Western Australian based exploration and development firm, Pacifico Minerals Ltd (ASX: PMY) is engaged in the advancement of a large near-surface Lead-Silver-Zinc deposit in Western Australia. The company holds 75 per cent stake in the Sorby Hills Joint Venture project, while the rest 25 per cent interest is owned by China’s largest lead smelting and silver producer, Henan Yuguang. The project has an outstanding infrastructure as it is located close to the port and is connected by existing roads, allowing for fast tracked production.
Through a recent update on the ASX, the company notified that it has received firm commitments from professional and sophisticated investors to raise AUD 4.6 million for a placement of 575 million shares at a price of AUD 0.008 per share.
Key Details of Placement
Pacifico mentioned that Euroz Securities Limited will act as a Sole Lead Manager for capital raising. The company also reported that the Placement will be concluded in a single tranche in accordance with its capacity under ASX Listing Rule 7.1A (228,034,309 shares) and 7.1 (346,965,691 shares).
The issue price of AUD 0.008 per share offered to investors under the Placement represents:
The Placement, which is expected to be settled on 6 September 2019, drew huge interest, with the demand for shares surpassing the shares available for Pacifico to allocate. Delighted over the strong support received from existing and new professional and institutional investors, the company informed that the Placement represents a strong endorsement for Pacifico’s strategy concerning its growth plans and the Sorby Hills Project.
As per Pacifico, the funds raised from the Placement will be utilised to deliver an optimised Pre-Feasibility Study (PFS) by January 2020, commence a Phase III drilling program, advance the Definitive Feasibility Study (DFS) work program and meet the general working capital requirements.
About Sorby Hills Joint Venture Project
Located at approximately 50km to the north-east from the regional centre of Kununurra, the Sorby Hills JV project has access to an existing sealed road to transport concentrate from site to the facilities at Wyndham Port, 150km away. Pacifico acquired the Sorby Hills JV project in October 2018 from Quintana MH Holding Company LLC.
Source: Company’s Presentation (19th August 2019)
The Phase I and Phase II drilling programs at the project have already been completed, and the company is planning to begin with the Phase III drilling program within the next two months.
Phase I Drilling Program
The company informed about the completion of its Phase 1 infill drill campaign in February 2019, that was designed to provide oriented and angled diamond drill core into B, C, D, F, I and CD link Deposits. The significant drill intercepts from Phase I drilling include:
Post completion of the Phase 1 drill campaign, an updated Mineral Resource Estimate (MRE) was completed by CSA Global that resulted in a material upgrade of the Global Resource to 29.98Mt of 4.7%Pb equivalent. This included an increased 10.85Mt of 5.0%Pb equivalent in Indicated Resources.
An updated Pre-Feasibility Study was also undertaken for the Sorby Hills Project, which provided the following results:
- 1Mtpa operation producing high-quality concentrate comprising 9.35Moz of silver and 249kt of lead.
- 8 Year Initial Mine Life based solely on Indicated Resources.
- Outstanding economics, with pre-tax IRR of 62 per cent and pre-tax NPV (8 per cent discount rate) of AUD 243 million.
- Pre-production capital expenditure of AUD 95.4 million, incorporating AUD 10.5 million contingency.
- Pre-tax Payback in sixteen months from commercial production.
- Average steady state cash flow of AUD 60 million.
Phase II Drilling Program
In July this year, the company notified about the conclusion of the Phase II drilling program at Sorby Hills Project, which was designed to convert Inferred Resources to Indicated Resources. The company observed notable drill intercepts from the Phase II drilling program, which include:
The company expects that Phase II drilling program will materially raise Indicated Resources within the next MRE scheduled for September 2019 to support the forthcoming Optimised PFS.
It can be inferred that the company has made outstanding progress in its 75% owned Sorby Hills JV Project made since its acquisition in 2018. The project has significant exploration upside, and its MRE has an excellent potential to grow as extensions and targets outside of the main defined deposits are drilled.
On 2nd September 2019, PMY ended the trading session at AUD 0.009, with ~22.08 million shares in rotation. The stock has performed extremely well in the past, generating a return of 125 per cent on a YTD basis.
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