The company recently updated on drilling progress at its 51%-owned Star zinc project in Zambia, and the highlights included initial findings from hand-held readings of up to 52% zinc in core.
The hand-held assay device, known as an XRF machine, is a relatively new development in exploration, and results from it are not considered of a degree of accuracy and reliability to be used in any of the official resource categorisation methods used in the industry.
Nevertheless, as a guide, the XRF is a useful tool.
So when Galileo says it’s encountered high grade intersections averaging between 15% and 28% zinc close to surface, it’s worth taking note.
To be sure, it’s early days. The assays are not in and this is a small drilling campaign at just 1,500 metres, with current data based on the first 750 metres of that.
But the XRF readings aren’t all that investors have to go on, as Galileo’s chairman Colin Bird explains.
When Anglo American worked this ground, he says, they estimated that it contained between 250,000 and 300,000 tonnes of ore. Back then, silicate deposits of this nature were less desirable while major sulphide deposits were still on offer. But most are gone now, and processing technology has well and truly caught up.
But more than that, Bird is optimistic that the geological implications of the recent drill are favourable.
“The drill programme has shown we could get stacks more. It goes up to around 50% zinc. And there’s lots of 28%.”
For zinc projects, these are rich grades indeed, and with the zinc price riding along at multi-year highs, it all adds up to an enticing prospect.
If, reckons Bird, the company could prove up 60,000 tonnes of contained zinc, then it would justify the setting up of a small-scale operation.
But if, he adds, the drilling could boost the resource exponentially, say, to five million tonnes, then Star would become the type of project that a company could sell on.
So plenty to play for at this stage. The initial assay results are due back in mid-March, even as drilling continues.
“My initial target is to put an envelope around the resource,” says Bird.
“But having said that we’re still trying to find the source. Inevitably there’ll be a big feeder. And there are those who say it’s a bit like Tsumeb.”
For those not in the know, Tsumeb is one of southern Africa’s foremost base metals projects, enough of an undertaking to put a smelter on site there in Namibia, and a benchmark for many a project in the region.
But how the geology all works remains unclear. Chartered Consolidated did some work at Star in the early 1960s, but Bird says he now wants to bring “more science to it.”
“The geophysics is old,” he says. “This latest work has now destroyed the Chartered Consolidated model.
That leaves room for a new, Galileo Resources model. The upcoming assays may not deliver quite that, but they may well be step towards it.
“Already we're getting better than the historic numbers,” says Bird. “On grade, I’m personally hopeful will be better.”
The early signs are good, but in the meantime new interest is being generated in South Africa at the Glenover project, which Galileo was founded on, but which went into something of a hiatus on weak commodity prices.
It’s come alive again though, reworked as a phosphate project rather than the rare earths mine that was originally envisaged. In this new form it’s attracted interest from a major phosphate producer in the form of an off-take agreement.
The advantages of this new structure are clear.
“We have high grade phosphate,” says Bird.
“We have stockpiles of three million tonnes. We haven’t got to go mining for six or seven years, and the capital cost will be just US$7mln-US$8mln. What’s more, the tailings are full of rare earths.”
It all adds up to a nice internal rate of return, and a doubling of the upside for Galileo investors.