I was doing some research on CBH and same across this on the CBH...

I was doing some research on CBH and same across this on the CBH Website....

http://cms.cbhresources.com.au//information/pdf/020107.pdf

It is interesting to compare TRO and CBH (CBH have a market cap around $550M, TRO is $146M). It is not comparing apples to apples, but gives an idea of the quality of the TRO reserve. TRO has more Zinc (10.1 vs 5.7), more lead (4.0 vs 3.3), much more copper (1.8 vs 0.2) and more silver (85g/t vs 53g/t). TRO also have a little bit of gold at 0.55g/t.

CBH's endevour mine is also underground (and producing). Brokers put the cost of extraction at approx 75c-80c a pound and say it is not a low cost producer, where TRO should be a low cost producer due to the much higher grades. The CBH reserve is bigger than TROs, but TRO do have further drilling to their high grade lens.

CBH have recently lowered the cutoff to to 4.3 Zinc Equiv to increase their reserve. The TRO cutoff is 7% Zinc equiv.

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Australia: a big player in zinc market

Australia is an important player in the global zinc market second only to China in production terms and representing over 10% of global mine output. Zinc deposits occur across the country with Queensland (Mt Isa and Century) and then New South Wales (Broken Hill and Cobar) key producing states. Australia zinc deposits are polymetallic in nature and therefore tend to occur with additional metals to zinc such as lead and silver, but also copper and gold.

In terms of current reserves the average mine life of domestic deposits is ~6 years and around ~12 years in terms of current JORC resources (Figure 6). Significantly, the last world class zinc discovery in Australia was Century made by RIO in 1990, 16 years ago. The majority of domestic production remains from mature underground operations generally over 10 years old. In recent times zinc exploration has been limited and has only begun to pick up with the surging price, however the majority of exploration is still brownfields related with very little greenfields focus.

Strong global zinc demand and limits to supply capacity has created a deficit which has seen zinc stockpiles diminish. With a depleted pipeline of zinc deposits in development there now appears a window for historically marginal deposits to be developed. These are deposits with combined zinc + lead grades of <10% and marginal at zinc prices
CBH’s deposits, plot at the lower grade / value end of the spectrum when benchmarked to other domestic zinc deposits (Figure 3 and 4). They are therefore classic of the 2nd tier zinc assets that may be required to supply future zinc demand given the lack of real alternatives.

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Resources: long life asset

In September, CBH recalculated resources and reserves using a lower cut off grade of 4.3% zinc equivalent and extensions to the lower levels of the mine. This resulted in a 50% increase in resources to 26.3Mt at a grade of 6.7% Zinc, 4.0% lead and 71g/t silver. Reserves stand at 19.4Mt at a grade of 5.7% zinc, 3.3% lead, 0.2% copper and 51g/t silver representing a mine life of 16 years at the base capacity of 1.2Mtpa. In essence the lower cut off grade has allowed CBH to capture the lower grade material between the higher grade “lenses” resulting in a substantial increase to tonnage, but also the ability to set up bulk stopes. There remains good opportunity for further additions to resources both at depth (focus of current drilling) and to the north.