PNX looks for more gold around Hayes Creek

In Australia, the untapped exploration potential of PNX Metals’ large Northern Territory tenement holding has recently been highlighted by a respected mining analyst as the company seeks to enhance the economics of its flagship Hayes Creek zinc polymetallic project.

The company completed a PFS on Hayes Creek, 170 km south of Darwin in the Pine Creek region, in July last year, confirming it to be a robust project generating A$266 million in pre-tax net cashflow over an initial 6.5-year period. But the company is eager to extend the life of the project out beyond 10 years and bolster its financial metrics.

To this end, it has been busily drilling a number of promising targets within trucking distance of Hayes Creek in an effort to prove up additional sources of feed.

In August, Hartleys analyst Paul Howard visited Hayes Creek and some of the exploration sites, coming away enthused about the region’s gold endowment and the likelihood of exploration success.

“While the Hayes Creek plant will produce a polymetallic concentrate that includes sulphide gold, there are numerous free gold mineral deposits and occurrences within the broader area including Cosmo-Howley, Woolwonga, Brocks Creek, Fountain head/Tally-Ho and Goodall with around 2 Moz produced historically,” he wrote in a recent note to clients.

“PNX is very excited about the gold opportunities around the broader Fountain Head and Tally Ho area where it acquired tenure in a land swap with Canadian company Kirkland Lake in early 2018. From our field inspections, it is very apparent just how under-explored the region is.”

The Banner prospect, which lies about 1.5 km northeast of the historic Fountain Head/Tally Ho pits, is where PNX drilled an impressive 6 m at 39.5 g/t Au from a depth of 54 m in August. The company also drilled beneath the historic pits and looks to have extended the mineralisation, returning results including 16 m at 1.4 g/t Au from surface at Fountain Head and 2 m at 4 g/t Au from 21 m and 5 m at 4 g/t Au from 107 m at Tally Ho.

“We eagerly await the results of ongoing drilling around Fountain Head/Tally Ho, as well as Moline, and have been encouraged by the prospectivity, both regionally and within PNX’s ground,” Howard said.

The Hayes Creek PFS forecasts an NPV10% of A$133 million, based on net smelter revenue from the sale of zinc and precious metals concentrates. With a low A$58 million of initial capital expenditure, the project is forecast to have a 73% IRR and pay-back period of just 15 months.

The proposed development at Hayes Creek is based on a steady state 450,000 t/y processing rate with ore sourced from initial open pit mining operations at Mt Bonnie and subsequent underground mining operations at Iron Blow. In total, approximately 3 Mt of ore are forecast to be processed over a 6.5 year mine life of which 98% is classified as Indicated Mineral Resources and only 2% as Inferred.

The PFS assumes construction of a purpose built processing plant with crushing, grinding, and flotation circuits to generate two valuable product streams, a zinc concentrate and a precious metals concentrate. Annual production in concentrates is forecast to be 18,200 t zinc, 14,700 oz gold and 1.4 Moz silver, or 39,100 t of zinc equivalent.  The concentrates will be trucked to the Port of Darwin and then shipped to international markets for sale and smelting and refining.  The development strategy at Hayes Creek includes the use of existing infrastructure including rail, road, high voltage power lines and water, designed to boost economics and reduce project risk.