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Lunnon Metals Limited (ASX: LM8) (the Company or Lunnon Metals) is pleased to announce the completion of the Preliminary Feasibility Study( PFS) and the initial Probable Ore Reserve for the Baker deposit of 612,000 tonnes at 2.86% Ni for 17,500 contained nickel tonnes1.
KEY POINTS
- Strong financial returns with low start-up capital requirements.
- Initial Probable Ore Reserve of 612kt averaging 2.86% Ni for 17.5kt contained nickel1.
- Indicated Mineral Resource converted 73% to Ore Reserve.
- Pre-tax and post-tax free cash flow generation of $196 million and $145 million.
- Pre-tax NPV8% of $164 million and 324% internal rate of return (IRR).
- Pre-production capex of $18.6 million, maximum cash drawdown of $26.4 million including working capital.
- A premium sulphide concentrate, averaging ~14.6% Ni, Fe:MgO ratio of ~18.8 and low arsenic of ~440ppm.
- Detailed offtake discussions can now commence for Baker’s high grade nickel sulphide ore.
- Significant upside potential from the initial base case outlined in the PFS:
- No Inferred Mineral Resources included in PFS
- Likely future extensions to Baker with the deposit remaining open down plunge
- Potential contribution from East Trough deposit (approx. 450m from Baker)
- Scale and synergies with Foster’s Mineral Resources.
The PFS confirms that the Baker Project is a commercially robust high-grade nickel sulphide orebody (2.86% Ni), with a modest pre-production capital cost ($18.6 million), located in a Tier 1 jurisdiction in the heart of Kambalda, Western Australia. The PFS also confirms that Baker will produce a premium nickel concentrate, the results of which now enable detailed offtake discussions for the Project. The PFS leaves significant future upside potential, with a depth of mining of less than 200m below surface and the deposit remaining open down plunge. Lunnon Metals will now continue further studies (including reviewing scale and synergy benefits with Foster’s Mineral Resources), as the Company looks to build on its initial Ore Reserve for the Kambalda Nickel Project, which comes less than two years since listing and 18 months after Baker’s discovery.
Key PFS Outcomes and Assumptions
A summary of the initial physical and financial evaluation of the Project is shown in Table A, with additional details provided in the PFS Executive Summary.
1 Refer to Section 7 of the Preliminary Feasibility Study – Executive Summary below for a full breakdown of the Ore Reserve.
Table A: Key Production and Financial Outcomes and Assumptions
Notes:
1: Life of Mine is calculated from first stope ore, being approximately four months into Project commencement.
2: C1 Cash Costs includes Operating Costs, including mining, processing (excluding penalties), surface haulage, G&A, less by-products, divided by ore tonnes for processing. Excludes pre-production and sustaining capital expenditure, rehabilitation cost and royalties.
3: Gross Revenue excludes deduction of penalties from revenue and excludes revenue credits to Pre-Production Capital. 4: Pre-Production Capital Expenditure is to first stope ore, not commercial production.
5: Total LOM Expenditure includes Operating Costs, Royalties, Sustaining Capital, Closure Costs and Pre-Production Capital.
It excludes any by-product or revenue credits.
6: Free Cash Flow is Gross Revenue (less penalties) minus Operating Costs, Capital Expenditure (pre-production and sustaining), Royalties, and Closure Costs.
7: Post-Tax includes an assumption of $30 million in accumulated tax losses to 31 March 2024 and 30% Corporate Tax Rate.
8: NPV is based on real cash flow forecasts and represents value as at projected start date of 1 April 2024.
9: Corporate Tax Rate may be less, with a tax rate of 25% if aggregated turnover is less than $50 million in any financial year.
Managing Director, Ed Ainscough, commenting said:
“Kambalda has been one of Australia’s most prolific nickel production centres for over 55 years. Despite this long history, the district is still a globally relevant nickel belt and remains an important strategic source of high-grade, premium quality nickel sulphides. Baker continues this proud Kambalda tradition and the Company is likewise proud to report the results for that deposit’s PFS and initial Ore Reserve. These impressive results come within two years of listing on the ASX and at a time when Kambalda is once again in the headlines, this time as a sought after key production centre driven by its many positive attributes including its high-grade, superior concentrate quality and consequent low energy and capital intensity to exploit.
I would like to thank the Lunnon Metals’ team who have worked to deliver these outcomes over the past two years. They more than anyone know that this is just the start, these are very much initial results, with plenty more to come from our growing Mineral Resource base already defined at Baker and Foster but also from the many exciting exploration programs across the rest of our portfolio. To have access to such high-quality tenure in the heart of Kambalda is truly amazing and sets the Company and its shareholders up for a bright future.”
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This article includes content from Lunnon Metals Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Premium Magnetite Iron Product (>70% Fe) Confirmed Across Waterfall Prospect (WA)
Key Points:
- Premium grade iron product (>70% Fe) has been produced across the Waterfall Prospect by beneficiation test work using the Davis Tube Recovery (DTR) method.
- Magnetite was liberated from its host rock using a relatively coarse grind size of 75um and 106um, which suggests potential savings on future processing costs.
- Average DTR recoveries of approximately 34% indicate that most, if not all, of the magnetite has been recovered in the concentrate.
- Impurity levels (silica, alumina, sulphur and phosphorus) within the magnetite concentrate are extremely low.
- The Morrisey Project is well located, being ~120km by road north of Mullewa and then ~80km by rail to the Port of Geraldton.
- Waterfall is the first of at least five targets identified within the Morrisey Project, with potential to host magnetite mineralisation.
Next Steps:
- Native Title clearance surveys over further magnetite targets are scheduled to be completed later this year.
- Drilling of additional targets is being planned for 2025, under the Strategic Alliance Agreement with a subsidiary of South32 Limited.
Beneficiation test work using the DTR method confirmed excellent recoveries of magnetite from its host rock (averaging ~34%) across the prospect, using coarse grind sizes of 106um and 75um, highlighting potential for the prospect to deliver a premium iron (Fe) product with very low impurity levels and enhancing the future commercial potential of the Project.
The Morrisey Project is well located, being ~120km by road north of the town of Mullewa, and a further 80km by rail to the Port of Geraldton (Figure 1). No discussions have been held with transport providers at this stage.
Figure 1: Morrisey Project: Location Plan showing road and rail access to the Port of Geraldton.
DTR results for all remaining drill-holes have now been received, confirming that iron (Fe) grades greater than 70% Fe can be achieved from both the 75um and 106um grind sizes for all the composite samples (varying from 4m to 12m in length). The distribution of DTR grades and down-hole thicknesses for the 75um grind size is shown in Figure 2, with cross-sections provided in Figures 3 and 4.
While there are no significant differences between results from the two grind sizes used, results for 75um are slightly more consistent, with less variations than for the 106um data (see Tables 1 and 2 below).
DTR Fe grades for the 75um grind size vary from 70.25% Fe to 71.63% Fe with recoveries varying from 18.6% for the lower grade composite samples (<25% Fe) and up to 44.3% for higher grade composites (>35%Fe), with an average recovery of magnetite across the prospect of ~34%.
Deleterious elements for the 75um product were all very low, including silica (average 1.3% SiO2), alumina (average 0.19% Al2O3), sulphur (average 0.08% S) and phosphorous (average 0.004% P), only increasing slightly for the coarser grind product.
Petrological examination of selected samples indicates that the magnetite grains are highly fractured, which is likely to contribute to the excellent magnetite recoveries achieved via the DTR test work.
Similar magnetic and gravity anomalies to the Waterfall prospect occur at a number of locations within the Morrisey Project. Five targets have been identified for drilling to help determine the overall magnetite potential of the district.
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Exploration Update - Visible Gold Intersected at Salanie
HIGHLIGHTS:
- Visible gold identified in drilling at the A1 prospect at 19m depth (Figure 1), associated within a broader 13m zone of quartz veining and shearing from 9.6m downhole:
- Interpreted as extension to system in trench SATR001 (10.3m @ 3.4g/t Au and 1.4m @ 15.7 g/t Au) (Figure 5);
- Assays for this hole are pending.
- At P6, a significant quartz veining/shear system over 20m with associated sulphides has been identified along the trend of historical high-grade underground workings that produced at an average of 16g/t Au.
- The underground workings at P6 represent a priority target that will be further targeted in the 2025 drill season:
- System displays as quartz veining and associated visual estimates of sulphides (trace to 25% pyrite+/-chalcopyrite) intersected in three principal positions in drillhole SLDD002 (61- 65m; 71-75m and 84-87m).
- Drilling completed for the current field season, with discussions advanced with a highly reputable new drilling contractor for drilling in 2025.
- At Salanie, five holes for 328m (two at the P6 prospect and three at the A1 prospect) were completed (two of these did not reach target depth due to drilling performance), with assay results received for 3 holes.
- In the northern areas around the Mikouma and Binda prospects, infill soil sampling has strengthened existing gold targets in these regions with anomalies up to 200ppb Au. Follow up ground reconnaissance will assist in delineating further the drill targets.
- Company to undertake a one (1) for three (3) non-renounceable entitlements offer to raise approximately $3.25 million (before costs).
Figure 1: Examples of visible gold identified in SLDD004 – at 19.04m (associated with chalcopyrite (Cpy) and galena (Gn)).
The Company cautions that visual estimates of sulphides or mineral abundance should never be considered a proxy or substitute for laboratory analysis. Laboratory analysis would be required to determine the widths and grades of sulphides, visible gold, or suspected mineralised intervals reported herein. Visual information also potentially provides no information regarding impurities or deleterious physical properties relevant to valuations. Assays are expected within 3-5 weeks.
Apollo Minerals’ Managing Director, Mr Neil Inwood, commented:
“The first pass drilling is highly encouraging having identified visible gold associated with quartz veining at A1 and a significant shear/quartz vein system at P6. Assays are pending from the key holes at A1. The Salanie system is interpreted to be in the same regional trend of Archean greenstones as Managem’s 1m oz Eteke deposit; highlighting the potential in the broader system.”
“Unfortunately, a combination of late arrival and poor performance from the drilling contractor and the end of the field season has meant that less than a quarter of the planned holes for 2024 were completed and the P6 target was only partially tested by one drill hole. We are in advanced discussions with another drilling company to commence drilling in the new year. Such a partner will enable a significant increase in drilling rate and quality and enable us to further unlock the untested potential at the Salanie Gold Project.”
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Wadi Al Junah VMS-Style Copper-Zinc-Gold-Silver Project in Saudi Arabia
Highlights
- As announced on 6 November, MBK’s Saudi Arabian JV company, has been awarded the Wadi Al Junah Project as part of the Saudi Government’s Exploration Licensing Round 6
- Wadi Al Junah is prospective for volcanogenic massive sulphide (VMS) copper-zinc- gold-silver mineralisation and for shear zone gold-silver, with several untested priority targets
- The Project is 35km east of the Al Hajar Au-Ag-(Cu-Zn) deposit previously mined by Ma’aden and is proximal to the regional centre of Bisha, and close to major access routes, local towns and workforce
- Saudi exploration strategy is supported by a well capitalised in-country JV Company in CMC and significant Saudi government incentives to de-risk and fast-track exploration
- Metal Bank continues to assess new potential project areas in Saudi Arabia prospective for copper, gold and other critical minerals – several tenement applications in progress
CMC is a Saudi Arabian limited liability company owned by MBK (60%) and Central Mining Holding Company (‘CMH’, 40%). CMH is a member of the Al Qahtani Holdings group, and was the JV partner of Citadel Resources which, under the leadership of Inés Scotland as Managing Director, was responsible for the exploration and development of the Jabal Sayid copper project in Saudi Arabia (prior to its acquisition by Equinox). CMC will be responsible for managing and implementing the work program for the Wadi Al Junah project utilising the technical expertise of MBK, as the exploration JV partner, in combination with the KSA expertise of the Al Qahtani Group. CMC has a current capitalisation of SAR5m (~AUD2.1m).
Wadi al Junah with an area of 427km2 was the largest of the projects offered in Round 6 and is proximal to the major regional centre and airport of Bisha, with major access routes passing through the license area and local towns and workforce close by. The Project is located in the prospective Wadi Shwas Gold Belt, a region under-explored for shear zone gold, VMS copper-zinc-gold-silver and intrusion-related gold and base metal deposits. It is supported by several mineral occurrences with encouraging geological observations, and gold, silver and copper grades in historic regional- scale reconnaissance mapping, which have not been followed up by modern work.
MBK’s technical team has prepared a comprehensive two-year work program, with an initial focus on following up the previous limited and surface based exploration for mineral occurrences of copper, gold and silver. MBK is aiming to be drill-ready within the next six months.
Commenting on this acquisition, Metal Bank’s Chair, Inés Scotland said:
“The successful tender for the Wadi al Junah project in Saudi Arabia by our JV company CMC via a tightly contested and highly competitive exploration round speaks to our commitment, capability and technical expertise in achieving our strategy of acquiring prospective tenure within Saudi Arabia, which we believe remains underexplored and highly prospective.
Wadi al Junah represents our first project back in Saudi Arabia, a region in which MBK’s management team has extensive experience and a proven track record of success, having previously developed the Jabal Sayid project. We are well-supported by both our JV partner and the significant government incentives provided by the Kingdom of Saudi Arabia in search for the next Jabal Sayid. The Arabian Shield has so much underexplored potential, and we are ready to get our initial phase of exploration underway as quickly as possible.”
Wadi al Junah Copper-Zinc-Gold-Silver Summary
The Wadi al Junah project area covers an area of 427sq km within the Asir province of the Arabian Shield, southwest Saudi Arabia (Figures 1 and 2). It is approximately 375km south-east of Jeddah, 150km east-northeast of the port of Al Quinfidhad and around 35km east of the Al Hajar Au-Ag-(Cu- Zn) deposit previously mined by Ma’aden. It is proximal to the major regional centre and airport of Bisha, with major access routes passing through the license area and local towns and workforce close by. The majority of the project area is accessed by local tracks and wadi valleys in moderate topography.
Figure 1: MBK MENA projects showing Wadi al Junah (Saudi Arabia) and Malaqa, Area 47 and Area 65 (Jordan).
Figure 2: Wadi al Junah location map within the Arabian Shield showing major geological provinces and major Au and Cu mines (modified from KSA Ministry of Industry and Minerals publication after Nehlig et al, 2002)
Geology
Wadi al Junah is situated within the central Asir terrane of the Archaean Arabian Shield (Figure 2) within the ~80km long north-trending Wadi Shwas Gold Belt. The Shwas VMS belt on the western margin of the Wadi Shwas Gold Belt is host to the Al Hajar Au-Ag-Cu-Zn deposit, and numerous other VMS base metal and Au mineral occurrences of Proterozoic age are present in the region (Figure 3).
Three known mineral occurrences occur in the tenement area – Haniyat (Ag-Cu-+/-Au+/-Zn), Wadi al Maytha (Ag-Cu) and Wadi Umm Rahka (Ag-Cu). Very limited rock chip sampling as part of regional scale mapping work in the 1960’s and 1970’s includes results up to 1.53% Cu, 0.44g/t Au and 160g/t Ag from these prospects, which were never followed up1.
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Octava to Commence Drilling at Yallalong High-Grade Antimony Project
Highlights
- Drill rig relocating to site with drilling to commence this weekend.
- The 3000m reverse circulation (RC) drill program is targeting further high-grade antimony at the Discovery prospect.
- Historic drilling at Discovery recorded high-grade antimony intercepts over a strike length of ~300m and remains open. Results include:
- YRC16: 7m @ 3.27% Sb from 12m including 1m @ 11.5% from 18m
- YRC06: 3m @ 6.83% Sb from 21m including 1m @ 13.6% Sb from 22m
- After drilling at Discovery, the drill rig will relocate to the Central antimony target, 2km north along strike. There has been no previous drilling at Central.
- A detailed geophysical survey over the antimony corridor at Yallalong is now complete, with the data being processed. This is expected to generate further targets within the antimony corridor.
Octava’s Managing Director Bevan Wakelam stated, "It’s great to have the rig heading to site and earlier than we had planned. The drilling will start on Discovery, then move to the Central target and should take about 2 weeks to complete. High-grade antimony has already been intersected at Discovery over a significant strike length and this drilling will further test the size. We will also twin some of the previously drilled holes."
Figure 1. Planned drill hole locations at the Discovery antimony target - Yallalong Antimony Project.
The antimony (Sb) mineralisation identified at Yallalong appears within a 10km north-south striking mineralised corridor that is interpreted to be related to a structural belt between the regional scale Darling and Woodrarung faults. Previous exploration identified four principal antimony targets where antimony mineralisation was exposed at surface. Only the Discovery Prospect has any drilling and remains open. Antimony ingot prices at that time were ~$8000/tonne compared to over $30,000/tonne now1.
Figure 2. Antimony targets at Yallalong antimony project with underlying geology.
Drilling at Discovery target recorded some of the highest-grade antimony drill intersections in Australia, at shallow depth, over a strike of ~300m including:
- YRC16: 7m @ 3.27% Sb from 12m including 1m @ 11.5% from 18m
- YRC06: 3m @ 6.83% Sb from 21m including 1m @ 13.6% Sb from 22m
- YRC27: 6m @ 1.35% Sb from 13m
After drilling at the Discovery target is complete, the rig will then move to the Central target, which is located 2 kilometres north along strike. There has been no previous drilling at the Central target.
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Targeted Exploration Focus Delivers an Additional 471koz or 99% Increase in Ounces, and a Higher Grade for Ricciardo
HIGHLIGHTS:
- Updated Mineral Resource Estimate (MRE) for the Ricciardo Deposit (part of the broader Golden Range Project) of 16.44 Mt @ 1.8 g/t Au for 947.5 koz gold.
- Represents a 99% increase in Ricciardo MRE contained gold ounces.
- Proven high-returning exploration with the increased Ricciardo MRE ounces delivered at an attractive all-in discovery cost of only approx. A$16/oz.
- High-quality resource additions given drilling focus on high-grade growth ounces with strong commercial potential.
- The updated Ricciardo MRE comprises:
- 467.5 koz @ 1.6 g/t Au open-pit gold Resource (75% M&I) (optimised pit shell constrained at A$3,300/oz)
- 480.0 koz @ 2.0 g/t Au underground gold Resource
- Critically, the Ricciardo system remains wide open at depth and along strike.
- Total Golden Range Project Mineral Resources now stand at over 1.28 Moz gold, a 58% increase from the previous level.
- This initial outcome validates the excellent potential for further growth within the broader 25km ‘Golden Corridor’ via the ongoing, simple strategy of targeting fresh rock extensions under shallow existing pits.
- RC drilling at the southern end of the ‘Golden Corridor’ targeting high-grade Resource growth is progressing well; 9 holes completed for 1,472 metres to date, assays pending.
Warriedar Managing Director and CEO, Amanda Buckingham, commented:
“This is the result we have been working towards all year. With less than 15,000m of targeted, efficient drilling we have added over 470 koz to the Ricciardo deposit, doubling the Resource.
We are excited by both the outcome itself, and the outlook that it delivers us for the wider corridor of gold deposits. The simple strategy of drilling below shallow open pits to find mineable ounces worked exceptionally well for our producing neighbours. The validity of this strategy is now beyond doubt, for us.
Not only is the Ricciardo system still wide open down-plunge, but the entire 25km long ‘Golden Corridor’ offers similar potential upside from such a relatively simple drilling focus.
In the middle of the infrastructure-rich southern Murchison, and located on existing Mining Leases, the opportunity in front of us is utterly irresistible.”
The Ricciardo Deposit
The Ricciardo Gold Deposit is located on existing mining leases 100% owned by WA8, in the Murchison Region, approximately 300 km east of Geraldton, and 420 km by road north-northeast of Perth. Sitting approximately 8km South of the Golden Range Mill on M59/421, and M59/458, within the Golden Range group of historic open pit mines and deposits.
Discovered in the 1990’s, open pit mining of the oxide resources commenced in 2001, and the plant entered Care & Maintenance twice (between July 2004 and 2009, and May 2010 to mid- 2013). Production was over 300 Koz before finally going into ongoing Care and Maintenance in August 2019.
The Ricciardo deposit is located 90km north of Capricorn Metals’ Mt Gibson Gold Project, 8kms south of the Company’s plant, 26km from the neighbouring Golden Grove processing facility and 40 km northeast of Vault Minerals’ high grade Rothsay gold mine (Figure 1).
Figure 1: The location of the Ricciardo gold deposit within the Golden Range Project; within the broader Southern Murchison region.
The Ricciardo gold system spans a strike length of approximately 2.3km, with very limited drilling having been undertaken below 100m depth prior to Warriedar drilling. Historical mining operations at Ricciardo were primarily focused on oxide material, with the transition and primary sulphides mineralisation not systematically explored.
Warriedar’s drilling of Ricciardo during CY2024 achieved excellent results, demonstrating high- grade extensions to the resource. The results demonstrated that the previously quantified resource is part of a much larger system.
Warriedar engaged independent mining consultants, Measured Group to update the Ricciardo MRE, previously reported 476Koz gold.1
The Ricciardo Gold Deposit consists of six semi-continuous historical open pit mines along the 2.3 km arcuate stretch of the Mougooderra Shear Zone, running north to south. These mines are named (from north to south) Silverstone North, Ardmore, Copse, Silverstone, Silverstone South, and Eastern Creek (Figure 2).
Figure 2: Drilling carried out by the Company during 2023 & 2024, which was used to update the MRE.
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This article includes content from Warriedar Resources Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.