The Cobar Basin and surrounding areas have been mined for base and precious metals over 140 years. Cobar style deposits are typified by modest scale ~2-5Mt sulphide lenses containing variably abundant high-grade copper, lead, zinc, gold and silver. Recent recoveries in metal prices have reinvigorated production and exploration activity in the region.
Cobar is home to several active operations the most notable of which being Glencore’s CSA Mine (45ktpa Cu & 431kozpa Ag), Aurelia’s [AMI] Peak Mine (61koz Au & 214koz Ag, 9kt Cu, 13kt Pb & 10kt Zn) and Aeris Resources’ [AIS] Tritton Mine (23ktpa Cu). Both Sandfire’s [SFR] Endeavor Mine (~44ktpa Zn & 24ktpa Pb) and Manuka’s [MKR] (~2Mozpa Ag) operations remain suspended. Explorers with significant Resources in the region include Peel Mining [PEX] who controls the Mallee Bull, Wagga Tank and Wirlong deposits, and Helix Resources [HLX] with the Collerina and Canbelego deposits.
Recent geophysics driven exploration success for AIS at the Constellation prospect (AIS 10/6/21) seems likely to yield a modest scale resource of ~1.5% Cu which will eventually provide feed for the Tritton operation. HLX’s recent success at Canbelego (70% HLX|30% AIS) has included some impressive hits including 14m at 4.2% Cu (HLX 23/06/21) that is likely to improve the historic 1.5Mt at 1.2% Cu Resource. HLX have recently completed detailed VTEM over key project areas that may lead to additional high value discoveries.
With mine permitting becoming increasingly onerous perhaps deposit owners will look towards alternate development strategies. Most major undeveloped deposits are within trucking distance of existing operations. Consider for example, the addition of a flotation circuit to the Wonawinta plant for treatment of sulphide ore from PEX’s undeveloped sulphide resources. Likewise, HLX’s deposits would likely find a home at AIS’ Tritton operation, but could also be trucked to competitor plants.
While none of the following companies are formally covered, we see particular investment opportunity in junior explorers such as HLX, TLM and ALY with low market capitalisations and high-quality ground positions. The discovery of even a single high grade Cobar style deposit has the potential to generate significant shareholder value. We think improvements to electrical geophysics made in the last decade are likely to drive these discoveries.
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