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Broken Hill Prospecting Hot On Heels As Next Heavy Minerals Sands Producer

Broken Hill Prospecting (NYSE:BPL) could be producing heavy mineral sands in 2016/17 if a scoping study comes up trumps from high-grade deposits in New South Wales using modular mobile mining plants.

To date the portents are good as BPL has built a valuable assemblage of mineral sands following a maiden Resource of 15 million tonnes at 3.7% heavy minerals defined for its Magic Heavy Mineral Sands Deposit in New South Wales.

This follows the July 2015 mineral resource of 11.6 million tonnes at 6.9% Heavy Minerals defined at its Copi North Deposit about 50 kilometres to the south.

Notably, the high average grade of the deposit is about twice the head-grade of nearby operating mines while mineralogy includes a relatively high proportion of the valuable zircon (11.3%) and rutile (10.8%).

In fact, BPL is the state's top explorer for titanium and zirconium in the Murray Basin, a world-class heavy mineral sands province.

Both projects are located close to existing infrastructure and Cristal Mining's Ginkgo and Snapper operating mines.

As a guide to the growing value of BPH's projects in the region, Cristal Mining is ranked in the top 10 of global mineral sands-producing companies.

The zirconium and titanium deposits existed within areas that had been prospected by mineral sand miners over several decades.

Scoping study

A Scoping Study is underway on the Copi North HMS deposit which is expected to be finalised late this calendar year as is an environmental survey. Hot on their heels will be a Pre-Feasibility study in mid-2016.

Development and operating costs are likely to be conducive for mining given coarse nature of the mineral-bearing sands, their high grades and the relatively shallow depth of the mineralisation.

This would see mining of small tonnage mines with low capital and operating costs and minimal environmental footprint. Project mine life could be increased by relocating mobile plant and equipment to Magic or other deposits after any future mining is completed at Copi North.

Regional infrastructure and mine support services, which have developed over more than 120 years of mining in the Broken Hill district, will assist to progress cost effective mine development.

A likely development scenario could see BPL mining at a rate of 1.4 million tonnes per annum and production of about 100,000 tonnes per annum of heavy mineral sands.

The projects are projects are fully financed by the private mining investment group Relentless Resources to earn a 50% interest in EL8311 (Magic) and EL8312 (Copi) as well as the Sunshine ELA.

Further drill testing is also planned to seek a western extension to the high-grade Copi North strand (the Sunshine Project) and to test the nearby Copi South HMS deposit.

Analysis

Newest Australian mineral sands producer in 2015, MZI (ASX:MZI) has been a strong sharemarket performer in 2015 providing incentive for BPL to fast track development of Copi North as it moves through a scoping study and environmental survey stages.

Based on MZI's market cap. of circa $40M, there is plenty to like about BPL at its market cap of $3.8M. Excluding cash of $1.5M and the market is under-valuing BPL's minerals sand assets as it is conceivably the next heavy minerals sands cab-off-the-rank.

Certainly, a production scenario of 1.4mtpa and production of about 100,000tpa of heavy mineral sands would generate significant operating income for BPL given relative project CAPEX and OPEX advantages.

Tellingly, BPL has just beefed up its Board, adding a 20 year experienced heavy mineral sands industry veteran in Denis Geldard.

Adding to the intrinsic value inherent not priced in by the market, BPL also has the Thackaringa cobalt-pyrite project near Broken Hill, one of the largest undeveloped cobalt projects globally.

This could produce 5,000tpa cobalt & 1-2Mtpa sulphuric acid in a longer term development given high capital cost.

This has drawn interest from parties for off take for cobalt or sulphuric acid. That deposit benefits from the lack of other metals such as copper or nickel.

As foreshadowed, BPL will likely seek to JV and develop a chemical business based on processing cobalt-pyrite concentrates.

However, it is BPL's heavy minerals sands projects in the mining friendly Broken Hills district that will ramp up in excitement and activity.

The stock is tightly held but the flip side is that BPL is leveraged to news flow.

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