface.
The assay results received for all holes provided highly-encouraging intercepts, which the JV believe, indicate greater strike continuity of copper mineralisation than previously assumed.
“The work we carried out at Mallee Bull in 2015 was deliberately focused on extensional drilling work,” Peel Mining managing director Rob Tyson told The Resources Roadhouse.
“We completed some geophysics early last year that identified the shallow T1 target, which we drilled and achieved some really high-grade zinc-lead-silver-massive-sulphide hits, which defined a close-to-surface lens of mineralisation.
“This year we intend going back and following that up with some more RC drilling to test along strike and follow up hits we had previously that are still open and to look for any more mineralisation close to surface.
“The drilling we completed at Mallee Bull underlined the unconstrained nature of the deposit.
“This year we will be doing more extensional drilling there as well as some drilling focusing on the main part of the deposit with the aim of de-risking it from where it currently stands.”
As strange it may sound to some, the Mallee Bull project, in the current climate, is in good shape.
The state of flux the exploration sector is currently in allows Peel to have the project fully-prepared for when the turn eventually comes.
“There’s no point waiting around for the good times to roll in again,” Tyson explained.
“Now is the time to be doing the work, because when the better times come the hard yards will be done and we will be in a better position.
“We will have done all the work necessary to complete a Feasibility Study.
“At some point the cycle will turn and the copper and base metal prices will go up and the deposits that are most advanced at that point in time will be the ones that will be able to be developed the quickest to meet demand.
“A deposit like Mallee bull is a project that warrants being continually advanced.”
Although Mallee Bull is still number one in terms of focus for Peel, the company has another prospect that is building to the point of great excitement – and that is Wirlong.
In January, Peel announced a new high-grade copper discovery at the Wirlong prospect – located within the company’s 100 per cent-owned Cobar Superbasin project (Peel Mining Ltd 100%; Japan Oil, Gas, and Metals National Corporation (JOGMEC) earning up to 50%) in central New South Wales.
The drilling at the 2.5 kilometre Wirlong prospect was funded by JOGMEC and intersected multiple mineralised intervals comprising the typical geochemical, geological, mineral and alteration assemblages of ‘Cobar-style’ deposits.
Two drillholes WLRCDD015 and WLDD001 were completed at the northern end of Wirlong.
9m at 8 per cent copper, 17 grams per tonne silver, 0.21g/t gold from 616m, including 2.82m at 21.85 per cent copper, 46g/t silver, 0.62g/t gold from 619.68m;
38m at 1.18 per cent copper, 4g/t silver from 450m;
6m at 1.23 per cent copper, 5g/t silver from 430m; and
4m at 1.14 per cent copper, 3g/t silver from 643m.
4.9m at 4.3 per cent copper, 13g/t silver from 402.1m, including 0.9m at 19.5 per cent copper, 58g/t silver from 402.1m;
22m at 1 per cent copper, 4g/t silver from 332m;
3m at 2.1 per cent copper, 6g/t silver from 451m; and
2m at 1.8 per cent copper, 13g/t silver, 1.63 per cent zinc from 524m.
“What these results told us, is that Wirlong can carry typical Cobar, lode-style mineralisation,” Tyson said.
“All the way through these drillholes, we saw pervasive chalcopyrite-sphalerite-galena-pyrrhotite-pyrite mineralisation occurring as sulphide disseminations, veins and veinlets, breccia, and massive sulphides within frequently silica-chlorite-sericite altered turbidite sediments and felsic volcanics – all the ingredients you want to see in our part of the world.
“It is early days, but we have compared it to CSA and Cobar Style systems and think there is potential for a big system to be buried there.”
Peel Mining Limited (ASX: PEX)
… The Short Story
U1/34 Kings Park Road
West Perth WA 6005
Ph: 08 9382 3955
Rob Tyson, Simon Hadfield, Graham Hardie
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