Morning News Bites – October 21

Red 5 Upgrade Mineral Resource for Satellite Pit.

Red 5 Limited RED) reported an updated Mineral Resource and maiden Ore Reserve estimate for their Great Western gold deposit, a satellite deposit located near Red 5’s Darlot Gold Mine in Western Australia, ahead of the planned commencement of open pit mining in January 2021.

The Great Western deposit was acquired by Red 5 in April 2020 for $2.2m and forms part of their Darlot Mining Hub strategy. Ore from the Great Western pit will be trucked to the Darlot Mill for processing.

The open pit mining operation will be underpinned by a maiden Open Pit Ore Reserve of 437,500 tonnes grading 2.5g/t Au for 35,424oz of contained gold. Based on a proposed mining rate of between 30,000 to 40,000 tonnes of ore per month, the open pit is expected to be completed over ~13 months, with plans to then access the underground orebody via a portal at the base of the pit.

Red 5’s Managing Director, Mark Williams, said:  “The Great Western deposit has emerged as a strong source of satellite ore feed for the Darlot processing plant, with the completion of an initial Open Pit Ore Reserve of 35,424 ounces of contained gold paving the way for the start of open pit mining planned for January 2021. Importantly, this will also provide a platform from which to pursue a potential longer-term underground mining operation.

CZR Resources to Complete PFS.

CZR Resources (CZR) has announced that the PFS on its Robe Mesa Iron Ore Project in WA’s Pilbara is progressing well and is set for completion in December this year.

The PFS is focused on a simple, low capex DSO iron-ore mine that aims to maximise the use of existing infrastructure and a trucking model for transport of product to port. Closer port options (within a 100km radius of Robe Mesa) between Onslow and Dampier may present an opportunity to reduce the haulage distance to port, as other companies look to develop new port infrastructure along the coastline.

Robe Mesa has a JORC 2012-compliant Indicated and Inferred Resource of 84.5Mt at 53.8% Fe using a cut-off of 50% Fe and calcining to Fe at 60.2% This includes a higher-grade resource component of 24.7Mt at 56% Fe (that calcines to 62.7% Fe) that is the focus of the PFS.

Given the current strength of the iron ore market, CZR is assessing a direct shipping ore (DSO) mining operation of 1.5 to 2.5 million tonnes per annum, utilising road-trains to haul ore approximately 400km from Robe Mesa to Port Hedland.

The strong outlook for Robe Mesa has been confirmed by the Company’s recent discussions with leading Asian steel mills and trading houses regarding the acceptability of the product and likely pricing points based on an indicative ore-specification.

Lynas Corporation Release Quarterly Report.

Lynas (LYC) released their quarterly report this morning and some of the information coming from it was: As a result of the the temporary shutdowns in both Malaysia and Mt Weld because of COVID-19 Movement Control Order (MCO) issued by the Malaysian government, production of NdPr was at 75% of Lynas NEXT production rates during the quarter (equivalent to original nameplate production rates). Lynas says it is currently sufficient to meet demand from their customers while COVID-19 uncertainty remains.

Total NdPr production during the quarter was 1,342 tonnes, up from 775 tonnes in the previous quarter and Total Rare Earth Oxide production was 4,110 tonnes, compared to 2,579 tonnes in the previous quarter. Sales revenue was A$87m during the September quarter, up from A$38m in the previous quarter.

The company remained cash flow positive during the quarter, as they captured efficiencies while running production at original nameplate. They expect to see an increase in expenditure related to Lynas 2025 projects in the coming months.

During the quarter they completed a A$425 million equity raising to fund Lynas 2025 foundation projects. One of those projects is the Kalgoorlie Rare Earth Processing Facility. They have now awarded the contract for the longest lead time item, the kiln, for facility, signed a sub-lease with the City of Kalgoorlie Boulder (CKB) for the industrial zoned site selected for the Kalgoorlie Facility and obtained a General Purpose Lease under the Mining Act.

BHP Shelve Olympic Dam Project.

In their quarterly report, yesterday, BHP (BHP) announced it will put on hold its planned multibillion-dollar expansion at South Australia’s Olympic Dam, after studies of the ore body revealed underwhelming prospects.

The plans were to spend up to $3.5B on the Brownfield Expansion but studies have shown that the copper resources in the southern mine area are more structurally complex, and the higher-grade zones less continuous, than previously thought.  This is despite BHP reporting the highest quarterly production since 2015.

Part of the report said; Following more than 400 km of underground drilling associated with the Brownfield Expansion (BFX) project studies, we have improved knowledge of the ore body’s variability. This has provided challenges for the economics of the BFX project, and we have decided the optimal way forward for now is through targeted debottlenecking investments, plant upgrades and modernisation of our infrastructure.

It will be a blow to the SA economy, especially on the back of the damage done by the impact of Covid19.  There were hopes that the project would create 1,800 jobs on the construction side and once completed 600 permanent roles in the operation.

The company is still expected to spend about $1.5B on Olympic Dam over the next two years.  Whether this gives hope to the Brownfield Expansion being resurrected, only time will tell.

KIN Mining High-Grade Results.

Kin Mining (KIN) has released a report announcing significant new assay results from recent diamond and Reverse Circulation drilling at the Cardinia Hill prospect as part of the ongoing Phase 3 drilling program at its 100%-owned Cardinia Gold Project, located near Leonora in Western Australia.

The Cardinia Hill prospect, located 2km from the proposed processing plant site, is a recent discovery at the Cardinia Gold Project and has been the focus of a resource drill-out program designed to underpin a maiden Mineral Resource estimate as part of a project-wide update by year-end.

Commenting on the latest Cardinia Hill results, Kin Mining Managing Director Andrew Munckton said:  “Diamond drilling is continuing to deliver excellent results at Cardinia Hill, with high-grade gold associated with the pyrite mineralisation intersected at depth in the Southern Shoot and strong intersections also achieved within the Northern Shoot. This highlights the potential for good continuity of the mineralisation, with an improving grade profile, at depth within the recently completed resource drill-out.”

“While our main focus is on establishing a maiden Mineral Resource estimate for Cardinia Hill by the end of this year, the diamond drilling has given us a much better understanding of the geological controls on the mineralisation and also highlighted the potential for discovery of shallow additional zones and extensions to the existing mineralisation into underground mining positions in the future.

Some of the targets hit were 5.4M at 6.18g/t from 186.4M and 5.3M at 3.31g/t from 96M and they confirm the extension of the resource at depth.