Mineral explorer Australian Mines (ASX: AUZ) is continuing to unlock resource potential at its flagship Sconi cobalt, nickel and scandium project in north Queensland, revealing further “outstanding” results from a resource expansion drilling program.
The company today announced it has engaged an independent resource consultant to immediately begin a re-estimation of the Sconi mineral resource after the latest program returned intersections grading as high as 3.4% cobalt.
Other notable intersections included 12m at 1.07% cobalt from a 1m depth, 9m at 1.02% cobalt from 1m, and 13m at 1.11% nickel from the surface.
According to Australian Mines, the repetition of intersections that grade in excess of 1% cobalt is “highly impressive” and “rarely seen”. To compare, the world’s biggest cobalt mine at Katanga in the Democratic Republic of Congo has an average grade of 0.54% cobalt.
“It is easy to overlook the fact that the apparent industry-accepted definition of “high grade” when referring to non-Africa projects is 0.1% cobalt,” the company stated.
“That the company’s resource expansion drilling appears to frequently intersect cobalt-rich zones that grade higher than 0.5% cobalt suggests that the Sconi cobalt-nickel-scandium project is continuing to live up to its status as a world class deposit”.
Australian Mines’ wholly-owned Sconi project has a proven ore reserve of 6.93 million tonnes grading at 0.79% nickel and 0.1% cobalt.
In November, the company released its bankable feasibility study supporting the commercial development of the project.
Its proposed development is based on three pits and a 2 million tonne-per-annum processing plant, with an 18-year mine life and average annual production revenue estimated at $512 million.
In today’s update, Australian Mines said the high-grade nature of the latest drilling results suggested a material resource upgrade may be possible, which would have a positive impact on the project economics.
“It is clear that this project has enormous potential to grow beyond the already strong commercial development case highlighted in November’s BFS,” Australian Mines managing director Benjamin Bell said.
“Our technical team successfully evaluated the extensional potential in areas at both the Greenvale and the nearby Lucknow deposits ahead of the campaign and it is clear from these results that the drilling has the potential to reinforce that modelling in a significant way,” he added.
According to Australian Mines, the updated resource statement is expected to be announced in April.
“Our focus now is on incorporating these outstanding results in a re-estimation of the mineral resource for the Sconi project, which will allow us to undertake what we believe will be a material optimisation review of our development case for Sconi, published in the initial BFS on the project,” Mr Bell said.
By afternoon trade, Australian Mines shares were up 2.27% to $0.045.