Peel Mining Ltd (ASX:PEX) has begun reverse circulation (RC) and diamond drilling at its Wagga Tank-Southern Nights zinc-polymetallic project in western New South Wales.
The 20-kilometre drilling program will employ two multi-purpose rigs and is designed to enable completion of a maiden JORC-compliant mineral resource estimate by the end of the 2018-19 financial year.
Drilling will also test for extensions to the mineralised system which remains open along strike and at depth.
The company has also completed its acquisition of the 2% net smelter return royalty from MMG Limited, giving 100% ownership of the project to Peel.
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The two drilling rigs will operate on a double shift basis to systematically infill and extend the current 2-kilometre-long footprint of the Wagga Tank-Southern Nights mineral system.
Wagga Tank is about 130 kilometres south of Cobar on the western edge of the Cobar super basin.
The deposit was initially discovered in the mid-1970s and comprises a near-surface oxide-gold zone, a possible supergene-enriched copper-gold-silver zone, and a primary zinc-lead-silver-rich massive sulphide zone starting 120 metres below surface.
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Historic drilling comprised 20 percussion holes and 22 diamond holes, with all holes intersecting mineralisation to some degree and 24 intercepting substantial grades, including:
32 metres at 3 g/t gold and 24 g/t silver from 10 metres;
20 metres at 3.11 g/t gold and 63 g/t silver from 28 metres;
25.9 metres at 8.74% zinc, 3.39% lead and 82 g/t silver from 141.6 metres;
15.7 metres at 10.39% zinc, 4.43% lead, 32 g/t silver and 1.01 g/t gold from 222.85 metres; and
24 metres at 2.73% copper, 0.56 g/t gold and 13 g/t silver from 86 metres.
In 2016 Peel completed its maiden drilling program at the project, confirming the high-grade mineralisation indicated in historic data.
Further drilling in 2017 delineated both the Wagga Tank-style mineralisation and the Southern Nights zinc-polymetallic discovery, defining a footprint of more than 2 kilometres of strike.
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MMG notified Peel in August that it had received an offer from a TSX-listed royalty streaming business to purchase the royalty interests associated with the tenements Peel had acquired from MMG in 2016.
In accordance with Peel’s first right of refusal under the royalty deeds, MMG offered to sell the royalty interest to Peel for $3.3 million in cash.
Peel elected to exercise its right and the agreement was settled last week, delivering full ownership of the Wagga Tank project to Peel.