Junior explorers Impact Minerals (ASX: IPT) and Castillo Copper (ASX: CCZ) have teamed up to market the base metal potential of a large area in New South Wales surrounding the world-class Broken Hill silver-lead-zinc deposit.
The partners today announced the signing of a non-binding memorandum of understanding to form the Broken Hill Alliance, which also includes privately-owned Squadron Resources, a major shareholder of Impact.
Each company is contributing highly prospective tenure to the alliance to create the largest tenement footprint surrounding the Broken Hill mine.
The agreement is for an initial term of six months, in which Castillo will lead the marketing of the group’s ground holding to potential strategic partners.
If a suitable partner is found, the three parties will form a special purpose vehicle (SPV), which will acquire the relevant tenements and metal rights from Impact, Castillo and Squadron in exchange for equal 33.3% shareholdings in the new SPV company.
The combined tenure
According to Castillo, the geology across the combined tenure making up the BHA is highly prospective for base metals and contains several known priority exploration targets.
While the area has largely been underexplored for the past 20 years, historical drilling at the Dora East prospect southwest-northeast zone of the project intercepted significant mineralisation including 5.1m at 10% zinc, 0.8% lead and 40.4 grams per tonne silver from 148.m, including 1m at 26.8% zinc, 2.8% lead and 133g/t silver from 148.9m.
In the northwest quadrant, historic test drill targets with up to 2.1% zinc and 24g/t silver have been recorded, and in the northeast quadrant of the project, three priority targets have been identified for follow-up work.
Castillo said the next steps for the alliance is to commence discussions with prospective strategic partners to finalise an agreement, then establish timelines to start exploration and development work.
Castillo’s copper strategy
Castillo managing director Simon Paull described the alliance as a “clear win-win for all stakeholders”.
“For [Castillo], it will enable our Broken Hill asset to be optimised and value created for shareholders on a free-carried interest basis,” he said.
Meanwhile, the company plans to focus on progressing its three core copper pillar strategy and its planned dual listing on the London Stock Exchange.
“This is an exceptional deal that facilitates a quality asset being developed. More importantly, as we move forward with the London listing plans, its pleasing that our Broken Hill asset is being optimised,” Castillo director Ged Hall added.
Castillo’s copper strategy is focused on developing the Cangai copper mine in NSW, the Mt Oxide project in Queensland’s Mt Isa region, plus several prospective assets in Zambia.
Impact’s platinum group metals focus
While Impact is contributing silver-lead-zinc rights to the alliance, it will retain the rights to all of the platinum group metals (or PGMs, including palladium, platinum, rhodium, osmium, iridium and ruthenium) as well as associated nickel, copper and other precious metals across its entire tenement holding in the region.
In its own announcement, the company said its plan for 2020 is to focus on PGM-nickel-copper exploration at Broken Hill with three key prospects – Red Hill, Platinum Springs and Little Broken Hill – identified for follow-up work, including drilling.
“With palladium and rhodium yet again reaching record prices late last week and now being well funded following our recent successful capital raising, we are gearing up to return to exploration at our unique Broken Hill project, where our previous drilling there has delivered exceptional grades of all six platinum group metals (palladium, platinum, rhodium, ruthenium, osmium and iridium) not to mention gold, nickel and copper as well,” Impact managing director Dr Mike Jones said.
He said the company is delighted to team up with Castillo an Squadron to search for a strategic partner for the non-PGM and associated metal rights on its tenements.
“The Broken Hill region is highly prospective for silver-lead zinc mineralisation and it is only appropriate that we look for partners to help maximise the potential of our large strategic ground holding there,” Dr Jones said.
By early afternoon trade, Impact shares were up 15.38% on the news to $0.015. Castillo shares remained unchanged at $0.019.