Shares in Ferrum Crescent Limited (LON:FCR) opened sharply higher on Thursday after the metals developer moved another step closer to getting drilling underway at its Toral lead-zinc project in Spain.
The company has contracted Spanish firm Sondeos y Perforaciones Industriales de Bierzo (SPI) to carry out the planned phase 1 drill programme.
SPI conducted the last known drilling campaign at Toral back in 2007, which Ferrum said proves the capability of its rigs.
The contract is for a minimum of 1,400m and a maximum of 2,100m and is expected to take three months to complete. Ferrum is paying €80 for every metre completed.
WATCH: Ferrum Crescent's Justin Tooth eyeing up drill programme at Toral
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The diamond drilling will further test mineralisation down to a potential depth of 150 metres (m) from surface in a series of angled holes up to 250m long.
In particular, Ferrum is focusing on three areas of an untested two kilometre-long “geochemistry anomaly” which contain a “variety of mineralising
“We are pleased to be on the cusp of commencing FCR's first drilling campaign for lead-zinc in Spain,” said Ferrum’s executive chairman Justin Tooth.
“Our objective is to define the presence of lead-zinc near to surface similar to the nearby Antonina and Rubiales projects where mineralisation has been mined in the top 200m.”
Tooth added that a successful campaign this time around would likely lead to a phase 2 drill programme.
Good zinc grades
Earlier this year, Ferrrum reported more good zinc grades from early stage development work at Toral.
Trenching returned 10.5% and 6.5% zinc in places along with good lead grades while soil sampling identified a distinct, continuous zinc‐in‐soil two kilometre anomaly, approximately 150 metres wide with a best grade of 1.4%.
Ferrum owns 100% of Toral, a zinc-lead-silver permit near Ponferrada in the west of the province of León in Spain.
‘Speculative buy’ recommendation repeated
City broker Beaufort Securities maintained its ‘speculative buy’ recommendation on the stock as it said the drilling “marks the start of a new phase” of exploration at Toral.
“Previous drill campaigns had focused on mineralisation at depth, the proposed new drill programme with test Ferrum's hypothesis that known mineralisation at depth is linked to shallow mineralised features,” said analyst Barry Gibb.
“If proven correct, these shallow mineralised features could potentially add to the current resource base.”
Shares soared 15% to 0.16p on Thursday morning.
--Updates for broker comments and share price--