UPDATED PRE-FEASIBILITY STUDY CONFIRMS STRONG ECONOMICS OF SORBY HILLS BASE METAL DEPOSIT
ASX Announcement 26 March 2019
Updated Pre-Feasibility Study into the production of high quality, high grade leadsilver concentrate has confirmed the economic viability of a scalable, production opportunity in Western Australia.
Highlights1
- 1Mtpa operation producing high grade concentrate containing 249kt of lead and 9.35Moz of silver.
- Initial 8 year open pit mine life based solely on Indicated Resources.
- Outstanding economics, with pre-tax NPV (8% discount rate) of A$243M and pretax IRR of 62%.
- Pre-production capital expenditure A$95.4M including A$10.5M contingency.
- Pre-tax Payback 16 months from commercial production.
- Shallow open pit mining with C1 direct cash cost of production of US$0.06/lb including silver credits.
- EPA approval and granted mining leases in place allowing for rapid completion of remaining permitting and other pre-development works.
- Infill drilling program planned for May 2019 targeting an upgrade in Mineral Resource to support higher throughput in an optimised PFS in Q4 2019.
- Offtake discussions underway with JV partner (largest lead smelting company and silver producer in China).
- Definitive Feasibility Study programs underway.
Pacifico Minerals Limited (ASX: PMY) (‘Pacifico’ or the ‘Company’) is pleased to announce the results of an updated Pre-Feasibility Study (‘PFS’) for its 75% owned Sorby Hills Project. The results of the PFS confirm that Sorby Hills is a high quality, high margin base metals project. With mining leases and key permits in place, Sorby Hills is strongly positioned for development.
Commenting on the results, Managing Director Simon Noon stated:
“Following a substantial upgrade to the Mineral Resource Estimate in early March 2019, the economic outcomes of this study are compelling and represent an important milestone towards the development of Sorby Hills. Our efforts are now firmly focused on completing phase II of the planned infill and expansion drilling program and again upgrading the Mineral Resource Estimate and targeting an optimised PFS with higher throughput in Q4 this year as well as advancing the Definitive Feasibility Study work programs that have already begun.”
The PFS proposes an open-pit operation and a 1.0Mt per annum plant that applies conventional flotation processing. Product will be transported along an existing sealed road to the Port of Wyndham, which is located approximately 150 km from the proposed mine site.
Feed to the mill for the proposed 8 year mine life is comprised of 8.64 Mt of Indicated Mineral Resources. No Inferred Resources were considered for the PFS.
PFS Cautionary Statement: The Company believes that the production target, forecast financial information derived from that target and other forward looking statements included in this announcement are based on reasonable grounds. However, neither the Company nor any other person involved in advising on the PFS makes or gives any representation, assurance or guarantee that the production target or expected outcomes reflected in this announcement in relation to the production target will ultimately be achieved.
Investors should note that the Company believes the commodity prices, AUD: USD exchange rate and other variables that have been assumed to estimate the potential revenues, cash flows and other financial information are based on reasonable grounds as at the date of this announcement. However, actual commodity prices, exchange rates and other variables may differ materially over the contemplated mine life and, accordingly, the potential revenue, cash flow figures and other financial information provided in discussions set out in this announcement should be considered as an estimate only that may differ materially from actual results. The Company cautions investors from relying on the forecast information in this announcement and investors should not make any investment decisions based solely on the results.
A number of key steps need to be completed in order to bring Sorby Hills into production. Many of those steps are referred to in this announcement. Investors should note that if there are any delays associated with completing those steps, or completion of the steps does not yield the expected results, the revenue and cash flow figures may differ materially from actual results.
Funding in the order of A$95.4 million will likely be required to achieve the range of outcomes indicated in this announcement. Investors should note there is no certainty that the Company will be able to raise any additional funding if needed. It is also possible that funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company’s existing shares.
MINERAL RESOURCE ESTIMATE UPGRADE AT SORBY HILLS
Highlights
- An updated Mineral Resource Estimate (MRE) has been completed by wellregarded resources specialist CSA Global, resulting in material upgrade of the Resource.
- 82% increase in the tonnage of Global Resource to 29.97Mt of 4.7%Pb equivalent (3.7% Pb, 43g/t Ag) and 0.6% Zn.
- 123% increase in the tonnage of Indicated Resources to 10.85Mt of 5.0%Pb equivalent (3.9% Pb, 46g/t Ag) and 0.4% Zn.
- Updated MRE and deeper geological understanding confirms high potential to expand the Sorby Hills Resource base.
- A review of preliminary Dense Media Separation (DMS) test work has identified exceptional results indicating ore grades may be upgraded by two to three times prior to processing.
- Updated MRE and preliminary DMS test work will support the 2012 PreFeasibility Study review and update due for completion in March 2019.
- Further MRE Update to be completed Q3 2019 to support a new optimized Pre-Feasibility Study and will incorporate drill results yet to be received from Stage 1 as well as Stage 2 drilling planned to commence in April 2019.
Note: Zinc has NOT been included in Pb equivalent calculations at this time, however, work currently being completed by Pacifico may provide the supporting data to include in future calculations. See Appendix 2 for equivalent Pb% calculation assumptions.
Pacifico Minerals Limited (“Pacifico” or the “Company”) is pleased to provide an update on the Sorby Hills Mineral Resource Estimate (“MRE”) following the initial Phase 1 drill campaign at its 75% owned Sorby Hills Lead-SilverZinc Project (“Sorby Hills”) located 50km northeast of Kununurra in Western Australia (ASX announcement, 14 February 2019).
An updated Mineral Resource Estimate has been completed resulting in an increased (by 82%) Global Resource of 29.97Mt of 4.7% Pb equivalent (3.7% Pb, 43g/t Ag and 0.6% Zn, using a 1.0% Pb cut off).
Within the Global Resource there is now an increased (by 123%) 10.85Mt of Indicated Resources with a grade of 5.0% Pb equivalent (3.9% Pb, 46g/t Ag) and 0.4% Zn using a 1.0% Pb cut off).
The previous Mineral Resource Estimate (“MRE”) was completed in 2018 (ASX announcement, 24 August 2018).
The MRE update has been completed by well-regarded resources specialist CSA Global (“CSA”) and is based on the analyses received from the initial 34 holes of the Phase 1 drilling program carried out in late 2018, initial results from a new mining study completed by an independent international mining Engineering specialist which supports a change in cut-off grade from the previous MRE, and an improved appreciation of the geological stratigraphy and structure.
CSA Global have a long history of involvement with the Sorby Hills Project with CSA managing a drill program and completing a Mineral Resource Estimate in 2007. Importantly, this was the first drilling program at Sorby Hills since 1980.
PMY’s Managing Director Mr. Simon Noon said: “We are very pleased to be able to announce an 82% increase in the tonnage of the Mineral Resource Estimate for our 75% owned Sorby Hills Lead-Silver-Zinc Project. Importantly, this includes a 123% increase in tonnage of Indicated Resources following infill drilling in late 2018. This greatly increases confidence levels and will underpin the 2012 Pre-Feasibility Study review and update which is due for completion in March 2019. As data continues to come in from final drill holes completed in late 2018 and with phase 2 drilling planned to commence in April, these resource figures are expected to rise further in 2019. We are confident that the Sorby Hills Resource base will continue to grow and subject to successful development the Project could potentially become one of Australia’s most significant lead producers.”
Analyses results from a further 18 drill holes are yet to be received and, combined with the Phase 2 drilling program planned to commence in April 2019 (weather permitting), should further upgrade the MRE.
A new simplified appreciation of the geological stratigraphy and structure allows for a better delineation of the geometry of the deposits, and greater confidence in resources. Angled drilling and orientated core from the 2018 drilling campaign has revealed a clear control on mineralisation that is hosted between upper Knox Sediments and a lower Sorby Dolomite. The deposits consist of both diagenetic replacement mineralisation in the overlying slump breccias and shales, and epigenetic mineralisation in the more brittle Sorby Dolomite immediately underlying the slump breccias. The mineralisation is associated with low-angle syn-sedimentary faults.
The updated MRE and deeper geological understanding of the deposits confirm significant potential to grow the Sorby Hills deposit. The results of the 2018 drilling campaign provide Pacifico with high confidence in converting Inferred Resources to Indicated, and for the discovery of additional resources with future drilling programs using angled diamond holes.
A review of previous metallurgical testwork has confirmed preliminary Dense Media Separation (DMS) test work indicates ore grades may be significantly upgraded by two to three times prior to being fed into the process plant with minimal (<15%) metal loss. Additional optimisation work is required over both low-and-high-grade ore samples to obtain a deposit wide representative DMS upgrade factor. Pacifico are using a conservative upgrade factor of x2.12 when modelling process plant beneficiation performance from ore throughput to final concentrate for its financial model update due for completion in March.
Previous DMS test work was detailed enough to separately identify float, sink and fines at various heavy liquid densities and these streams were assayed separately (KBL Mining Ltd: ASX announcement, 6 December 2012).
Importantly, as most of the silver appears to be held within galena (lead sulphide), silver grades are similarly upgraded via DMS.
All previous DMS work was completed in 2011 and 2012. Pacifico has recognised the significance of this work and its potential to materially change the economics of the Project by providing pre-flotation ore with lead and silver grades at least double to triple the mined head grade. A significant test program will commence to feed DMS results into a process plant design that incorporates a DMS beneficiation plant from commencement of mining.
STRONG DRILLING RESULTS AT SORBY HILLS
ASX Announcement 14 February 2019
Highlights
- Phase 1 infill drill campaign completed with results received from 34 of 52 holes to be analysed.
- Significant drill intercepts from each deposit drilled, include:
- 11.7m at 13.2% Pb equivalent (10.8% Pb, 105g/t Ag and 0.4% Zn) from 75.7m, - F Deposit in drill hole AF005
- 10.0m at 7.8% Pb equivalent (6.6%Pb, 53g/t Ag and 0.9%Zn) from 82m, - I Deposit in drill hole AI010
- 9.7m at 9.1% Pb equivalent (7.5%Pb, 68g/t Ag and 1.1% Zn) from 76m, - CD Link in drill hole ACD019
- 20.0m at 8.6% Pb equivalent (7.3% Pb, 56g/t Ag and 0.4% Zn) from 11m, - DE Deposit in drill hole ACD046
- 9.0m at 8.3% Pb equivalent (7.6% Pb, 32g/t Ag and 1.1% Zn) from 37m, - B Deposit in drill hole AB033
- Note, Zn has NOT been included in Pb equivalent calculation. See Appendix 3 for equivalent Pb% calculation assumptions.
- Results received from F Deposit indicates that mineralisation links with DE Deposit and could be mineable with a single open cut.
- Results from this drill campaign are expected to upgrade and increase the confidence levels of the existing Sorby Hills Mineral Resource.
- Review and update of 2012 Pre-Feasibility Study underway and being spearheaded by Lycopodium with completion expected March 2019.
- The updated Mineral Resource is expected to materially enhance the economics and confidence of an optimized Pre-Feasibility Study scheduled for delivery mid2019.
- Phase 2 infill and expansion drill program scheduled to commence April 2019.
- A combination of unique factors makes Sorby Hills a potentially highly economic base metal deposit, with shallow open pitable mineralisation at 20m to 100m depth, simple mineralogy allowing for low cost beneficiation before plant treatment, high metal recoveries, existing sealed roadsto a nearby port and high silver credits.
Pacifico Minerals Limited (“Pacifico” or the “Company”) is pleased to provide an update on drilling results from the initial Phase 1 drill campaign at its 75% owned Sorby Hills Pb-Ag-Zn Project (“Sorby Hills”) located 50km northeast of Kununurra in Western Australia (See ASX announcement dated 10 October 2018).
Introduction
The Phase 1 drill campaign was designed to provide angled and oriented diamond drill core into B, C, CD link, D, F and I Deposits (See Figure 1). 72 holes were drilled in [Q4]-CY2018 for a total of 5,372m drilled. These holes were all drilled at a 70o angle from east to west designed to test any intercepting geological structures. Drilling comprised a combination of both reverse circulation (“RC”) to end of hole and RC pre-collar with diamond drilled tails to end of hole (See Appendix 1 and 2). This was the first drilling campaign since an RC drilling program in 2011 and the first diamond drilling campaign since 2010. Fresh drill core has demonstrated again the simple mineralisation which consists essentially of coarse silver bearing galena (lead sulphide). The mineralisation occurs as a sediment replacement deposit predominantly along the flat-lying contact between an upper siltstone and a lower dolomite.
Since taking control of the Sorby Hills Project, Pacifico’s strategic focus has been on commercialising the Project with an initial focus on declaring a maiden JORC 2012 compliant Mineral Resource Estimate (“MRE”), increasing the confidence level of the MRE and further optimising the project economics given recent advances in processing technologies. As such, fresh drill core from this most recent campaign is being utilised to assess various density separation techniques designed to separate ore from waste rock to form a pre-concentrated product prior to further concentration via a lead flotation circuit, thereby significantly reducing capital and operating costs.
Figure 1. Sorby Hills Mineralised Corridor of Lead-Silver Deposits with a Global Mineral Resource Estimate Totalling 16.5Mt @ 6.0% Pb Equivalent (4.7% Pb, 0.7% Zn and 54 g/t Ag). Note: See ASX Announcement 24 August 2018 and Appendix 3 for equivalent Pb% calculation.
Pacifico Minerals Ltd (“Pacifico”, ASX: PMY) is a West Australian based exploration company with interests in Australia, Mexico and Colombia.
Sorby Hills Project, Western Australia, Australia (75%)
Pacifico owns a 75% interest in the Sorby Hills Joint Venture Project with Partner Henan Yuguang owning the remaining 25%. Henan Yuguang is China's largest lead smelting and silver producer.
Sorby Hills is Australia's largest near-surface lead-silver-zinc deposit and has a JORC 2012 compliant Resource, EPA approval, approved mining titles, excellent recoveries and to produce a high-quality concentrate, established infrastructure, and potential high operating margins from high-grade shallow deposits.
Borroloola West Project, Northern Territory, Australia (51%)
Pacifico is currently advancing the Borroloola West Joint Venture Project, which covers an outstanding package of ground with high potential for the discovery of world class base metal deposits. Our Joint Venture Partner is Sandfire Resources NL.
South Australian Project, South Australia, Australia (100%)
Licences have been granted for ground prospective for cobalt and other battery metals. Exploration is expected to commence shortly.
Violin Project, Guerrero, Mexico (100%)
Pacifico has acquired an option to purchase 100% interest in the Violin Gold-Copper Project in the Guerrero Gold Belt of Mexico, with highly attractive terms. The Project has high prospectivity for the development of a major gold-copper deposit.
An operations centre has been established, and land access agreements have been finalised. Drilling is scheduled for October 2018.
Berrio Project and Tenement Applications, Colombia (100%)
The company retains a valuable strategic copper-gold position in Colombia. Our Berrio Gold Project is located within the Segovia Gold Belt, from which several million ounces of gold have been produced over the past 150 years. Exploration work for the Berrio Gold Project is currently on hold to allow the company to focus on potential Joint Venture or purchase agreements at Urrao and Natagaima. Both Projects are highly prospective for the discovery of economic copper-gold deposits.
