Broken Hill Prospecting (ASX:BPL) is building a valuable assemblage of mineral sands following a maiden Resource of 15 million tonnes at 3.7% heavy minerals defined for its Magic Heavy Mineral Sands Deposit in New South Wales.
This follows the July 2015 mineral resource of 11.6Mt at 6.9%HM defined at its Copi North Deposit about 50 kilometres to the south.
Both projects are located in the company’s five tenements in the Murray Basin where previous exploration by Iluka Resources (ASX:ILU) identified deposits of economic interest.
These are located close to existing infrastructure and Cristal Mining’s Ginkgo and Snapper operating mines. Cristal’s HM concentrates are trucked to the mineral separation plant near Broken Hill.
As a guide to the growing value of BPH's projects in the region, Cristal Mining is ranked in the top 10 of global mineral sands-producing companies.
Both of BPH's projects are fully financed by the private mining investment group Relentless Resources Limited, which is providing $2 million of funding through a joint venture to earn a 50% interest in EL8311 (Magic) and EL8312 (Copi) as well as the Sunshine ELA.
Relentless has earned a 40% interest in the two tenements to date.
The average grade at Magic is similar to reported head grades of nearby operating heavy mineral sands mines of between 3.5%HM and 4.5%HM.
Notably, it also contains a substantial proportion of high-value zircon (14%) compared with many other HMS deposits.
This has low clay and oversize contents that may help maximise HM recovery as well as limited groundwater that could support lower capital cost, dry, open-cut mining.
In addition, the deposit has not been closed by drilling and may extend outside the drilled area along trend to both the northwest and southeast.
Magic could become a viable sequential mine development to contribute to Copi North.
Dr Ian Pringle, managing director, commented:
“Magic is the next heavy mineral sands ‘cab off the rank’.
“This is a very comprehensive Maiden Resource estimate to add to Copi North which was announced a few weeks ago. Combined, the deposits have almost 27 million tonnes of resource containing 1.4 million tonnes of HM and could very well form the basis for a future pipeline of mine development.
“Like Copi North, the Magic deposit is very well located – not far from Broken Hill which provides logistical and technical support for Cristal’s Ginkgo and Snapper wet dredge mines and only a few kilometres west of the Silver City Highway along which Cristal’s HM concentrates are trucked to the mineral separation plant near Broken Hill.
“The shallow nature and excellent grade continuity of the Magic HMS deposit may allow for a cost effective, dry open-cut mining operation with a relatively small and mobile plant.
“High zircon grades (average 14% zircon) as well as low slime and oversize contents add to the value of Magic’s heavy mineral assemblage.”
Magic HMS deposit
The Magic HMS deposit is a strandline-type, ilmenite-rutile-zircon-leucoxene (titanium, zirconium) placer deposit located approximately 110 kilometres south of Broken Hill in the Murray Basin of western New South Wales.
Similar deposits are mined by Cristal (Ginkgo, Snapper) and Iluka (Woornack) in Victoria.
Drilling by BPL in early 2015 defined considerable thicknesses and good continuity of mineralisation within the Magic HMS deposit.
The deposit is about 14 kilometres along trend, 130 metres to 300 metres in width and about 2 metres to 8 metres in thickness.
It is located beneath 6 metres to 18 metres of sediment overburden.
Copi North Project
In late July, the company completed a maiden Resource estimate of 11.6Mt grading 6.9%HM at the Copi North deposit that is located 70 kilometres northwest of Wentworth and about 60 kilometres west-southwest of Ginkgo and Snapper.
Like Magic, it is a placer accumulation of heavy mineral sands associated with well-defined ancient beach sand strandlines.
The JV plans to finalise Scoping Studies for Copi North before commencing a Pre-Feasibility study for the project in late September.
The Magic HMS deposit will help with assessment of development options for a pipeline of relatively high-grade, small tonnage mines with low capital and operating costs and minimal environmental footprint.
It will provide a longer life-of project framework by offering future opportunity to relocate plant and equipment after any future mining is completed at Copi North.
Analysis
The Resource estimate of 15Mt at 3.7%HM at Magic provides a sequential development opportunity for a low OPEX, low CAPEX development after BPH brings the equally low cost, but higher grade Copi North into production.
That Cristal is successfully mining a mineral sands resource nearby is a positive for BPH and is likely keeping a keen eye on progress at Copi North and Magic. The former is nearly twice as high in grades as the nearby operating mine (which treats grades of 3.5-4%).
Copi North could be mined using a relatively small, mobile plant to develop Copi North before moving it to Magic or other deposits within its tenement position.
The high grade and the location near existing infrastructure in the Broken Hill region increase the probability that the project returns will be robust.
The JV with Relentless Resources Limited, provides for $2 million of funding to earn a 50% interest, de-risking the road to development for BPH.
As a guide to the inherent value contained within BPH, Cristal Mining's nearby mineral sands projects are being successfully mined nearby and Cristal is the world’s second largest producer of titanium dioxide.
BPH has now paved the way to progress its HMS projects to feasibility study to subsequent sequential development of its Heavy Mineral Sands deposits. The low CAPEX, potentially short time frame should lead to earlier returns for shareholders.
However, BPH is not just about mineral sands, it has a world class cobalt-sulphuric acid project in its back pocket - an effective long dated option - that should attract a JV partner and produce 5,000tpa cobalt & 1-2Mtpa sulphuric acid on development.
The top 20 hold 73% of the issued capital so BPH is tightly held.
Bullishly, BPH executives have form in progressing mineral projects into development: managing director Ian Pringle has a track record in discovery and development of mineral deposits within Australia, South East Asia and the Pacific.
All this, for a stock with a current market capitalisation of just $3.6 million and bargain basement share price of $0.037.
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