(Source: Exploration Insights)Introduction
If you're into investing in the mining sector, you should know the above chart very well. This series covers the three projects with the most significant drill interceptions over the past week, as well as the prospects of the companies which own these projects. I will use data from the weekly bulletin of RSC Mining and Mineral Exploration, which can be found on its website. Note that the drill interceptions are converted into grades of gold equivalence using the following formula:
(Source: RSC Mining and Mineral Exploration)
RSC Mining and Mineral Exploration has chosen gold as the metal equivalent for all conversions, as it considers it the most widely used and best-understood benchmark to determine or appreciate the grade tenor of a drilling intercept.
(Source: RSC Mining and Mineral Exploration)1) Wagga Tank polymetalic deposit in Australia
On 28 March, Peel Mining announced that hole WTRCDD199 at the Southern Nights discovery at its Wagga Tank Zn-Pb-Ag-Au-Cu deposit returned 23.1m @ 22.54% Zn, 12.0% Pb, 0.25% Cu, 200g/t Ag and 1.42g/t Au from 224m. This is equal to 584(AuEq.)m:
Source: Peel Mining
This hole was drilled around 50 meters northwest of hole WTRCDD150, which intersected 18.2m @ 40.3% Zn, 15.21% Pb, 0.97% Cu, 356 g/t Ag and 2.77 g/t Au from 182m.
The company said that high-grade mineralization has been now confirmed over 180 meters of strike, and from around 120 meters below surface to at least 350 meters below surface.
Peel Mining was featured into this series earlier in March when hole WTRCDD180 returned 16.95m @ 43.25% Zn, 14.66% Pb, 1% Cu, 356g/t Ag and 3.11g/t Au from 179.15m. This hole was drilled as a twin of drill hole WTRCDD150 to provide material for further metallurgical testwork and for Mineral Resource Estimate QA/QC purposes.
Wagga Tank is situated on the western edge of the Cobar Superbasin:
(Source: Peel Mining)
Economic mineralization was discovered in the mid-1970s, but there was no drilling after 1989. Peel bought the project in 2016 and drilled 42 holes that year, with 24 returning significant intercepts. In 2016 and 2017, drilling confirmed historical data and mineralization was defined over around 300m of strike.
In 2017, Peel made the Zn-Pb-Ag-Au-Cu Southern Nights discovery around 1km south of Wagga Tank:
(Source: Peel Mining)
So far, several holes at Southern Nights have returned over 40% zinc, which I think is truly amazing.
Peel expects to release a maiden JORC resource by June 2019.2) Finniss lithium project in Australia
Source: Core Lithium
This hole was drilled at the BP33 deposit and the company said that the new drill results confirmed the consistent and high-grade nature of the lithium ore body at the deposit.
Finniss is located in the Northern Territory near the strategically important port of Darvin:
It’s one of the highest grade lithium projects in Australia and is located close to grid power, gas and rail infrastructure. Core has also signed offtake and prepayment agreements with some of China’s largest lithium converters.
Core is just days away from completing a definitive feasibility study on the project. It plans to start mining in Q3 2019 ahead of the commissioning of a DMS plant in Q4 2019.
In June 2018, Core completed a pre-feasibility study which projected A$346 million in revenue generation and A$168 million in free cash flow over a 26-month mine life. The capex was expected to come in at A$53.5 million.
However, the study was based only on the Grants deposit. The DFS will also include the BP33 and Carlton deposits:
Source: Core Lithium
I expect the inclusion of the three deposits to double the mine life compared to the PFS and significantly improve the project's economics.3) Penny West gold project in Australia
Source: Spectrum Metals
As you can see, the interception lies down dip of 4m at 35.2 g/t Au.
Penny West is located on two granted mining leases about 25 kilometers from the Youanmi mining center in Western Australia:
It formed part of the of Youanmi gold project until 2012 and Spectrum bought it in December 2018 for just A$1 million in cash and scrip. Penny West produced 85,000 ounces of gold in 1991 and 1992.
At the moment, Penny West has a mineral resource of 36,000 ounces, all of which lies completely below the historical pit:
Source: Spectrum MetalsConclusion
I continue to think that Wagga Tank could be one of the most important zinc-polymetallic discoveries in Australia over the past several years and the resource estimate should be fantastic. It’s a large-scale system with high-grade zones. Several holes have returned over 40% zinc, and I think that the high-grade zones could be a game-changer. Unfortunately, the company’s shares are not listed in the US so if you want some exposure, you’ll have to go to the ASX.
Finniss is a low-cost high-margin lithium project in Australia that has a mine life of just 26 months. However, the upcoming DFS should feature a much larger mine life thanks to the addition of two deposits, which should be reflected in the economics. The latter already look great and the project has a payback of just around a year. And $20 million of the initial capex is already committed by a major Chinese lithium offtake partner.
Spectrum Metals bought Penny West for just A$1 million and the recent drilling results have already justified the purchase. It has a decent exploration potential, but I don’t think that the company deserves a market capitalization of almost A$30 million.
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