Some 20 km to the south, Inmet has intercepted strong zinc and copper grades in two holes 100 metres apart on an electromagnetic conductor, 4 km south of the past-producing Teutonic Bore base metal mine. Teutonic Bore was discovered in 1977 and mined as an open-pit and underground operation by BP Minerals between 1980 and 1985. The deposit originally contained a reserve of 2.1 million tonnes grading 11.39% zinc, 3.53% copper, 150 grams silver and 0.5 gram gold per tonne.
Inmet began a first pass of drilling at the project in January, targeting untested electromagnetic (EM) geophysical anomalies which occur in the same stratigraphic package of mafic and hydrothermally altered felsic volcanics as the Teutonic Bore mine. Inmet’s first two holes were drilled 600 metres apart on a 1,800-metre-long EM conductor, some 4 km to the south.
The first hole, collared at minus 72, intersected a 5.8-metre-thick sequence of interbedded mafic volcanic and graphitic shale containing anomalous copper and zinc values at a down-hole depth of 434 metres.
Collared a further 600 metres to the south at minus 70, hole 2 intersected 7.7 metres of massive sulphides grading 16.05% zinc, 4.28% copper and 0.76% lead, plus 173 grams silver and anomalous gold, starting at 485 metres down-hole or 450 metres vertically.
Inmet is testing the extent of the Jaguar discovery area using two rigs. Spotted 100 metres along strike north of the discovery hole at minus 65, hole 5 intersected 2.75 metres of 17% zinc, 2.7% copper and 123 grams silver at 465 metres down-hole. This was closely followed by a second massive sulphide intercept grading 10% zinc, 5.6% copper and 118 grams silver across 3.45 metres, starting at 479.5 metres of depth. A 90-metre zone of copper-zinc-bearing stringer mineralization lies below the high-grade intercepts in hole 5. The stringer zone is being assayed.
Stepping out in the other direction, 100 metres south of the discovery hole, drilling cut an anomalous 3.45-metre-long intercept of stringer and semi-massive sulphide mineralization in brecciated chert, beginning at a depth of 449 metres in hole 4. Inmet continues to test this new discovery along strike.
A second EM target, 10 km south of the Discovery area, was unsuccessfully tested with a single hole. No mineralization was intersected and the anomaly remains unexplained pending further down-hole geophysical surveys.
The Teutonic Bore property lies at the southern end of the Yandal greenstone belt, 260 km north of Kalgoorlie and 60 km north of Leonora. Inmet optioned the property from Australia-listed
The Tarmoola open-pit gold mine sits 20 km south of the Teutonic Bore project area.
Along with Tarmoola and Thunderbox, the Yandal gold corridor includes the million-ounce-plus gold deposits of Jundee, Bronzewing, Darlot and Gwalia.
Pilbara acquired the Teutonic Bore mine lease in 1997 from Mt. Isa Mines, and in 1999 acquired an adjoining land package from Goldfields and Mt. Isa Mines covering some 30 km of strike. In addition, Pilbara acquired more than 20 years’ worth of exploration data and drill core.
Inmet’s first task was to carry out ground EM surveys to test their effectiveness in penetrating the thick, weathered, conductive cover in the Teutonic Bore area. A systematic “deep EM” regional geophysical survey was then carried out over an 11-by-4-km area of favourable stratigraphy, starting 1 km south of the Teutonic Bore mine. The ground survey outlined conductors at depths not tested by previous geophysical surveys.
A drilling program, originally scheduled to begin in June 2001, was delayed while Pilbara awaited formal approval of the exploration licence under the Native Title Act. Title was finally granted on in mid-December 2001 and Inmet began drilling in January 2002.
Pilbara has taken advantage of the new base metal discovery to raise A$6.8 million through the placement of 34.1 million shares priced at A20 each. The company now has 79.9 million shares outstanding and is trading in the A40-33 range.
LionOre
In the meantime, LionOre’s promising Waterloo nickel discovery on the Wildara property, 20 km to the north, continues to grow with further drilling. Wildara is a 60-40 joint venture between Toronto-based LionOre and minority partner Australian-listed
Based on the reported assay results from a further 20 holes, together with visuals on another seven holes pending assay, LionOre has more than doubled the indicated strike length of the Waterloo nickel mineralization to 500 metres. This discovery continues to remain open both to the north and south, as well as downdip.
In early February, LionOre announced it had intercepted 10.68 metres grading 4.83% nickel and 0.49% copper (including 5.82 metres of 7.68% nickel and 0.81% copper) at a vertical depth of 140 metres while drill-testing the first of nine EM targets generated through a geophysical survey completed in 2001. Using reverse-circulation percussion and diamond drill rigs, LionOre has since drilled 37 holes on a rough 40-by-20-metre grid between sections 9,980N and 10,480N.
The northern portion of the deposit is lens-shaped and averages 50 metres in plan width, with drill hole intersections ranging from 0.4 metre of 8% nickel in hole 455 to more than 19 metres grading 5.27% nickel and 0.42% copper in hole 462. The northernmost hole drilled to date intersected 4 metres of 1.15% nickel on section 10,460N. The deposit’s western margin is cut by a steep parallel fault, indicating potential for mineralization at depth to the west of this fault.
South of the 10,140N section, the dip of the deposit steepens to 45. In this part of the deposit, drilling has intersected narrower widths of up to 4 metres. The southernmost hole assayed to date intercepted 1 metre of 4.3% nickel and 0.19% copper at 166 metres down-hole, closely followed by 2 metres of 2.91% nickel and 0.4% copper.
Other key intercepts since the last drilling update at the end of February include:
– 15 metres of 3.38% nickel and 0.28% copper from 108 metres of depth in hole 464 on section 10,420N;
– 2.2 metres of 7.93% nickel and 1.06% copper at 191 metres in hole 470 on section 10,260N;
– 4 metres of 2.22% nickel and 0.35% copper in hole 478 on section 10,220N; and
– 6.9 metres of 4.08% nickel and 0.21% copper in hole 480 on section 10,220N.
The southernmost hole drilled to date, for which assays are pending, intersected a 4-metre mineralized interval in the Main zone at 214 metres down-hole. The interval consisted of 2 metres of
disseminated sulphides and 2 metres of stringer sulphides. The mineralization in the Waterloo discovery is dominated by high-grade matrix to disseminated sulphides, with associated zones of structurally controlled massive sulphides.
Disseminated sulphides typically have grades of up to 3% nickel; the matrix sulphides grade between 3% and 9% nickel; and the massive sulphides run between 9% and 15% nickel.
The latest results also show the presence of platinum group metals (PGMs). Nickel intercepts from five previous holes yielded combined PGM values ranging from 0.42 to 2.12 grams. The 19-metre intercept in hole 462 averaged 0.64 gram platinum and 1.06 grams palladium, for a combined PGM value of 2.12 grams, enhanced by levels of osmium, iridium, rhodium and ruthenium.
Drilling will continue to test for extensions along strike and downdip, as well as at depth west of the interpreted fault. Other nearby EM conductors will also be drilled.
‘Impressive’
Haywood Securities mining analyst Kerry Smith says the Waterloo discovery could contain more than 600,000 tonnes of mineralization representing 30,000 tonnes of nickel, based on a preliminary back of the envelope conceptual estimate. “This is obviously an impressive discovery by LionOre,” Smith says in a recent market update. “With excellent infrastructure, the discovery could quickly move into production, either as a direct shipping mine to a smelter or with a small concentrator producing a nickel-copper concentrate.” The new nickel discovery lies 25 km away from Leinster, the heart of WMC’s nickel operations in Western Australia.
Smith believes the capital cost to develop Waterloo would be modest, and the high nickel grades, in conjunction with the copper and PGM credits, would result in competitive low-cost production.
LionOre is one of the few nickel-producing juniors. It holds a 41.65% interest in the Tati nickel operation in Botswana, which is undergoing a US$66-million expansion program that will effectively double the mine’s production to 12,500 tonnes of payable nickel per year.
Commissioning of a 3.6-million-tonne-per-year open-pit and concentrator plant is to begin during the second quarter of 2002. The mine has sufficient reserves for a further 13 years of life at the increased production rate.
The Tati mine produced 6,305 tonnes of payable nickel, along with 2,157 tonnes payable copper in 2001 at a cash operating cost of US$1.83 per lb. nickel.
The Tati nickel operations generated an after-tax profit of US$5.3 million for LionOre during 2001, compared with US$9.6 million in the previous year.
Low prices
Operations were affected by lower world nickel prices, which averaged US$2.70 per lb. in 2001, versus US$3.92 in 2000.
LionOre’s 80%-owned, newly constructed Emily Ann underground nickel mine in Western Australia started up in November 2001 and remains on schedule to achieve full production levels by the end of the first quarter of 2002. Utilizing a conventional, on-site concentrate plant, Emily Ann will process 250,000 tonnes of ore annually to produce 6,700 tonnes of payable nickel at a projected life-of-mine cash cost averaging US$1.60 per lb. nickel. Probable mineral reserves stand at 1.2 million tonnes grading 3.36% nickel, or 39,500 tonnes of contained nickel, for a mine life of five years.
Discovered in 1999, the Thunderbox gold deposit is undergoing construction, the price of which is pegged at US$33 million. Production from the open-pit operation is to start in the fourth quarter. The mine is projected to produce 220,000 oz. in its first full year of operation and 150,000 oz. per year thereafter for the next four years.
Reserves stand at 10.9 million tonnes grading 2.43 grams gold per tonne, equivalent to 849,000 contained ounces, based on a gold price of US$254 per oz. The waste-to-ore stripping ratio is 3.5-to-1. An on-site processing plant will incorporate single-stage crushing and a semi-autogenous grinding mill and ball mill, followed by a conventional carbon-in-leach recovery circuit. Life-of-mine cash operating costs are estimated at US$164 per oz., though costs in the first year will be much lower at US$112 per oz. Thunderbox is owned 60% by LionOre and 40% by Dalrymple.
LionOre has 119.6 million shares outstanding and trades at around $3.60.
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