An exploration company, Pacifico Minerals Limited (ASX: PMY) is focused on the development of its Sorby Hills Joint Venture Project (75% interest), a large near-surface and flat lying lead-silver-zinc deposit in Western Australia. The project is around 50km north-east from the regional centre of Kununurra and has an outstanding infrastructure with existing sealed road to transport concentrate from site to the facilities at Wyndham Port, 150km away. The well-established infrastructure present at the Project location allows for the fast track production. Further, the company recently received the Ministerial validation to extend the timeframe for extensive commencement of the Sorby Hills Silver Lead Zinc proposal for an additional five years, to 2 April 2024.
Sorby Hills Regional Location (Source: Company Reports)
The project is significantly de-risked with Environmental Protection Authority’s (EPA) approval for Open Pit operation on pre-native title mining licenses. EPA believes that the Project can be managed in a manner that avoids significant or unacceptable environmental impacts and risks.
A Pre-Feasibility Study conducted has confirmed that the Project has strong financials.
PFS Results (Source: Company Reports)
As per the PFS, Sorby Hills Project is a high quality, high margin base metals project.
Background on Sorby Hills Project: Discovered in 1971, Sorby Hills has been the subject of historical (pre-1980) and modern exploration, and preliminary (PFS level) economic studies. There has been no previous mining activity at Sorby Hills, and the deposit does not outcrop. The Project is located within granted mining leases M80/197, M80/196, with three additional peripheral mining leases M80/285, M80/286 and M80/287.
In 2018, Phase I drilling campaign was completed at the Project, which was designed to provide angled and oriented diamond drill core into B, C, CD link, D, F and I Deposits (refer to below image).
Sorby Hills Joint Venture Project Mineralised Corridor of Lead-Silver Deposits
A summary of results for each deposit drilled is as follows:
- DE Deposit- Extensions to the known resources at this deposit include ACD046 with 20.0m at 8.6% Pb equivalent (7.3% Pb, 56 g/t Ag) and 0.4% Zn from 11m.
- I Deposit – I Deposit drill hole AI010 intersected 10.0m of 6.6% Pb, 53g/t Ag and 0.9% Zn.
- F Deposit – Drill hole AF012 intersected 15.0m of 5.8% Pb, 81 g/t Ag and 0.1% Zn and AF005 intersected 11.7m of 10.8% Pb, 105 g/t Ag and 0.4% Zn.
- B Deposit – The B Deposit is interpreted as forming two lenses, B1 and B2, separated by a low angle fault. The mineralisation may extend further along strike to the north and south beyond the area drilled by the company.
- C and D Deposit (CD Link) – ACD019 intersected 9.7m of 7.5% lead, 68 g/t Ag and 1.1% Zinc. Additional close spaced drilling is required to determine if the C Deposit (south) and the D Deposit (north) link up and to estimate additional mineralisation in this area.
Updated Mineral Resource Estimate: Recently, during the March quarter, the company completed an updated Mineral Resource Estimate of the project and the update resulted in an increased (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). Now, there is an increased (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).
Currently, there is a growing use of lead in the industry for energy storage systems. It is predicted that between 2018 and 2022, the global lead market demand will grow at a CAGR of 6.74%. With its Sorby Hills Joint Venture Project, Pacifico Minerals Limited is very well positioned to take advantage of this opportunity.
To realise shareholder value, the company is also exploring opportunities to sell or establish joint ventures for its non-core assets, which include:
- Borroloola West Joint Venture (Northern Territory)
- Joint Venture Project in the McArthur Basin with Sandfire Resources NL (PMY 51%, SFR 49%)
- Potential for Mt Isa style copper-cobalt-zinc.
- South Australia Tenements
- Prospective for battery minerals (Co, Cu, Mn)
- Colombian Project
- Berrio, Urrao and Natagaima Projects are highly prospective for the discovery of economic copper-gold deposits.
Employees Securities Incentive Plan: The Board of Pacifico Minerals Limited recently adopted a new Employee Securities Incentive Plan to assist in the reward, retention and motivation of eligible participants. The company is planning to issue 64.5 million performance rights under the Plan, which convert to ordinary shares on a 1 for 1 basis, subject to the achievement of certain performance hurdles. The initial performance rights issued under the Plan will be offered to the Directors and Senior Management of the company. The Plan will be subject to shareholder and ASX approval at the next General or Annual General Meeting of the company.
Performance Rights and Milestones (Source: Company Reports)
Appointment of Project Manager: In June 2019, the company appointed Mr Aaron King as Project Manager for the company’s Sorby Hills Lead-Silver-Zinc Project. In his 25 years of experience, Mr King held similar roles, including Process Manager at Western Minerals Technology, Proteus EPC Engineers and Ausenco, Expansion Study Director and General Manager Capital Projects at Karara Mining. In addition, he also has significant experience in study management, detailed engineering design and project life cycle management and has executed brownfield projects across a diverse range of commodities.
Two Tranche Placement: In April, the company announced two tranche placement of shares to sophisticated and professional investors to raise $4million with Euroz Securities Limited acting as Sole Lead Manager. The company has completed both the tranches. Moreover, the funds raised from the Placement were used to (1) Finalise the company’s 75% acquisition of the Sorby Hills Project; (2) Continue Phase 2 infill and expansion drilling; (3) Update the Mineral Resource Estimate for the Sorby Hills Project; (4) Underpin an optimised PFS in 2019 and for general working capital purposes.
Stock Performance: In the past six months, the company’s stock has provided a return of 75%, rising from $0.004 as on 14th January 2019 to $0.007 as on 15th July 2019. The company currently has a market capitalisation of circa $16.19 million.
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