Heavy Minerals (ASX: HVY) has begun its much awaited infill and extensional drilling program at the Port Gregory garnet project in Western Australia.
The program follows a “robust” scoping study for the project that was published in September, which was based on the resource of 135 million tonnes grading 4% total heavy minerals and 4.9Mt of contained garnet.
Key takeaways from the study were an initial 16-year mine life, plus low $110 million capital and operating expenditures due to the project’s proximity to Geraldton and existing infrastructure.
The proposed processing method was standard to achieve annual output of 141,000t garnet and 6,000t ilmenite.
This is expected to generate $1.59 billion in life-of-mine revenue and after-tax free cash flow of $588 million.
The scoping study gave Port Gregory a $253 million after-tax net present value (NPV) and a 33% after-tax internal rate of return.
Upcoming pre-feasibility study
Specialist mineral sands driller Bostech has been engaged to undertake the current aircore drilling program that will comprise 130 holes for 4,600m.
The program is designed to improve confidence in the existing resource prior to the pre-feasibility study kicking-off.
An extensional part of the campaign is also targeting an increase to the total resource base by testing targets to the east, north and south.
Heavy Minerals non-executive chairperson Adam Schofield said the company was “very pleased” to begin the infill and extensional drilling program at Port Gregory.
“This is an important step prior to commencing a pre-feasibility study and in delivering a potential upgrade in the resource.”
“We are excited to see results of this drilling in the near term and the positive impact a potential increase in the total resource will have on an already positive project NPV,” he added.
Initial assays from the campaign are anticipated in December, with the majority of results to flow in during February.
These will underpin a resource update, which is scheduled for March next year.
Mr Schofield said he expects the pre-feasibility study for Port Gregory will begin in April next year.
In readiness for the drilling campaign, Heavy Minerals has cleared 16km of access track at Port Gregory.
Red Hill program
Once the Port Gregory program winds up, drilling will move to the Red Hill prospect, which is 37km to the south of the project.
This campaign is anticipated to begin in late December or early January and will comprise 1,400m of aircore drilling.
Assays from this program are expected in March, and if positive, will feed into a resource for the prospect in the June quarter.
“The company will strive to add significant value to the project via resource expansion and feasibility work over the next 12 months and to derive maximum value for shareholders,” Mr Schofield said.
