THE INSIDE STORY: Sheffield Resources has made considerable progress into the Pre-Feasibility Study being carried out at the company’s 100 per cent-owned Thunderbird deposit, located near Derby in northwest Western Australia.
Earlier this year Sheffield Resources (ASX: SFX) reported the results of a Scoping Study, which determined Thunderbird to be a world-class, long life mineral sands project able to provide exceptional financial returns with modest capital requirements.
Having acquired Thunderbird as part of the Dampier project in late 2010 after Rio Tinto (ASX: RIO) had let ownership of the title slip due to difficulties associated with the GFC, Sheffield is confident Thunderbird is a company making project.
The company has been able to demonstrate to the market that Thunderbird has the potential to be a project of significance on a global scale.
After establishing an exploration target of 450 to 850 million tonnes at five to ten per cent Heavy Minerals, Sheffield raised $10 million, which it has since put to good work.
The release of the Scoping Study followed a Resource upgrade, also completed earlier this year, when Sheffield doubled the Resource at Thunderbird, placing a lot more in the Indicated category.
The Resource at Thunderbird now sits at 2.62 billion tonnes at 6.5 per cent heavy minerals (HM) (Measured, Indicated and Inferred) for 170Mt of contained HM, including a high-grade component of 740Mt at 12.1 per cent HM.
The Scoping Study concluded projected and estimated production and financial parameters for the Thunderbird deposit to include:
An initial mine life of 32 years, targeting first production in 2017;
Life of mine (LOM) revenue of $10 billion;
LOM operating cash flow of $5 billion ($204 million per annum for first 10 years of production);
Average LOM annual EBITDA of $140 million ($187 million per annum for first 10 years of production);
Pre-production capital expenditure of $257 million plus $37 million of contingency, with identified opportunities that may reduce capital expenditure with capital payback in two years; and
Average annual production of 118,200 tonnes zircon, 545,000 tonnes ilmenite, and 21,700 tonnes of HiTi80 leucoxene.
Notably the Study has only incorporated Thunderbird’s Indicated and Measured Mineral Resources.
The high-grade Inferred segment of the Resources remains open in several directions and provides Thunderbird with a healthy amount of upside potential.
The company’s confidence in the project was bolstered by the results from a program of aircore drilling, during which 37 extension, infill and groundwater monitoring drill holes were completed.
Best results included:
30 metres at 8.56 per cent heavy minerals (HM) from 0m including 21m at 10.9 per cent HM from 0m;
33m at 7.74 per cent HM from 0m, including 10.5m at 16 per cent HM from 1.5m;
30m at 7.77 per cent HM from 0m, including 10.5m at 14.3 per cent HM from 0m.
Down-dip Infill & Extension
58.5m at 8.33 per cent HM from 58.5m, including 34.5m at 10.5 per cent HM from 60m;
52.5m at 8.9 per cent HM from 36m, including 39m at 10.5 per cent HM from 39m;
49.5m at 9.71 per cent HM from 63m, including 42m at 10.9 per cent HM from 69m.
One important aspect Sheffield took away from these results is that both the up-dip and down-dip drilling were able to extend mineralisation.
The results from the up-dip drilling indicated continuity of thick, shallow, high-grade mineralisation beyond the current resource envelope.
The down-dip drilling extended the mineralisation to the southwest while demonstrating strong continuity of mineralisation within part of the resource currently classified as Inferred.
Of greatest significance for the company is that these drilling results are outside the 32-year life-of-mine (LOM) optimised pit shell used in the April 2014 Scoping Study.
The company considers this to be a good indication potential exists to improve the project’s already impressive economics.
“The drilling returned the ideal result for us,” Sheffield Resources managing director Bruce McQuitty told The Resources Roadhouse.
“It was not only able to confirm the deposit extends both up-dip and down-dip and remains open, it also confirmed the discovery of additional high-grade mineralisation in the up-dip region.
“This is of particular significance because the Scoping Study delivered higher margins in early production years from this region.”
Work on the Thunderbird Pre-Feasibility Study is now well underway and on schedule to be finalised during Q1 2015.
Metallurgical testwork on a 15-tonne bulk sample has been carried out by Robbins Metallurgical using full-scale or scalable equipment in order to confirm process design.
Feed preparation, primary wet concentration, slimes settling and co-disposal tests, and concentrate upgrade stages have been completed, and mineral separation stages are proceeding.
Fifteen geotechnical investigation drill holes have been completed using sonic coring with the aim of providing sufficient geotechnical information for:
Pit slope stability analyses and pit design;
Assessment of the excavatability of mineralisation and waste; and
Mining and overburden equipment selection.
The test drilling program has been designed to evaluate ground conditions largely within an optimised initial four year pit shell.
Stage 1 of an infrastructure study has been completed, which investigated possible transport and product export options.
Stage 2 of this study is on-going and is focused on site infrastructure.
An initial investigation of power (site maximum demand), and annual energy consumption has been undertaken based on Scoping Study engineering and process flow diagrams.
Power supply options and potential service providers are also currently being investigated.
Three test production bores have been completed to a maximum 120m depth within, and adjacent to, the Thunderbird deposit.
Results of pump testing of these bores are anticipated to be available soon.
An airborne EM survey is also to be planned for Thunderbird to assist in aquifer modelling.
All the above activities, including physical test work from the metallurgical testwork program and an updated engineering design is expected to be completed during Q4 2014.
Apart from the work being undertaken at Thunderbird, Sheffield completed a diamond drill hole, RBDD004, to test a large, strong bedrock conductor ‘RBD1’ at the company’s Red Bull nickel-copper project.
The Red Bull project is within 20 kilometres of Sirius Resources’ (ASX:SIR) Nova nickel-copper deposit, in the Fraser Range region of WA.
Sheffield had identified the RBD1 from Moving and Fixed Loop Transient Electromagnetic (MLTEM & FLTEM) ground geophysical surveys.
RBDD004 was designed to intersect the modelled conductor plate at around 680m down-hole depth, however a 123m interval of mafic granulite with trace disseminated sulphides was intersected from 600m to 723m depth.
Sheffield explained that, although it could potentially be a favourable host lithology for magmatic nickel deposits, the low level of sulphides in this unit mean it is unlikely the drilling sourced the conductor.
The drilling ultimately encountered a 5m thick interval of graphitic and sulphidic schist from 728m depth.
Although is deeper than indicated by the model, Sheffield has interpreted this to be the most likely source of the conductor.
Sheffield remains confident in Red Bull’s potential and has commenced a down-hole EM survey with the aim of confirming the graphitic schist as the conductor source or to determine the existence of additional off-hole conductors.
Sheffield Resources Limited (ASX: SFX)
…The Short Story
Level 1, 57 Havelock Street
West Perth WA 6005
Ph: + 61 8 6424 8440
Fax: +61 8 9321 1710
DIRECTORS and MANAGEMENT
Will Burbury, Bruce McQuitty, David Archer
Will Burbury 6.4%
Bruce McQuitty 6.4%
David Archer 6.4%