THE Lachlan Fold Belt (LFB) is a geological subdivision in eastern Australia. Most prominent throughout NSW and Victoria, it extends into Tasmania, the Australian Capital Territory and Queensland, covering an area of about 200,000sqkm.
A long-standing proven mineralised region, the LFB has several world-class mines already operating within it, including Endeavour, Peak Mines and Mineral Hill, and recent discoveries at Tottenham, Mount Boppy, Hera, Nymagee and Wonawinta. Argent Minerals holds a 100 per cent interest in a pre-development project at Kempfield in Evans Shire, NSW. The project area lies within the LFB, and hosts a resource of more than 31 million ounces of silver, 260,000 tonnes of lead and zinc, 65,000oz of gold and more than 2 million tonnes of barite, contained within a 4km-long zone. Argent moved to 100 per cent ownership of the project after buying out joint venture partner Golden Cross Resources in April 2011. The area around Kempfield has a long history of mining and exploration activity, and contains a number of historical workings. According to the Department of Mines, barite mining started in the area in 1918 and has continued to the present day. Kempfield incorporates three major zones, known as BJ, McCarron and the Quarry. The adjacent BJ and McCarron zones – which contain more than 90 per cent of Kempfield’s total in-pit mining inventory – will likely be combined into one pit by Argent with a north-south strike length of about 1km and width of about 400m, based on recent drilling results.
The Quarry zone, an existing open pit developed more than 50 years ago to extract barite on a small scale, was in operation up until about 5 years ago. It lies about 1km north of BJ and McCarron, and contains 10 per cent of Kempfield’s total mineral resource.
On April 20, 2010 Argent released the results of a scoping study that estimated that the Kempfield project could produce 12moz of silver and 42,000t of lead and zinc, at a throughput rate of 600,000t of ore per year, for 10-and-a-half years. However, dramatic
increases in the silver price prompted Argent to review its cut-off grades. Basing its resource on November 2010 silver prices, the company suggested a revised cut-off grade from 40 grams per tonne of silver to 25g/t silver for the oxide and transitional mineralisation, and from 80g/t to 50g/t for primary mineralisation. This dramatically increased estimated production to 21moz of silver, 110,000t of lead and zinc, and 34,000oz of gold across a mine life of between 10 and 11 years. “When we originally did our scoping study on the project – 18 months to 2 years ago – we were looking at a project which was 600,000 tonnes a year for 10 years, to produce about 10 or 11 million ounces of silver,” Argent executive chairman Kerry McHugh said. “The increased price, together with the drilling that has been completed, has led to this increase in the total scale of the project.” In late November, London-based precious metals consultancy, Thomson Reuters GFMS, announced that silver prices could rise to US$50 an ounce or higher by the
end of 2012 as investment demand surged: a massive increase on the $18.67/oz price used in the April 2010 scoping study. The skyrocketing price of silver could potentially alter the mineral resource cut-off grades at Kempfield even further.
“We have got some very encouraging hits below the BJ pit [and] somewhat less encouraging under the McCarron pit, but still wide intersections of lower-grade ore,” Mr McHugh said. “What that drilling program shows is the system is open at depth. So as prices
increase, we can go deeper. “So Argent – more than a lot of other companies around Australia, which have somewhat different styles of resources – has large lower-grade deposits, which gives us very good leverage to increase output in line with the silver price.”
A Definitive Feasibility Study (DFS) initiated in April included more than 5000m of infill, metallurgical and geotechnical drilling. On October 24, Argent announced the results of an infill and extensional drilling program. At the McCarron zone, highlights included 10m at 0.37g/t gold, 141.8g/t silver, and 0.6 per cent lead and zinc from 4m. Importantly, the program indicated that this high-grade ore extended into the BJ zone. At the southwest corner of the zone, highlights included 48m at 0.62g/t of gold, 42.1g/t silver, and 4.3 per cent lead and zinc from 58m. While no significant intersections were encountered at BJ in October, further drilling in November confirmed extensive high-grade intersections up to 100m below the base of the proposed BJ pit, including 4m at 97.8g/t
of silver from 204m and 2m at 214g/t silver from 246m. The pit is currently modelled as being 170m from surface to base, but the drill results indicate that mineralisation extends
much further.
Mr McHugh said, however, that these consistent hits would not alter Argent’s original approach to the project. “We were confident that the system extended because mineralisation is very consistent right down to the base of the pit. We have mineralisation that is
very extensive, and the size and the depth of the pit was really onlyconstrained by lack of drilling,” Mr McHugh said.
“We have an economic project on our hands now, and these intersections that we have seen here, even though they aren’t bad, won’t support a deepening of the pit by 100m by themselves. “We would have to do a lot more drilling, putting the project on hold for
another 6 months while we drilled it out, and we aren’t prepared to do that.”
The $2.5 million DFS will be finalised by March 2012, with regulatory approvals expected soon after. Subject to these approvals being granted, completion of the study will lead to financing arrangements being made for the development of Kempfield. At the completion of the DFS – which will include a revised resource estimate on the back of the drilling program – Argent expects development approvals and mining lease grants to take the company through to September 2012. Capital requirements for development were estimated to be about $100 million and Mr McHugh said the company hoped to fund more than 50 per cent. The rapid progress of the silver, lead, zinc and gold project looks set to elevate Argent to the swelling ranks of NSW metal producers. “We would like to be a position to commence construction at the end of 2012/start of 2013,” Mr McHugh said.
“We think that it will probably take about 12 months for construction to be completed, so we hope to begin production in the first quarter of 2014.
By Reuben Adams
