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.
Operations
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.
Prefeasibility Study
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.
Analysis
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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