Pacifico Minerals soars 11% on ASX, A Glance Through September Quarter Report

An exploration company based in Western Australia, Pacifico Minerals Ltd (ASX: PMY) holds interests in Colombia and Australia. The company currently focuses on the development of its Sorby Hills Lead-Silver Zinc JV Project in Western Australia, in which it owns 75 per cent interest with the remaining 25 per cent held by Chinese-headquartered HYG or Henan Yuguang Gold & Lead Co. Ltd.

HYG is the silver producer and lead smelting company in China, that has been counted amongst Top 500 China manufacturing enterprises and Top 500 Chinese enterprises for the last five consecutive years.

In a recent update on the ASX, Pacifico released quarterly activities and cashflow reports for the September 2019 quarter. Let us take a look at the operational and financial highlights of the quarter below:

Operational Highlights

Pacifico’s Sorby Hills Joint Venture Project, located around 50km to the northeast of Kununurra, is well connected to the facilities at Wyndham Port via sealed roads. The project’s permitting and established infrastructure allow for fast tracked production.

In March this year, the company notified that the Pre-Feasibility Study (PFS) has estimated a capital expenditure of $95.4 million to develop the mine, with a pre-tax NPV8 of $243 million and a 16-month payback.

During the quarter, Pacifico notified about the following developments at its Sorby Hills Project:

  • Results of Phase I Metallurgical Testwork Program
  • Results of Phase II Infill and Expansion Drilling Campaign
  • Commencement of Phase III Drilling Campaign
Results of Phase I Metallurgical Testwork Program

On 17th July 2019, the company reported highly positive results from its Phase I metallurgical testwork program that was conducted to confirm previous flotation performance and assess beneficiation options for the Sorby Hills Project. The results validated the Project’s potential to generate high quality lead concentrate encompassing appreciable silver credits.

Pacifico observed higher flotation recoveries relative to the assumptions used in the PFS, with rougher flotation testing with sulphidisation implying up to 95 per cent Ag and 96 per cent Pb recovery on Fresh composite and up to 95 per cent Ag and 91 per cent Pb recovery on Oxide composite. In addition, cleaner flotation testing validated the potential for the production of final concentrate grade of 65 per cent Pb.

Heavy Liquid Separation testwork, that was conducted to upgrade the ores, also returned remarkable results with significantly low lead losses (<10 per cent) relative to the PFS assumption. The results demonstrated:

  • Lead grade upgrade for fresh ore of:
    • 36x with lead losses of 6.6% at Specific Gravity (SG) 2.93; and
    • 85x with lead losses of 3.3% at SG 2.75.
  • Lead upgrade for oxide ore of:
    • 15x with lead losses of 9.1% at Specific Gravity (SG) 2.93; and
    • 22x with lead losses of 4.1% at SG 2.75.

The Preliminary ore sorting testwork also provided 1.3x and 1.4x upgrades for Pb and Ag, respectively using XRT with lead losses of 2-3 per cent.

Results of Phase II Infill and Expansion Drilling Campaign

The company undertook Phase II drilling program between May and July 2019 at Sorby Hills Project. The drilling program was focused on shallow mineralisation beyond 100m depth, that may be mineable by open pit, at CDEF and B deposits. The program consisted of 31 RC holes, eleven holes drilled with diamond tails and RC pre-collars, and 44 HQ cored diamond holes for a total of 5,959m.

Pacifico reported significant shallow drill intercepts from both CDEF and B deposits, which included:

Pacifico carried out the drilling program to increase Indicated Resources ahead of a proposed MRE update in the December quarter. The company will combine the updated MRE with progressing mining studies and metallurgical results to improve confidence and enhance Project economics ahead of the upcoming Optimised PFS.

Commencement of Phase III Drilling Campaign

During the quarter, the company updated that it is planning to commence the Phase III drilling campaign in October 2019, that will include 3,000m of reverse circulation drilling. With the Phase III program, the company intends to increase the Inferred Resource inventory and add to shallow Inferred Resources.

Financial Highlights

The company recorded net cash outflow of $1.16 million from operating activities and net cash inflow of $4.3 million from financing activities during the quarter.

The company’s consolidated cash balance was ~$5.1 million at 30 September 2019, with JV reimbursements of $282k likely to be received during the December 2019 quarter.

During the period, the company issued 575 million shares at a price of $0.008 per share to professional and sophisticated investors to raise $4.6 million. The company will use the proceeds from the placement to complete both the Optimised Pre-Feasibility Study and Phase III drilling program and to advance the Definitive Feasibility Study (DFS).

Pacifico’s Forward Plans
  • The company expects the completion of a revised MRE in October 2019, that will bolster the Optimised PFS likely to be completed in January next year and DFS to be completed in Q4 2020.
  • The company has also planned to undertake additional drilling through to 2020 to convert Inferred Resources at the Alpha, Beta, A, H and I deposits to Indicated Resources, and to expand Indicated Resources of the CDEF and B deposits.
  • The company also expects an expansion in the deposit size of the Project as drill targets are drilled and supplemented to the resource base.

One can see that Pacifico has delivered remarkable performance during the September quarter, marking substantial progress at its Sorby Hills Project.

Stock Performance: PMY settled the day’s trade higher at $0.010 with a massive rise of 11.1 per cent on 14 October 2019. The stock has generated an enormous return of 137.5 per cent on a YTD basis.


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