FOLLOWING the strategic acquisition of a Canadian mining and exploration company in early 2011, Perilya has extended its focus beyond NSW’s iconic Broken Hill to explore international opportunities.
Perth-based Perilya was established in 1987, and has since assembled a diverse portfolio of base metal operations and exploration projects.
On top of the newly-acquired Cerro de Maimon mine in the Dominican Republic and the historic Broken Hill mine, Perilya is advancing the Flinders project in South Australia and the Mount Oxide project in Queensland. It also has extensive exploration programs under way in NSW (zinc, lead and silver), Queensland (copper, gold and zinc), Malaysia (copper and gold) and the Dominican Republic (copper, gold, silver and nickel laterite).
For the half year to June 2011, Perilya had a net profit after tax of $21.3 million, on the back of operating revenues of $167.8 million: an increase of 15 per cent and 32 per cent respectively on the previous corresponding period.
With a healthy balance sheet and low debt levels, Perilya stands in good stead to follow its strategic plan of investment in sustainable growth through ongoing exploration and further development.
The Broken Hill mine was acquired by Perilya in 2002. As one of the world’s largest and most recognisable zinc, lead and silver mines, it has produced more than 200 million tonnes of ore during its 127 year history. Along with the mine, Perilya also acquired well-developed infrastructure at Broken Hill with an inbuilt capacity and flexibility to operate at higher volumes and with a range of ore sources.
“Perilya has brought a new lease of life to the historic Broken Hill mine over the last nine years: increasing production and extending its life to more than 10 years based on existing reserves,” Perilya managing director and chief executive officer Paul Arndt said in a
“By approaching opportunities with a fresh set of eyes, using innovative approaches to tap into the rich seam of past knowledge, and introducing new practices and technologies, we believe that we can unlock the considerable latent value at Broken Hill.”
Despite its extensive history, many areas of Broken Hill remain under-explored. Perilya manages 1042sqkm of terrain, including the mine leases, and is undertaking a plan to expand the operations through a three-pronged plan comprising the development of the
Potosi Trend, assessment of the North mine and exploration within a 10km radius of the concentrator, in order to provide additional ore streams to fill spare concentrator capacity and create further development opportunities. During the September quarter, Broken Hill experienced the highest production quarter in 18 months, with 31,100t of combined lead and zinc plus 355,000 ounces of silver. In addition, recoveries for all metals were above plan for the quarter.
The September quarter C1 cash costs (cash costs net of by-products) remained within annual guidance despite significant adverse impacts on cost, with the Australian dollar growing ever stronger and weakening by-product metal prices.
These September results were achieved despite head grades for both lead and zinc being below expectations. These were offset by over-budget mine production and over-budget recoveries (87.3 per cent for lead, 91.1 per cent for zinc and 73.8 per cent for silver), allowing the record production to be achieved. Perilya’s Flinders project, near Leigh Creek in South Australia, has the potential for high-grade zinc suitable for direct shipping ore (DSO).
With total mineral resources of 972,000t grading 29.8 per cent zinc metal, containing almost 300,000t zinc metal, Perilya believed the Flinders project could withstand a range of zinc prices due to its DSO potential. The company previously mined the Beltana
deposit during a 12-month open pit mining and on-site crushing program in 2007, with more than 100,000t of contained zinc stockpiled and exported.
The company is now undertaking exploration and feasibility studies into similar projects within the Flinders area, where the high-grade nature of the ore would remove the need for metallurgical processing and thereby allow for direct shipping.
A drilling schedule undertaken between late 2009 and April 2011 comprising 94 holes for 13,068m resulted in an estimated initial indicated resource of 214,000t grading 34.36 per cent zinc and 1.35 per cent lead for the North Moolooloo deposit.
“This is an exciting discovery as the deposit represents one of the highest-grade deposits discovered in the area to date and extends from near surface to a depth of approximately 150 metres,” Mr Arndt said.
“North Moolooloo is the second significant zinc silicate discovery by the company in the Flinders Ranges – the first being the Reliance discovery in 2001 – and follows the company’s highly successful open pit Beltana development, also in the Flinders region. The
exciting thing with North Moolooloo is that preliminary work indicates that the ground conditions are very similar to the Beltana project, giving us a higher degree of confidence around the potential for an economic open pit mining operation.
“In light of these results, the company will carry out a scoping study into the potential mining of this resource whilst continuing to explore and seek to identify further resources in the Flinders region.”
Exploration during the September 2011 quarter focussed on testing copper sulphide and zinc silicate targets in the area of the former Mt Bayley copper mine. Minor copper mineralisation was intersected, and the results are being reviewed to determine if additional
work in the area is warranted.
Diamond drilling was also initiated in the Emu prospect area along the prospective structure hosting both the Reliance and North Moolooloo deposits. Work will continue to test targets generated by hand-held x-ray fluorescence soil surveying, rock chip sampling
and gravity datasets.
A feasibility study is currently under way at Perilya’s Mount Oxide copper project in the Mt Isa region of Queensland. The project has a 2008 mineral resource estimate of 203,000t of contained copper, and Perilya reported that it viewed it as having considerable potential as a low-cost, near-term development operation, given the strong copper market.
Prior to 1958, the Mount Oxide mine, within Perilya’s project area, produced 51,000t of secondary copper ore grading 21 per copper from an underground operation. An additional, unknown quantity of ore was also mined from an open pit between 1968 and 1971.
During the September 2011 quarter, Perilya continued the feasibility study with soil, fauna and flora, and cultural heritage surveys, and groundwater monitoring. Infrastructure studies on water and concentrate transport were progressed and a study of the current open pit water was undertaken to understand reagent regimes required to treat this highly-mineralised water.
Work undertaken to this time indicated that a hybrid open pit and underground mining configuration would be the most viable option for Mount Oxide.
Perilya anticipated that a development decision for the project would be made by the middle of 2012.
In late 2010, Perilya entered an agreement to acquire all of the issued and outstandingcommon shares of Canada’s GlobeStar Mining. At C$1.65 per share, the deal valued GlobeStar at about C$184 million. The deal was completed in January 2011, making Perilya the 100 per cent owner of the operating Cerro de Maimon mine (with a 1 per cent net smelter royalty held by original owner Falconbridge Dominicana). Cerro de Maimon, in the municipality of Maimon in Monsenor Nouel Province, 70km northwest of the Dominican Republic’s capital Santo Domingo, had approximately 6 million tonnes of open pit copper-gold reserves calculated to NI 43-101 standards in 2007 by the previous owners.
Perilya believed there was potential to further expand this reserve base from satellite deposits in the surrounding tenements, acquired as part of the deal with GlobeStar. Construction of the open pit mine, processing facilities and relevant infrastructure was completed in 2008. Contractors undertake mining using a fleet of articulated trucks, rigid body trucks and hydraulic excavators. The mined ore is sent to the appropriate sulphide or oxide stockpiles and processed by two separate processing facilities. Copper is recovered from the sulphide ores with co-products gold and silver, while the oxide ore is treated to recover gold-silver dore.
During the September 2011 quarter, Perilya released an updated ore reserve and mineral resource, the first since the initial 2007 estimate.
It reflected three years of mining depletion, and showed that the oxide plant could be expected to run for a further four years and the sulphide plant for at least 10 more years. The new estimates comprised: proven and probable sulphide ore reserves of 5.37mt grading 2.2 per cent copper, 0.85 grams per tonne gold and 27.6g/t gold; and proven and probable oxide ore reserves of 901,000t grading 1.58g/t gold and 26.9g/t silver. The updated measured, indicated and inferred combined oxide and sulphide resources were 10.57mt grading 1.42 per cent copper, 0.8g/t gold, 23.7g/t silver and 0.99 per cent zinc.
“The exciting thing about these results is that they do not include the 2011 drilling program, which has confirmed massive sulphide mineralisation continuing outside of this updated resource, both along strike and down dip,” Mr Arndt said in a statement. “As we drill deeper into the deposit we see an increase in the zinc grades from recent drilling, which supports the potential for both the establishment of a separate zinc circuit and the development of an underground mine to complement the open pit. These results
are not included in the updated resource and reserve statement.
“Perilya expects to release a further resource update mid-2012, and anticipates completing its study as to the potential underground mine and the feasibility of establishing a separate zinc circuit by the end of 2012 or early 2013.
By Rachel Seeley