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High-Quality Exploration Projects in a Low-Cost Jurisdiction

High-Quality Exploration Projects in a Low-Cost Jurisdiction

Pan Asia Metals (Pan Asia) is a specialty metals focused exploration and development company, with three assets in Thailand and one asset in Australia. The company also conducts target generation more broadly across Southeast Asia and may expand its portfolio with additional assets when appropriate.

The company has two wholly-owned advanced exploration projects, the Khao Soon Tungsten Project, located in the Nakhon Si Thammarat Province (Figure 1), and the Reung Kiet Lithium (Lepidolite) Project, which is located in the Phang-Nga Province (Figure 1). Pan Asia is also completing initial exploration at the 100%-owned Bang Now Lithium (Lepidolite) Project, located within the Chumphon Province (Figure 1).

Figure 1 - The Location of Pan Asia Metals Projects
 
Source: Pan Asia Metals

The company also owns 100% of the Minter Tungsten Project, which is located north of the historic Ardlethan Tin Mine in the Lachlan Fold Belt in New South Wales, Australia.

Pan Asia focuses its efforts on advancing high-quality projects that have the potential to be low-cost operations. The company differentiates itself from its peer group by focusing on advancing its projects to produce higher-value downstream products, rather than lower-value concentrates (Figure 2).

This strategy seems robust given that Pan Asia is focussing on Thailand, which is a low-cost advanced industrial economy; according to the Observatory of Economic Complexity Thailand is ranked 25th in economic complexity, a proxy for the state of industrialisation.

Figure 2 - Pan Asia Metals Strategy
 
Source: Pan Asia Metals
Figure 3 - Stope at Khao Soon
 
Source: Pan Asia Metals

Exploration Stage — Exploration Target Defined

Pan Asia entered into a farm-in arrangement with Thai Goldfields in late 2014 and later Thai Goldfields took equity in Pan Asia and the farm-in arrangement was terminated, leaving Pan Asia with 100% of the project.

Pan Asia subsequently has since conducted additional soil and rock chip sampling, mapping programmes, and induced polarisation surveys and two drilling programmes.

Exploration work has discovered district scale, tungsten anomalism in soils, which is supported by rock samples with highly elevated tungsten associated with prospective geology.

Figure 4 - Drilling at Khao Soon
 
Source: Pan Asia Metals
 
 
 
Figure 5 - Size and Grade of Global Tungsten Deposits
 
Source: Metals & Mining Research Corporation, Size of data point proportional to contained WO3
Figure 6 - Photograph of Khao Soon Tungsten Deposit
 
Source: Pan Asia Metals
Figure 7 - Tungsten bearing breccia at Khao Soon
 
Source: Pan Asia Metals
Figure 8 - Khao Soon Cross section
 
Source: Pan Asia Metals
Figure 9 - T2 Prospect at Khao Soon
 
Source: Pan Asia Metals

Over 10 prospect areas have been identified with a combined strike length of about 10 km.

Pan Asia has conducted diamond drilling (Figure 4) programmes consisting of 22 holes for a total of 1,912 m drilled at the Than Pho, Than Pho West, Rabbit and Last Hill prospects (Figure 5) in 2018 and 2019.

The drilling located tungsten mineralisation extending down dip of the soil anomalies.

This drilling has allowed the company to define a JORC 2012 compliant Exploration Target of 15 Mt to 29 Mt at a grade between 0.2% WO3 and 0.4% WO3 (Figure 6 – red data points).

The potential quantity and grade of the exploration target is conceptual in nature. There has been insufficient exploration to estimate a mineral resource and it is uncertain if further exploration will result in the estimation of a mineral resource.

Should Pan Asia be successful in establishing a compliant mineral resource estimate at a similar scale to the Exploration Target, Khao Soon would be a mid-grade and mid-size tungsten deposit compared to its peer group (Figure 6 – red data points), with between three million (mln) metric tonne units (mtu) (30,000t) and 11.8mln mtu (118,000t) of contained tungsten.

It is important to note that the drilling Pan Asia has so far completed is only at reconnaissance level to shallow depths and has only partly tested the prospects drilled, which remain open at depth and along strike.

Numerous other targets remain to be tested by drilling including high-grade surface geochemical anomalies and deeper targets associated with geophysical anomalies that commonly exist at depth at many prospects.

Deposit grade is an important factor to consider when assessing a project; however, it should not be seen as a prerequisite for a projects potential economic metrics.

Location, depth, hardness, labour costs and power costs, as well as many other factors, also have significant influence over a project's potential economics.

Pan Asia believes its projects have a strategic advantage compared to its peer group due to the low-cost operational environment in which its projects are located.

Geology

The area that contains the Khao Soon Deposit is dominated by Silurian-Carboniferous sedimentary rocks, known as the Tanaosi Group.

The Tansaosi Group is composed of siltstone, minor sandstone and calcareous inter-beds that have been intruded by the Jurassic-Triassic aged Khao Luang Granite batholith to the north and east of the Khao Soon Deposit.

Tungsten mineralisation is hosted within brecciated and silicified sediments that often form prominent ridges in the area (Figure 7).

The hydrothermal breccia (Figure 8) occurs as a series of semi-continuous pipes, pods, lodes and fracture fill zones (Figure 9).

The historical Khao Soon Mine workings are scattered over an area about 1 km long and 500 m wide but there are also many other zones of mineralisation associated with historical workings throughout the project area.

The Khao Luang Granite is not believed by the company to be the source of the mineralised fluid; the company believes that there is a younger non-outcropping granite that formed the tungsten mineralisation. Regional magnetic data suggests the source granite occurs around 1 km below the Khao Soon project area.

The tungsten bearing mineral in the area is ferberite (FeWO3), which an iron-rich member of the wolframite group.

Ferberite forms the matrix of the mineralised breccia in association with unmineralised clasts of silicified metasediment.

Oxidised mineralisation occurs in the weathered breccia zones above fresh breccia.

Much of the exploration target is likely hosted in near surface oxidised mineralisation.

Lower-grade tungsten mineralisation is also hosted in laterite at Target 1 and Target 2.

Pan Asia believe the tungsten in laterite is a geochemical anomaly indicating potential for tungsten mineralisation at depth. Some induced polarisation anomalies seem to support this (Figure 10).

Next Steps

At the Khao Soon Tungsten Project, the company is currently interpreting the results of a second induced polarisation (IP) survey. The IP programme focused on the Target 2, Than Pho West, Last Hill and Rabbit prospects.

The data will be used for drill target planning ahead of a maiden resource estimate and scoping study. Metallurgical and other technical studies will be undertaken as required.

Figure 10 - The Reung Kiet Project
 
Source: Pan Asia Metals

Reung Kiet Lithium Project

Introduction

The Reung Kiet Lepidolite Project is located in the Phang-Nga Province in southern Thailand (Figure 1), an area of extensive historical tin mining (Figures 11 and 12). Pan Asia holds a 100% interest in three special prospecting licences covering about 40 km2.

There are two main prospects that the company has initially targeted within this area, the Reung Kiet prospect to the southern end of the tenement package (Figures 11 and 14) and the Bang I Tum Prospect to the north (Figure 10).

At the southern prospect, lepidolite bearing pegmatites have been defined over a strike length of 1 km with high-grade Li2O rock chip samples from the southern portion of the pegmatite averaging 1.41% Li2O. Initial drilling on the northern section of the pegmatite beneath the old pit returned lower-grades, leading the company to focus its next phase of work on the higher-grade southern section. The pegmatites are open along strike to both the north and south.

At Bang I Tum, the northern prospect within the Reung Kiet Lepidolite Project, there are a series of alluvial and hard rock tin pits and initial sampling as demonstrated the potential for widespread lepidolite mineralisation (Figure 13) associated with the southern end of the historic tin pits where an 800 m long zone of Li2O in rock chips has been delineated, with average grades of 1.29% Li2O. The trend is also supported by anomalous Li2O in soils.

Pan Asia believes that the combined strike length, based on pits, exposures and rock chips, is greater than 2.5 km long.

Figure 11 - Tin working at Reung Kiet
 
Source: Pan Asia Metals
Figure 12 - Lepidolite at Bang I Tum
 
Source: Pan Asia Metals
Figure 13 - The Reung Kiet Prospect
 
Source: Pan Asia Metals

History

The area covered by the Reung Kiet Lepidolite Project of investigation was a major tin mining district up until the 1980s.

In the late 1960s a joint Thai and British geological survey study of the area discovered lepidolite in pegmatites being mined for tin at the Reung Kiet and Bang I Tum open-pit mines. This study included geological mapping, geochemical analysis and mineralogical descriptions of various tailings, concentrate and rock samples.

Exploration Stage — Assessing Target Areas

Pan Asia obtained its licences for the project in March 2019. Since then, the company has undertaken soil and rock chip sampling, mapping and mineralogical studies as well as an initial drilling (Figure 15) and trenching programme (Figure 16).

The maiden drill programme consisted of five diamond holes for 587.5 m, which targeted the main pegmatite zone beneath the open cut. Results included: 6.3 m at a grade of 0.65% Li2O (lithium oxide) from 66 m; and 5.8 m at a grade of 0.73% Li2O from 80 m (RKDD001); and 15.6 m at a grade of 0.82% Li2O from 55 m, including 9 m at a grade of 1.00% Li2O (RKDD002).

Mineralised zones are open north of hole RKDD001 at the northern end of the old pit.

Nine trenches were also completed over 307 m. Trenching identified a large open-ended lepidolite rich pegmatite dyke swarm, up to 100 m wide, to the south of a historical open pit. Results from 90 samples in the trenches averaging 1.41% Li2O with accessory rubidium, tin and tantalum present in all samples.

These studies have demonstrated the presence of lepidolite associated with extensive pegmatite dykes (Figures 17 & 18); some of these dykes have been exposed by previous mining and are up to 25 m wide.

Geology

The Reung Kiet Lithium Project is located within the Western Province of the South East Asian Tin and Tungsten Belt.

The licence areas consist of sedimentary rocks of the Phuket Group, with interbedded mudstone-sandstone. The Phuket Group has been intruded by the Mesozoic aged Khao Po Granite and lepidolite bearing pegmatite dykes and veins along the north-east trending Phang Nga Fault Zone.

The pegmatite dykes within the swarm are rarely more than 3 km from the Khao Po Granite. The pegmatites are fine-grained and sometimes aplitic. They are composed of quartz, albite, lepidolite, cassiterite and tantalite as well as other accessory minerals including some rare earths.

Next Steps

Pan Asia is conducting metallurgical studies on samples from the Reung Kiet prospect. Preliminary results are very positive, with rougher concentrate test work recovering 93% of lithium at a concentrate grading 2.6% Li2O. Additional optimization work is being undertaken. The studies are assessing the viability of producing a lepidolite concentrate, as well as assessing the potential to recover kaolin clay and quartz to facilitate a zero waste outcome. Pan Asia is also planning to undertake further drilling and metallurgy, moving the project towards a maiden resource estimate and a scoping study.

Figure 14 - Lepidolite bearing drill core
 
Source: Pan Asia Metals

 

Figure 15 - Trenching at Reung Kiet
 
Source: Pan Asia Metals

 

Figure 16 - Lepidolite bearing dykes
 
Source: Pan Asia Metals
Figure 17 - Outcropping Lepidolite
 
Source: Pan Asia Metals

Bang Now Lithium Project

Introduction

The Bang Now Lepidolite Project, is located within the Chumphon Province (Figure 1). It is comprises two exploration licences that cover an area of 5 km2, which include the prospective Ranong Fault Zone and includes large scale historic alluvial-eluvial tin mines (Figure 19).

The Bang Now Project is earlier stage than Pan Asia’s other projects but initial rock chip samples in and to the north of the historic alluvial tin mine have demonstrated the presence of high-grade Li2O (Figure 20).

Pan Asia has actively engaged with the local village heads and representatives of the district administration and local villagers have even assisted the company with access in and around the old mine area for the reconnaissance exploration programme. To date only a small part of the prospect area has been visited.

History

Bang Now is a former tin mine which operated into the 1980s. There is little information available regarding the deposit. Tin was recovered from alluvial deposits and weathered pegmatites.

 

Figure 18 - The Bang Now Lepidolite Project
 
Source: Pan Asia Metals

 

Exploration Stage – Initial Field Work

Pan Asia has conducted initial reconnaissance exploration work at Bang Now, during which Pan Asia identified a potential swarm of lepidolite bearing pegmatite dykes covering an area up to 400 m wide and 2 km long.

Outcrop, float and dump sampling has yielded grades between 0.30% and 3.38% Li2O, with an average of 1.49%. Applying a 0.5% Li2O cut-off to these samples results in capturing 83% of the samples and increases the average grade to 1.75% Li2O. Importantly, one of these samples is of mica rich metasediment that returned 1.51% Li2O. This may indicate that lithium mineralisation is more broadly distributed "country rock" as well as occurring in pegmatite.

Figure 19 - Outcropping Lepidolite
 
Source: Pan Asia Metals

Geology

The Bang Now project is part of the Ranong Tinfield. At Bang Now Pan Asia has identified lepidolite bearing pegmatite dykes are hosted in Palaeozioc aged metasediments belonging to the Phuket Group. Granitic rocks are not mapped in the area; however, regional magnetics suggest that concealed granites are located nearby, at depth. The pegmatite dykes at Bang Now are interpreted to be part of a dyke swarm that may occur over an area up to 400 m wide and 2 km long. The dykes strike north northwest to south southeast and dip 50 to 60 degrees to the northeast. In limited outcrop, the dykes are up to 0.6 m wide but historical data indicates that individual dykes can be up to 2 m wide.

Next Steps

Pan Asia is planning to cut access tracks and lines in order to conduct additional a mapping and sampling programme at Bang Now, ahead of a maiden drill programme.

Figure 20 - Pan Asia Share Register
 
Source: Pan Asia Metals

Capital Structure

Pan Asia's has 101mln shares in issue, with 50mln shares to be issued as deferred consideration associated with the acquisition of its portfolio of projects from Thai Goldfields. The deferred consideration will be issued on the achievement of the following milestones: 25mln share issued upon definition of a 20,000 t WO3 JORC resource estimate; and 25mln shares issued upon definition of a 50,000 t Li2O JORC resource estimate.

The maximum number of these shares that can be distributed in any 12 month period is capped at 10% of the outstanding shares at the beginning of the period, insuring new investors do not experience onerous dilution.

Pan Asia's current register is tightly held with directors holding 48.8% of the business and the top five largest shareholders owning 80.7% of the issued share capital (Figure 21).

Thailand Overview

In Thailand, the Prime Minister is the head of the Government and the chair of the cabinet of Thailand. The country is a constitutional monarchy. The current Prime Minister is Prayut Chan-o-cha, a retired Royal Thai Army General who has led the country since the coup d'état in May 2014. The military junta ruled Thailand between May 2014 and July 2019. As of August 2019, the National Assembly elected Prayut Chan-o-cha as the Prime Minister, he represents the Palang Pracharath Party, which has ties to the National Council for Peace and Order.

Mining is an important part of the Thai economy accounting for 2.1% of gross domestic product in the fourth quarter of 2019 (Source: https://tradingeconomics.com/thailand/indicators) with the bulk of mining activities focused on gypsum and limestone as Thailand is the largest producer of cement in SE Asia. The corporate tax rate for mining companies is 20% and the royalty rate as at 20 March 2020, for tungsten trioxide is 5.8%.

Thailand’s royalty for tungsten is based on the Chinese price in Yuan for a 65% WO3 concentrate and converted into Thai Baht. The royalty has a sliding scale, with the maximum bracket of 20% reached when the 65% WO3 Con price is RMB166,667/t or US$23,474/t (RMB/USD 7.1). The price on March 20 was RMB90,000/t, or US$12,676/t, and the ammonium paratungstate (APT) price then was c. US$22,900. This means APT would need to reach c. US$42,400 for the maximum royalty bracket to be reached, the actual royalty payable at this level is 9.4%. We would expect Thailand’s Department of Primary Industries and Mines to apply a similar sliding scale to lithium.

The new Minerals Act, BE 2560, came into effect on 29 August 2017, repealing previous legislation, though there are many existing mining rights to which the old Mineral Act still applies. The minister of Industry is charged with the administration of the Minerals Act but is removed from the exploration and mining licence application process, a result of the issues surrounding the Kingsgate / Chatree gold mine and the suspension of the licence. Pan Asia reports that the application process is transparent but takes time as there is a requirement to obtain community support at the front end of the application process, which acts to de-risk the licenses to a degree.

There are three types of exploration licences in Thailand: General Prospecting Licence (GPL), the Exclusive Prospecting Licence (EPL) and the Special Prospecting Licence (SPL).

A GPL is a non-exclusive, non-renewable and non-transferable licence that is only valid for one year. Under this licence, only geological, geochemical or geophysical surveys can be undertaken and mineral sampling, such as pitting, trenching and drilling is not allowed. During an EPL and SPL application an exploration company can conduct these activities over the application under a GPL license.

An EPL grants sole mineral prospecting and exploration rights within a designated area. It is valid for two years. An EPL is limited to an area not exceeding 2,500 rai or 4 km2.

An SPL is valid for five years and is non-renewable but re-application is possible if commitments have been met in the first five years, as Pan Asia has demonstrated. The exploration area that may be granted under an SPL cannot exceed 10,000 rai or 16 km2. The SPL holder will get sole rights to acquire a mining licence for the area the SPL covers.

Upon discovery of a commercial mineral deposit, a prospector must apply for a Mining Licence (ML) in order to conduct mining activities. An ML is up to 1 km2 but there is no limit to the number of MLs that can be applied for. A ML is valid for up to 30 years and may not be transferred without the approval of mining right issuers.

Figure 21 - PRS Risk Index
 
Source: Pan Asia Metals

 

The Political Risk Services Group, an independent quantitative political risk rating and forecasting firm based in Syracuse, New York, has given Thailand a score of 76/100 in its Global PRS Risk Index, 100 being most favorable, ranking Thailand 37th (Figure 22).

 

Figure 22 - Transparency International’s Corruption Map of Thailand
 
Source: https://www.transparency.org/cpi2018
Figure 23 - World Bank: Ease of Doing Business Index
 
Source: https://data.worldbank.org/indicator/IC.BUS.EASE.XQ?view=map

The Transparency International Index ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople. It uses a scale of 0 to 100, where 0 is highly corrupt and 100 is free of corruption. Thailand has a Transparency International Corruption Perception Score of 36/100 (Figure 23), which is less corrupt than surrounding countries such as Myanmar, 29/100, Loa, 29/100, and Cambodia 20/100, but behind the nearby countries such as Vietnam (37/100) and Malaysia 53/100.

More than two-thirds of countries globally score below 50/100, and the average score is 43/100. The average score for the Asia-Pacific Region is 44/100. On a global rank, Thailand is 101 out of 180 countries, demonstrating that Thailand is in the mid-range of the corruption index, relative to other countries globally.

The World Bank: Ease of Doing Business Index provides an objective measure of business regulations for local firms in 190 economies by ranking them from best -1 to worst - 190.

The World Bank data for Thailand is in contrast to the data from Transparency International, the Ease of Doing Business Index that ranks Thailand 21st out of 190 countries globally. Thailand is also ranked much higher than surrounding countries such as Myanmar 165/190, Lao 154/190, Cambodia 144/190 and Vietnam 70/190 but is ranked below Malaysia, which sits at 12/190 (Figure 24).

Thailand is not currently rated by the Fraser Institute Annual Survey of Mining Companies, 2019.

Thailand and Electric Vehicles

Thailand appears to be establishing itself as a leading Southeast Asian country in the roll-out and development of electric vehicles. While behind the likes of China, Korea and Japan, the country is gaining ground.

The electric vehicle market in Thailand is expected to grow at a compound annual growth rate of 21.6% between 2018 and 2025, though this may prove to be an underestimate as recently published Thai Department of Land Transport statistics show that between 2019 and 2018 electric vehicle registrations increased by 380%. Plug-in hybrid electric vehicle registrations we up by 51%.

The electric vehicle industry is being promoted under Thailand's S-Curve policy, which is providing economic incentives to electric vehicle manufactures by reducing in-country production costs. Thirteen companies were granted these incentives to date, including Toyota, Honda, Nissan, Mazda, Mercedes-Benz, BMW, SAIC Motor-CP, FOMM, Mitsubishi and Mine Mobility.

Mercedes recently announced that it has begun assembling lithium-ion batteries at its new factory in Thailand; these batteries are destined for Mercedes plug-in hybrids manufactured in Thailand. BMW has also begun assembling lithium-ion batteries in Thailand for its X5 and Toyota had shifted its hybrid vehicle battery recycling operations to Thailand from Belgium.

With such a burgeoning electric vehicle industry in Thailand, and the in-country demand for source materials for batteries and electric vehicles. It would seem logical that companies developing domestic sources of the required source materials would be actively encouraged by the Government.

Quick facts: Pan Asia Metals Ltd

Price: 0.16 AUD

ASX:PAM
Market: ASX
Market Cap: $20.16 m
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Pan Asia Metals gearing up for drilling at key tungsten project as it nears...

Pan Asia Metals Ltd (PAM) managing director Paul Lock says they're preparing a drill program and making arrangements to mobilise drilling equipment from its Reung Kiet Lithium Project in southern Thailand so drilling can start at its Khao Soon Tungsten Project. PAM is looking to raise between...

on 6/8/20

22 min read