Sir Lunchalot – Horseshoe Metals

Sir Lunchalot was recently paid a visit in the Roadhouse dining room by Horseshoe Metals managing director Neil Marston.

Horseshoe Metals listed on the Australian Securities Exchange in July 2010. Although its history is relatively short the company has managed to produce a good deal of excitement for investors so far.

The copper gold play has a strong Western Australian focus, where it has two projects.

The Horseshoe Lights copper mine project is the company flagship, and the Kumarina copper project, which was mined in the 1970s, provides a reliable backstop.

Horseshoe’s first couple of months on the local bourse didn’t exactly set the boards alight with early drilling programs failing to capture the market’s attention seeing the share price waver between 26c on listing to around 30c in October.

“Then we went and did our second drilling program in November and released those results in January,” Marston said.

“The day before we released those results the share price was sitting at 22 cents. It closed the following day at 64.5 cents and hit a high of 82 cents on the following Monday morning.”

When Sir Lunchalot dined with Marston, the Horseshoe share price was trading at around 46c.

The horseshoe Lights project is located in the Bryah Basin situated partly within the Narracoota Volcanics that host Sandfire Resource’s Doolgunna discovery, located 75km to the southeast, which Marston senses was a driver behind the January rise.

“It is certainly what, I think, drove our share price in January. With the drilling announcements…people started to look at us as a potential Sandfire mark two”, he said.

“I’ll leave that for the market to judge going forward, but that is certainly what we put our share market kick down to.”

The Horseshoe Lights project was discovered back in 1946, which is quite recent compared to a lot of other WA mining projects.

A small mine operated at the site during the 1950s, however what could be considered ‘real’ mining began in the 1980s when a gold CIP plant was put in place.

At this time Horseshoe was mined down to around 100m vertical depth where the operation began intersecting a lot more copper.

A supergene zone, rich in copper and gold was located, then below that massive sulphides and lenses of +20% copper in chalcocite.

“They shut down the gold plant and put in a floatation plant and started producing a copper concentrate and as they were mining the rich chalcocite they were just crushing and shipping around a 25 percent copper concentrate,” Marston said.

The mine eventually closed in 1994 when low copper prices prevented a cutback of the pit to access the remaining ore but not before the mine had produced just over 300,000 ounces of gold and about 55,000 tonnes of copper.

“They got to a depth of 215 metres,” Marston explained. “There’s mineralisation below the bottom of the pit but on economics terms they couldn’t justify doing a cutback in 1994 so the mine was placed on care and maintenance.”

Since then global economics have changed and the copper price has skyrocketed. Not surprisingly, when it acquired the asset in January 2010, pre IPO, Horseshoe quickly engaged Coffey Mining crunch some numbers.

This resulted in an Inferred Resource 4.9 million tonnes at 1%, for around 48,000 tonnes of copper.

“Which is not bad when you consider they previously only produced around 55,000 tonnes,” Marston pointed out.

There are three zones of mineralisation at Horseshoe: the Main Zone, the Northwest Stringer Zone, and the Motters Zone

There are three lenses of mineralisation below the existing pit called the Main Zone where drilling has identified copper to a depth of 200m.
The Northwest Stringer Zone sits under what was the waste dump and has also emerged as a target for a great deal of the company’s attention.
“We devised two phases of drilling that we started last year,” Marston said.

“The first program was thirteen holes. All of the holes came up with some copper, which would have been a surprise if they didn’t.

“The best was a hole that was drilled up on the waste dump. It was drilled under an old hole that had been drilled back in 1993. It came up with 14 metres at 2.2 percent copper, including a metre at 12.3 percent.

“We were quite pleased when we received that intersection. It certainly confirmed our theory, which was the mineralisation doesn’t run up to the waste dump – they just hadn’t drilled under it.

“Then we went back on Phase 2 where we drilled another 13 holes, most of which were up on the waste dump to test around the hole from the previous program.”

Two other holes also returned impressive numbers. One with 14 metres at 3.7% copper, including 3m at 9.8% copper, while the other returned 16m at 4.8% copper, including 3m at 11.8% copper.

“We are starting to see a continuation of that twelve per cent copper zone in that area,” Marston continued.

“The Phase 3 program; we started that last month. We’ve drilled fifteen holes. Our priority, obviously, is to test up on the northwest dump and we have been drilling up there.

“We have just terminated the program and all the samples are in the labs at the moment. We should have results out by the end of the month (APRIL).”

Horseshoe is now reviewing the recent Phase 3 work and is intending to complete a resource re-estimate based on that then follow up drilling will follow these results.

“We have had some good results to date and we have other results just around the corner,” Marston said.

“We have a resource of around 48,000 tonnes that we expect to grow from the resource re-estimate and there is the potential at Horseshoe, because of the way it is, that it wouldn’t take much for us to get it back into production.”