Blackthorn Resources on track for Kitumba Pre-Feasibility Study
Blackthorn Resources (ASX: BTR) remains on target to complete the Pre-Feasibility Study for its 100% owned Kitumba project in Zambia by end July 2013 and continues to intersect high grade copper from its ongoing infill drilling.
Assays from the drilling are due in August.
The company said the key PFS deliverable will be a report assessing the economic potential at Kitumba of a project based on design and cost estimation with a ±25% level of accuracy.
Initial infill drilling has intersected wide intercepts of high-grade copper mineralisation, consistent with previous drill results from the Kitumba deposit.
“The PFS is an important step in assessing the economic potential of the Kitumba Project on the path to production and we look forward to publishing the results of the study in due course,” managing director Scott Lowe said.
“Meanwhile the core observed in the infill drilling is showing very promising mineralisation consistent with the February 2013 Mineral Resource model.”
Kitumba is part of Blackthorn’s wholly-owned Mumbwa Project in west central Zambia that covers 250 square kilometres and is being explored for Iron Oxide Copper Gold style mineralisation.
Mumbwa has an Indicated Resource of 87 million tonnes at 1.17% copper.
Infill drilling, which is focused on converting a portion of the Indicated Resource at Kitumba to Measured Resource, is continuing with four holes totalling 2,200 metres out of an initial 5,000 metres completed to date.
Work to prepare samples for assay has commenced and first assay results are expected to be received by August 2013.
The infill drilling is being carried out by three rigs.
The prefeasibility study (PFS) for the Kitumba Project is making good progress and is on target to release the findings to the market around the end of July 2013.
Besides assessing the economic potential of the project, an integral part of the PFS has been the evaluation of both underground and open pit mining methods, as well as alternative mineral processing scenarios.
Progress has been made in a number of areas including the mining method, metallurgy and process plant design and environmental studies.
The PFS is currently comparing the advantages and disadvantages of open pit and underground mining methods, taking account of increased pre-strip costs evident from the revised resource model.
It noted that a smaller scale underground mine targeting the high-grade core of the deposit (Indicated Resource of 29.8 million tonnes at 2.1% copper using a 1% cut-off) has the potential to provide a better return on investment when compared with a larger scale open pit with higher capital cost for plant and pre-strip.
An underground scenario with sub-level open stoping is now being evaluated.
Metallurgical work is continuing with interim results indicating that the best results may be achieved from a plant design that involves a combination of flotation, leaching and Solvent Extraction and Electro Winning (SXEW) processes.
A number of alternative flow sheets based on these elements are being evaluated with a view to optimisation. In all cases being considered the majority of the metal by volume is produced in the form of cathode.
The final process design will take account of capital and operating costs as well as metal production volumes.
SXEW plants have the advantage of greatly reducing downstream logistic costs, offsetting increased site power and processing cost requirements. Producing cathode also has marketing advantages.
In addition to the PFS metallurgical testing, samples are being collected in the current phase of drilling for further test work in future feasibility phases, the focus of which will be the high-grade core.
Last, but not least, the environmental impact study is well advanced and is scheduled to be completed in the timeframe of the PFS.
The ongoing intersections of high grade mineralisation continues to add further value to Blackthorn Resources’ Kitumba Project.
Its expectation that an underground development could be more attractive than an open pit also bodes well, given the Scoping Study had concluded the project had positive economic potential.
With Blackthorn currently trading at close to 67% cash backing with cash of $28.6 million, or $0.174 per share, as of 31 March 2013 and a market capitalisation of $42.71 million and share price of $0.375, Proactive Investors considers the company to be undervalued considering the scale of its Mumbwa Project as well as the prospects of imminent zinc production from its 27.3% owned Perkoa project (Glencore 62.7%) in Burkina Faso.
The Perkoa project is expected to become operating cash flow positive during the fourth quarter of 2013.
With upcoming newsflow there are catalysts for re-rating.
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