PNX Metals’ Hayes Creek zinc-gold-silver project is located in a favourable mining jurisdiction in the Pine Creek region of Northern Territory, 170 km by road south of Darwin. It comprises 14 wholly-owned mineral leases including the Iron Blow and Mt Bonnie VMS deposits which were acquired in 2014 from Newmarket Gold NT Holdings, a subsidiary of Canadian-listed Kirkland Lake Gold Ltd.
The Hayes Creek Project’s JORC 2012 mineral resource estimate (85% Indicated, 15% Inferred) across the Iron Blow and Mt Bonnie deposits contains 177,000 t zinc, 238,000 oz gold, 16.2 Moz silver, 37,000 t lead and 10,000 t copper. This is equivalent to 1.1 Moz of gold, or 445,000 t of zinc.
A PFS was completed over the project in late June 2017 and announced to the market on 12 July 2017. This confirms it to be a high value, relatively low risk and technically strong development opportunity for the company. The study forecasts the project to generate an NPV10% of A$133 million, based on net smelter revenue from the sale of zinc and precious metals concentrates of A$628 million over a 6.5 year mine life. 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.
In his recent Chairman’s address to shareholders, Graham Ascough reported: “At Fountainhead, the preferred location for a processing facility for Hayes Creek, recent drilling has intersected high grade gold mineralisation beneath the historic pits, demonstrating that there is considerable potential to grow the mineral inventory both at depth and along strike.
“Approximately 1.5 km to the northwest of the historic mining area at Fountain Head, our initial drilling targeting a gold-in-soil geochemical anomaly returned an outstanding intercept of 6 m grading 39.6g/t Au (Banner prospect). This is an exciting result as we have many similar looking soil anomalies on the project that have yet to be tested. Also, the intercept is near surface and remains open in all directions. A subsequent diamond drill hole has been completed at Banner and assays are pending. Importantly, however, this follow-up drill hole has provided structural and geological information that will guide the next round of drilling at Banner to determine the extent of this high-grade intercept.
“Drilling at another exploration prospect, Cookies Corner, has also delivered solid results that suggest the presence of an extensive gold system. Gold mineralisation was intersected in all 16 drill holes of an initial program that covered an area of approximately 500m by 100m. Several holes terminated in mineralisation at the depth capacity of the rig and the mineralisation remains open in all directions. High gold grades from surface rock chip samples located on trend and north of the initial drilling provide an obvious target for future drilling programs and this area will be tested with RC drilling in the coming weeks.
“Hayes Creek remains a high value, relatively low risk and technically strong development opportunity. Our regional exploration is designed to complement and enhance the Hayes Creek development, and to identify new, potentially stand-alone resources. Continued success from this program would likely have a very significant economic impact on the project and the company.
“The advancement of the Hayes Creek Project towards development alongside the growth potential demonstrated by our regional exploration efforts has attracted new investors to PNX and we are pleased to welcome Delphi as a new substantial holder in the company.”
