The 129% increase in the JORC-compliant resource announced by North River Resources (LON:NRRP) does not mean an end to delineation drilling in the near term.
Broker Ocean Equities said North River can now start mine planning work, having upgraded a significant portion of the resource for the Namib lead, zinc and silver project in Namibia, but the company will continue to plough on with resource expansion.
“North River recently purchased a Kempe pneumatic underground drill to complete its most recent exploration holes and has now built a fully trained team to conduct more drilling with the rig. It has also engaged Shali Drilling as contractors to carry out additional drilling with a larger Atlas Copco rig. The immediate focus of the drilling will be below the previous development levels of the mine,” the broker said.
“North River also intends to develop a drive-out to the Northern Lodes to conduct more underground drilling in virgin ground,” Ocean Equities added.
The broker thinks the inclusion of the tailings in the resources estimate is an important achievement for North River.
“The 13,000 tonnes of contained zinc could be relatively easily recovered through processing the material using more sophisticated froth flotation processing (compared to the previous mining operations that ended in 1992) and represent a fast track option for North River to generate cash revenues and profit to help fund the re-development of the Namib underground mine,” Ocean’s mining analysts reckon.
Meanwhile, exploration of the ground below the known resources has a high probability of success based on the vertical continuity of the lode structures that host the high grade ore, Ocean opines.
“Developing a drift out to the Southern Lodes will allow North River to better target the lodes and presents a lower risk exploration for the company albeit with a larger upfront cost. Exploration success at the Southern Lode area could lead to relatively quick development of the lodes thanks to the existing development at Namib. High grade ore could possibly provide supplemental ore feed for the plant proposed to re-process the tailings on site but future economic assessments are required on the project to assess this potential,” the broker notes.
VSA Capital, which has a ‘buy’ recommendation and 2p price target for North River, recently sent some people over to the mine site and found the workings to be in excellent condition.
The resource upgrade announced “largely matches” the tonnage expected by VSA, and underlines the company’s ability to deliver results to timelines and budgets.
“Key events, which we expect in the next few months, include the filing of an environmental impact report and the application for a mining licence. The results announced…de-risk the project with regard to suitable tonnages, mine life and grades for the completion of a Definitive Feasibility Study, due in Q1 2014,” VSA said.
Shares in North River currently trade at 0.662p.