Pacifico Minerals’ updated PFS proves technical and economic viability of Sorby Hills lead-zinc-silver project

Pacifico Minerals ASX PMY Sorby Hills lead-zinc
After a substantial mineral resource upgrade, Pacifico Minerals has updated the PFS for its Sorby Hills project, which has revealed “compelling” economic outcomes.

An updated pre-feasibility study by Pacifico Minerals (ASX: PMY) at the Sorby Hills project in Western Australia has confirmed the proposed $94.5 million development could economically produce a high quality, high grade lead-silver concentrate.

The study – centred around an open pit operation with a 1 million tonne per annum plant using conventional flotation processing technology – confirmed the 75%-owned project as a high-margin production opportunity for the young explorer.

It was based on an updated mineral resource estimate released earlier this month following an infill drilling campaign, which increased the project’s global resource base by 82% to 29.97Mt grading 4.7% lead equivalent (3.7% lead, 43 grams per tonne silver and 0.6% zinc, using a 1% lead cut-off).

Indicated resources also increased by 123% to 10.85Mt at 5% lead equivalent (3.9% lead, 46g/t silver and 0.4% zinc, using a 1% lead cut-off).

Technically robust

Pacifico conducted the PFS following completion of a phase one drilling campaign and associated technical reviews at the project, located near Kununurra in WA’s Kimberley region.

It has shown Sorby Hills could be a technically and economically-robust development comprising an integrated mining and processing operation to produce high value, high grade lead-silver concentrate over an initial eight year mine life.

The proposed mine plan targets high grade mineralisation within current indicated resources and combines ore drawn from three open pits with a processing plant employing conventional milling with a dense media separation (DMS) beneficiation plant between the coarse crush (dry end) and the grind and flotation circuit (wet end).

The production rate was selected after analysing previous DMS test work which highlighted the ease of upgrading the ore grade via simple gravity separation.

The proposed plant design has been considered conventional and straightforward, reflecting the favourable metallurgical characteristics of the Sorby Hills deposit.

The PFS indicated steady-state annual production of concentrate containing approximately 31,125tpa of lead and 1.17 million ounces per annum of silver.

Pre-production capital expenditure is estimated to be $95.4 million including $10.5 million contingency, with the project possessing a net present value of $243 million and a 62% internal rate of return at current metal prices.

Offtake agreements

Sorby Hills product will be marketed as a high value, high grade primary lead concentrate with substantial silver credits.

At a 65% contained lead grade, Pacifico believes it will be among the highest grade lead concentrates available commercially on the global market.

The company is exploring options to secure financing to cover the estimated capital and working costs, as well as binding offtake commitments from potential customers.

Pacifico is currently in discussions with China’s largest lead smelting and silver producing company with a view to locking in an offtake agreement.

“Given the favourable project economics and the strong demand for offtake indicated by the market, we believe Sorby Hills has the capacity to attract a reasonable level of debt funding,” the company said.

“We may also consider developing it in conjunction with one or more strategic partners at the project level.”

Next steps

Pacifico said it would now proceed to definitive feasibility study with a view to making a development decision for Sorby Hills by late-2020.

Programs within this stage will include an advanced drilling campaign, ore variability test work, a possible upgrade of resource and reserves estimates, and the production of marketing samples for prospective partners.

Results will allow definition of improved lead-silver resources and optimisation of the proposed mining schedule.

Lead demand

Approximately 65% of the world’s lead consumption is used for batteries in new cars and for the secondary replacement of batteries in existing vehicle fleets.

Other applications include stationary batteries (14%), industrial traction batteries (7%) and non-battery uses (13%).

Lead demand is forecast to grow at 1.9% per year from now until 2040, with increased demand from the automotive industry being the leading driver, with stationary battery applications for stable, low-cost energy storage running close behind.

Industry research shows the lead market is currently in a supply deficit, with very little new mine development occurring over the past decade.

London Metals Exchange figures show that at the end of 2017, lead concentrate stockpiles were at (or near) record lows of 18 days of global smelter requirements.

At midday, shares in Pacifico were up 20% to $0.006.

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