Quarterly Report June 2016
Thackaringa Cobalt | Broken Hill, NSW
- Strong domestic & international investor interest in strategic technology metals; responsive to significant growth in demand across the Lithium-ion battery market
- Recent cobalt price increase based on quality/ethical supply issues
- Confirmed exploration potential with advanced planning for resource infill & expansion drilling and metallurgical test work programs
Heavy Mineral Sands | Murray Basin, NSW
- Updated Copi North Mineral Resource Estimate:
-- 14.2Mt at 6.6% total heavy mineral (THM), 2.8% slimes & 2% oversize comprising 54.4% ilmenite, 10.8% rutile, 11.3% zircon and 10% leucoxene
- Copi North Pre-feasibility study commenced
- Environmental monitoring ongoing (6 months to date)
- Relentless Resources (RRL) provide final $0.5m payment to earn 50% interest in HMS Projects (Copi North, Magic & Sunshine)
- BPL appoints new Chief Executive Officer, Mr Trangie Johnston
- Private placement raises A$992,000 with high demand for exposure to BPL's cobalt assets
- Share Purchase Plan to close 12 August 2016 for eligible shareholders
THACKARINGA COBALT - PYRITE PROJECT, BROKEN HILL, NSW
The global battery market is experiencing significant growth for service storage solutions for renewable energy generation and electric vehicles, led by large corporations including Tesla and Panasonic.
"With a planned production rate of 500,000 cars per year in the latter half of this decade, Tesla alone will require today's entire worldwide production of lithium ion batteries" - Tesla Motors.
Cobalt is a major component of Lithium-ion batteries, so demand is also expected to increase while supply remains uncertain. Some 94% of the world's cobalt is produced as a by-product of copper and nickel mining. More so, pending an election in the latter half of 2016, the world's largest supplier of cobalt (60%), the Democratic Republic of Congo, may be subject to increased political and economic turbulence with the potential to disrupt commodity exports.
Given this uncertain market future, BPL's 100% owned Thackaringa Cobalt Project offers a rare potential future source of cobalt. Favourably located proximal to existing rail and road infrastructure and just 25km southwest of Broken Hill, the project comprises a large mineralised system of potentially world class scale.
Currently hosting a global Inferred Mineral Resource estimate of 35.7Mt at 841ppm cobalt, BPL has identified significant opportunity to increase the shallow resource base through extensional and infill drilling.
Planning and regulatory approvals are underway for a proposed drilling program designed to:
- obtain drill core for metallurgical test work
- test potential extensions of the Pyrite Hill and Railway deposits with a combined conceptual exploration target of 37-59Mt at 600-900ppm cobalt
- infill existing resources for improved classification pending an updated Mineral Resource estimate
The Thackaringa deposits remain under-explored, with detailed geological mapping delineating over 10km of mineralised outcrop of which approximately 75% remains untested. Beyond potential strike extensions, mineralisation remains open at depth with future exploration to test below 250 metres.
HEAVY MINERAL SANDS PROJECTS, MURRAY BASIN, NSW
Copi North Resource Upgrade
A successful drilling program undertaken in early 2016 has supported a major resource upgrade for the Copi North Heavy Mineral Sand (HMS) deposit. The high-grade, strandline-type deposit now extends over 16km.
With drilling extending the high grade mineralisation approximately 2.6km to the northwest, the new mineral resource estimate increased total resource tonnes by 22%, while maintaining heavy mineral grade at 6.6%. Increased geological confidence and data density also improved resource classification with 77% now classified as Indicated.
The combined Indicated & Inferred Copi North Mineral Resource estimate comprises 14.2Mt at 6.6% total heavy mineral (THM), 2.8% slimes & 2% oversize (at a 2.5% THM cut-off) with a heavy mineral assemblage of 54.4% ilmenite, 10.8% rutile, 11.3% zircon, 1% monazite and 10% leucoxene.
BPL's Chief Executive Officer, Mr Trangie Johnston commented;
"The Copi North deposit is geographically well located with excellent grade continuity close to surface. These characteristics should support a cost effective, low capex mobile mining operation returning value for our shareholders."
The Copi North deposit remains open to the northwest and intermittently outcrops over an additional 2km strike. A conceptual exploration target comprising 0.5-1Mt at 2-5% THM, 3-6% slimes and 4-8% oversize has been derived through analysis of historical and recent drilling.
4The Copi North exploration target is as released 27 May 2016 under JORC2012. The potential quantity and grade of this target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in determination of a Mineral Resource.
Encouraged by the upgraded Mineral Resource estimate, a pre-feasibility study has commenced on the Copi North deposit. Initial work programs are focused on metallurgical and marketing studies, in combination with environmental monitoring (ongoing for 6 months) and project approvals.
BPL's strategy for the Murray Basin is for continued resource growth focused on the establishment of a sustainable pipeline of high grade, low tonnage deposits amendable to processing through mobile plant equipment capable of being deployed across the broader project area.
BPL's joint venture partner, Relentless Resources Limited (RRL) provided the final $0.5M payment to earn a 50% interest in three HMS tenements (Figure 1, see link below). RRL has contributed a total of $2M since early 2015.
To date, the JV has defined two shallow high-grade resources at Copi North (released 27 May 2016) and Magic deposits (released 10 September 2015). Both resources are open along strike in both directions.
BPL is continuing to assess the exploration potential on its currently 100% held tenements outside of the Joint Venture, being EL8308 (Nanya North), EL8309 (Springwood) and EL8310 (Milkengay) (Figure 1). Each tenement offers excellent opportunity for the delineation of high-grade, near surface heavy mineral sand deposits based on historical exploration data and regional analysis.
Appointment of New Chief Executive Officer
On 19 May 2016 BPL announced the appointment of Mr Anthony (Trangie) Johnston as its Chief Executive Officer replacing the executive functions of the Managing Director, Dr Ian Pringle, who retired on 30 April 2016.
Mr Johnston is a geologist with 20 years' experience in exploration, project development and mining activities. His career has to date spanned private, public and government sectors extensively across Australia and overseas jurisdictions.
Mr Johnstons' most recent appointment prior to joining BPL was as Chief Executive Officer to KBL Mining, a New South Wales ASX listed gold and base metal producer. During his time at KBL Trangie was responsible for overseeing a company restructure including major resource/reserve upgrades and new discoveries, which underpinned $35m of capital raising activities.
Mr Johnson holds a Bachelor of Science (Hons) in Geology from Newcastle University and a Masters in Economic and Mining Geology from the University of Tasmania.
On 2 June 2016 the Company announced that it had raised A$992,000 (before costs) after a share placement to sophisticated and professional investors. Far East Capital was Lead Manager to the placement.
The placement consisted of 12,400,000 fully paid shares at an issue price of A$0.08 together with one free attaching listed option for every two shares issued. The options are exercisable on or before 12 November 2019 at an exercise price of A$0.08.
The issue of the securities was made pursuant to the Company's placement capacity under ASX Listing rule 7.1. The issue was oversubscribed providing an indicative insight into the desire of the markets to currently attain cobalt exposure.
Share Purchase Plan (SPP)
BPL announced a Share Purchase Plan (SPP) to the market on the 24 June 2016, to allow eligible shareholders the opportunity to participate in the Company's capital raising program.
The issue price of shares under the SPP will be 8.1 Australian cents (A$0.081). The issue price represents a 19.7% discount from the volume weighted average price of BPL shares of the last five days and a 26.6% discount to the 10 days volume weighted average price, prior to the record date. The record date to establish entitlement to the offer under the SPP for eligible shareholders is Thursday 23 June 2016.
The offer under the SPP opened on Monday 4 July 2016 and closes at 5pm Sydney time on Friday 12 August 2016.
The Company's consolidated statement of cash flows is listed in Appendix 5B. At the end of the quarter the consolidated entity, following the private placement undertaken in early June had $1,391,675 in cash.
On 23 June 2016 the Company received a refund of $256,474 from the ATO for research and development related expenses associated with JV HMS expenditure.
The final JV payment of $0.5m was received on 1 July 2016.
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About Broken Hill Prospecting Ltd
Broken Hill Prospecting Ltd (ASX:BPL) is an Australian exploration company focussed on the discovery and development of strategic mineral resources across two primary geographical areas; the Murray Basin Region (Heavy Mineral Sands) and the Broken Hill Region (industrial, base and precious metals, including the Thackaringa Cobalt & Base/Precious Metal Project).
Broken Hill Prospecting Ltd