PNX Metals Ltd (ASX:PNX) (FRA:4P1) is continuing to focus on work streams at its Northern Territory portfolio, advancing its Hayes Creek Zinc-Gold-Silver Project definitive feasibility study (DFS) while setting attractive prospects such as Cookies Corner as exploration targets.
The South Australian company shared its December quarter achievements with the market last week during quarterly reporting season.
Among these achievements was its earn-in to a 90% stake in the Iron Blow and Mt Bonnie volcanogenic massive sulphide (VMS) deposits from Kirkland Lake Gold Ltd (ASX:KLA) (TSE:KL) (NYSE:KL) (FRA:NGDA) subsidiary Newmarket Gold NT Holdings Pty Ltd.
PNX Metals intersects gold mineralisation at Cookies Corner, extending strike to more than 800 metres
PNX Metals’ two parallel work streams consist of a project development stream and an exploration stream.
The company’s planned March quarter activities on the Hayes Creek project development front include generating an updated mineral resource estimate for Mount Bonnie that takes into account 2018 drilling.
Mt Bonnie is a planned initial open-pit mining operation for the Hayes Creek project.
The company hopes to drill two diamond drill holes at Iron Blow to collect large-scale representative samples of the eastern and western massive sulphide lodes.
Iron Blow is a proposed underground development and PNX hopes to also gain additional geotechnical information as it undertakes planning.
Hayes Creek project
Hayes Creek is 170 kilometres south of Darwin by road and had a JORC 2012 mineral resource estimate across the Iron Blow and Mt Bonnie deposits containing 177,000 tonnes of zinc, 238,000 ounces of gold, 16.2 million ounces of silver, 37,000 tonnes of lead and 10,000 tonnes of copper.
Eighty-five per cent of the resource was in the indicated category with the remaining 15% inferred.
The resource is equivalent to 1.1 million ounces of gold or 445,000 tonnes of zinc.
A July 2017 pre-feasibility study for the Hayes Creek project valued it at $133 million using a net present value (NPV10) calculated at a 10% discount.
Net smelter revenue from the sale of zinc and precious metals concentrates was $628 million for a 6.5 year mine life.
Hayes Creek had a low $58 million initial capital expenditure for a 73% internal rate of return and 15-month payback period.
Annual production rates of concentrates were forecast at 18,200 tonnes of zinc, 14,700 ounces of gold and 1.4 million ounces of silver, or 39,100 tonnes of zinc equivalent.
PNX hopes to progress regulatory approvals during the March quarter, gaining an Environment Protection and Biodiversity Conservation (EPBC) referral of the Hayes Creek project development.
The company also hopes to advance environmental impact statement (EIS)-related studies and address feedback it received after submitting a notice of intent (NOI)
PNX Metals’ ground in the NT
Regional exploration budget and objectives
PNX’s objective for the regional program is to make discoveries to supplement Hayes Creek or operate as standalone mining operations or be free-milled at gold facilities in the region.
PNX will undertake low-cost geological modelling during the March quarter, also refining drill targets and planning for the 2019 exploration season.
PNX reported last week it expected “expenditure will be significantly lower than during the field season”.
The company’s total expected cash outflows for the March quarter are $680,000, with $350,000 earmarked for exploration and evaluation.
Wet season in the NT is likely to run throughout the quarter, with PNX responding by focusing its exploration efforts indoors.
The field season tends to correspond with dry season, with explorers usually able to get out on the ground between about April/May and December.
Cookies Corner resource estimation at Burnside
PNX plans to follow on drilling successes at Cookies Corner prospect of Burnside project with gold mineralisation modelling to determine mineral resource potential and finalise the plan for dry season drilling efforts.
The company has previously said it expected to estimate a near-surface open pittable gold mineral resource after two phases of drilling last year.
A follow-up reverse circulation (RC) drill program concluded in December netted results such as up to 2 metres at 4.35 g/t gold from 61 metres.
Twelve more holes remain to be drilled as part of this program, which will be completed during the 2019 field season, from about April.
A number of untested NE-SW trending gold-bearing quartz veins associated with NE-SW trending parasitic anticlines were identified at surface through mapping and rock sampling.
These are to be tested as part of the next drilling campaign at the prospect 30 kilometres from Hayes Creek project.
Other exploration focuses
PNX plans to complete a conceptual mining study for its Fountain Head project to weigh up the merits of mining the gold mineralisation or historical open pits at Hayes Creek project, or adopting a mixture of both strategies.
The company’s contractor for several project efforts, CSA Global, will help PNX generate a structural model to aid understanding of the controls around the gold mineralisation at Fountain Head, Tally Ho and Banner to assist with future drill targeting and mineral resource estimation work.
PNX hopes to get back delayed assays from Moline Gold and Base Metals Project RC and diamond drilling.
Given the delays, the company had opted to defer metallurgical test work and the interpretation of information for resource estimation efforts and now hopes to complete the work in March quarter.
Moline project includes the Moline, Tumbling Dice, School, Redback and Hercules prospects and is 65 kilometres from Hayes Creek.
The interpretation and modelling of an aeromagnetic survey at Kilfoyle project will be conducted to assist with drill targeting for drilling to be co-funded by the government.
Kilfoyle is prospective for the commodities of zinc, lead, silver, gold, lithium, nickel, cobalt and copper and was picked up as a farm-in project last May.
South Australian assets
Ausmex Mining Group Limited (ASX:AMG) is farming into PNX’s eight exploration licences in South Australia’s Burra area, to earn up to a 90% interest over two stages by spending at least $300,000 in each stage on diamond drilling or other agreed exploratory work.
The first stage which would allow a 60% farm-in is to be completed by September 30.
PNX has the Yorke Peninsula and Adelaide Geosyncline exploration tenements in its home state.
PNX used $1.2 million on operating activities in the December quarter, spending $862,000 on exploration and evaluation.
It had $1.6 million cash on December 31 and zero debt after raising $3.5 million with a placement in the October quarter.
The company is expecting $680,000 of cash outflows in the March quarter as it focuses on its Hayes Creek DFS and scales back its regional field activities during the wet season.
PNX had 1,522,055,020 shares on issue on January 31.
Among its significant shareholders at the end of last month was Heidelberg-based Australian juniors investor Delphi Aktiengesellschaft with 18.2%.
The shareholder had become PNX’s cornerstone investor with a $2 million investment made during the company’s December half capital raising.
Second largest holder Marilei International Limited had 10.3%, third BNP Paribas Nominees held 6.2%, fourth Sochrastem SA had 6.2% and fifth Potezna Gromadka Limited held 5.9%.
— with John Miller, Tharun George