Amidst global transition towards clean energy, economists are forecasting significant growth in the global lead market. This, coupled with the recent uptick in lead prices, has put a spotlight on lead stocks.
Pacifico Minerals Limited (ASX: PMY) is one such ASX-listed player, making strong efforts to tap the lucrative global lead market opportunity. The company is engaged in the development of its 75% owned Sorby Hills Lead-Silver-Zinc Project, a large near-surface and flat lying lead-silver-zinc deposit in Western Australia (WA).
Casting Eye over potential Lead Market Opportunity
Pacifico has released an investor presentation highlighting the rising lead market opportunity. The company notified that the short-term refined lead stocks are close to record lows. While, the global demand for lead is expected to grow at CAGR of 6.74% between 2018 and 2022 (as per Business Wire). Wood Mackenzie also expects automotive demand to support lead battery production throughout the current year.
The increasing use of lead batteries, a key element in the transition to a low carbon economy with unrivalled sustainability credentials, is one of the major reasons behind the increasing demand for lead. Rollout of 5G networks will also support demand for lead in 2019 as base stations currently use lead batteries.
There is also a growing use of lead in the industry for energy storage systems in 2019. Australia alone is tipped to add more than 70,000 home batteries in 2019 due to government subsidies and incentives.
Many analysts predict that the expanding lead demand could give birth to a significant gap in the supply and demand for lead (refer below graph).
Positive momentum in Lead and Silver Prices
In its presentation, PMY has highlighted the recent uptick in commodity prices. PMY has noted that since the start of April 2019, the prices of silver and lead have soared by around 21% and 14%, respectively.
Resource size and confidence level substantially increasing with each drilling program
After completing the highly successful Phase II drilling campaign at Sorby Hills, PMY recently updated the Mineral Resource Estimate.
Major Highlights of the Updated MRE:
- 20% increase in Global Resource to 36 Mt at 4.7% Pb equivalent and 0.5% Zn;
- 53% increase in total Indicated Resources to 16.6 Mt at 4.8% Pb equivalent (3.8% Pb, 39g/t Ag) and 0.4% Zn through the conversion of Inferred Resources;
- 63% increase in Indicated Resources in the Omega deposit (formerly CDEF) and 165% increase in the B deposit.
The updated MRE demonstrated two additional aspects of the deposit which are likely to have a significant impact on the planned Optimised Pre-feasibility study (PFS):
- Inferred Resources have a high conversion rate to Indicated Resources through a tightening of the drill hole spacing;
- The mineralisation is only marginally susceptible to a significant change in cutoff grade.
The findings of the updated MRE will help Pacifico to refine its targeting and exploration drilling to grow the high-grade zone of mineralisation and to finalise its sample selection for a new phase of metallurgical testing.
Successful Phase I and II drilling programs
The completed Phase I and II drilling programs have confirmed continuity between deposits C, DE, and F which is now referred to as the Omega deposit with a strike length of 1.7km.
Significant intercepts from Phase I and II drilling programs include:
- 20.0m at 7.3% Pb, 56 g/t Ag 0.4% Zn from 11m – Omega Deposit hole ACD046
- 11.7m at 10.8% Pb, 105 g/t Ag 0.4% Zn from 75.7m – Omega Deposit hole AF005
- 14.0m at 13.0% Pb 89g/t Ag 1.0% Zn from 24m – Omega Deposit drill hole ACD080
- 23.0m at 9.0% Pb, 88g/t Ag 1.2% Zn from 59m – Omega Deposit drill hole ACD071
- 21.0m at 5.0% Pb, 21g/t Ag 0.5% Zn from 23m – Omega Deposit drill hole ACD056
- 22.0m at 8.8% Pb 52g/t Ag 0.3% Zn from 68m (including 16m at 11.7% Pb, 68g/t Ag 0.37% Zn from 63m) – Omega Deposit in drill hole ACD082
- 11.0m at 6.9% Pb, 26g/t Ag 0.1% Zn from 29m – B Deposit drill hole AB050
With the ongoing Phase III drilling campaign, PMY expects to make major updates in the coming months in relation to the further development of Sorby Hills.
- Phase III drill program update (Dec. 2019);
- Phase III drilling results (Dec. 2019 / Jan. 2020);
- Optimised Pre-Feasibility Study and Ore Reserve Estimate (Q1 2020); and
- Offtake and strategic investment and financing discussions ongoing.
The recently expanded Project MRE amidst the favorable price movement of lead and silver highlights that Pacifico is exploring the right commodities at the right time.
At market close on 20 November 2019, PMY stock was trading at a price of $0.008 with 2.89 billion outstanding shares. The stock has generated a decent YTD return of 100%.
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