The Abra project in the Gascoyne region of Western Australia features an overall resource of 36.6 million tonnes at 7.3% lead and 18 g/t silver.
Within that resource, Galena has identified a high-grade indicated and inferred section featuring 11.2 million tonnes at 10.1% lead and 28 g/t silver.
Resource exceeds management’s expectations
The establishment of the resource follows a successful drilling program completed in December which covered more than 8,000 metres.
While the resource metrics surprised on the upside, the project could still grow in size.
Chief executive officer Ed Turner said: “These resource numbers have exceeded our expectations and confirm Abra as a truly world-class asset with global significance in the lead market.
“What is even more exciting is that this looks like just the beginning of a much bigger project and that potential upside exists in and around where we have drilled to date.”
Prefeasibility study the next catalyst
Galena’s plan has always been to target the proven high-grade mineralisation at Abra with a view to establishing a high-grade/low-cost development strategy.
The company now has the capacity to deliver on this strategy.
Management aims to bring Abra on line as one of Australia’s next base metals producers, and its focus is now on progressing a prefeasibility study over the coming months.
Hartleys bullish on Galena
Analysts at Hartleys initiated coverage of Galena in January with a buy recommendation and a price target of $1.58.
At that stage, the company's shares were trading at about $1.25, but subsequently retraced as volatility in global markets and commodity prices brought downward pressure.
However, with the share price returning to January levels of about $1.20 today, Hartleys’ price target appears achievable.
It is also worth noting that the broker based its price target at that time on drilling results alone.
Hartleys will now crunch the numbers based on an established resource which could see an upgrade in valuation.
Based on previous test work in 2008, management believes that lead and silver sulphide mineralisation could be economically extracted using conventional flotation methods.
Preliminary metallurgical test work at that time was encouraging, indicating that a float recovery of 95% is achievable for lead in the lead domain.
Tests also indicated that a concentrate grade of approximately 55% to 65% lead is achievable.
Galena will be in a better position to assess its production options after laboratory examination of recent samples has been completed.