Perth, Oct 31, 2008 AEST (ABN Newswire) - The Prairie Downs Metals Limited (ASX:PDZ) Base Metal Project is located approximately 100 kilometres southwest of Newman in the Eastern Pilbara region of Western Australia.
Currently the project hosts a total global inferred and indicated resource of 4.7 million tonnes at a grade of 6.3% zinc, 18g/t silver and 1.8% lead at a nominal lower cut off grade of 1% zinc (refer to Table 2.0 attached to this announcement). This resource contains 295,000 tonnes of zinc, 2.6 million ounces of silver and 83,000 tonnes of lead.
Included is a High Grade Resource of 1.6 million tonnes at a grade of 12.3% zinc, 36g/t silver and 3.7% lead. In addition, Prairie Downs Metals Ltd has successfully targeted mineralization along strike including "Costean Seven" and "Kerrs Find" prospects for zinc, lead, silver, copper, vanadium and gold. Reconnaissance and resource definition results are pending.
RESOURCE DRILLING
Resource drilling of the Main Lode has been completed and the initial results are very encouraging. A total of 25 RC holes for 4,817 meters have been drilled with target depths being achieved in three holes which intersected both alteration and sulphide mineralisation. All but three holes completed have reached target mineralization with the remainder of the holes (21 in total) requiring diamond tails to reach anticipated mineralized horizons. A total of 11 diamond tails have been completed for 1,365 meters.
The primary objective of the resource drilling program is to increase the high grade resource to underpin at least five years of high grade production. Conceptually the Company may extend high grade resources from 1.6 million tonnes to between 2.0 million tonnes and 2.5 million tonnes grading 8-12% zinc, 1-2% Pb and 10-20 g/t Ag. These potential resources are not estimated due to insufficient exploration to date but are suggested as possible on the basis of unclosed high grade mineralization, previous drilling to depth not included in the high grade resource due to low drill density, and a 3D geological interpretation. Current plant and mine design plans on this basis would support five years of high grade production. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource Initial results have been received for the first of the diamond tails as described below:
- MAIN LODE, PDD111, 6.2 meters at 8.1% zinc, 1.2% lead and 12g/t silver (9.6% zinc equivalent) from 201.8 meters. This intersection includes 4 meters at 11.9% zinc, 1.4% lead and 15g/t silver (13.7% zinc equivalent).
- MAIN LODE, PDD325, 1.7 meters at 8.7% zinc, 1.7% lead and 48g/t silver (10.8% zinc equivalent) from 242.7 meters.
Notes:
1. Zinc equivalent % = Zinc % + (Lead %*(USD Lead price per tonne/ USD Zinc price per tonne))
2. Zinc price of USD1,146/t and lead price of USD1,440/t as per London Metals Exchange 29th October 2008.
These results demonstrate the continuation of the ore body to greater depths and support geological breakthroughs previously announced. The mineralization is variably broad, continuous and high grade.
Drilling conducted during this quarter has been designed to maximize the contribution of indicated resources and add to inferred resources. In addition, the company (Prairie Downs Metals Ltd) aims to increase the high grade indicated and inferred resources. These results demonstrate the realization and potential of the deposit at modest mining depths and support the Company's resource definition strategy.
EXPLORATION DRILLING
Assay results received from the recent first drill program at Costean Seven have confirmed the existence of mineralization derived from diamond drilling near surface. All holes were mineralized to varying degrees with respect to copper, lead, zinc and silver. Mineralization is zoned. Intermittent narrow intersections variably graded up to 19.5% Pb, 0.9% Cu, 7.6% Zn and 245ppm Ag.
These results demonstrate the continuation of base metals mineralization over 3.7 kilometres strike. The company intends to commission an Aircore drilling program in the short term, pursuing base and precious metals, to the west of the Main Lode mineralization. The company envisages high drill production and spatial coverage, with a view to improved subsequent targeting and cost effective contribution to the resource base.
RECONNAISANCE EXPLORATION
Earlier in the year the Company undertook a detailed mapping program at the Project to provide geotechnical data and to gain a better understanding of the geology. Initial analysis using a Niton XL3T handheld XRF machine indicated the existence of significant vanadium mineralization in association with barite, copper, lead, zinc and silver. Analysis of surface samples collected has been completed which confirms the existence of vanadium mineralization yielding grades greater than 1% V2O5 over 3.7 kilometres of strike length.
Grades greater than 1% are rarely achieved in a mining scenario. Windimurra mine produced vanadium at an average grade of 0.46% vanadium. Other Australian projects at an advanced stage include Barrambie (Reed Resources 0.8% V2O5), Balla Balla (Aurox Resources 0.65% V2O5 and 45% Fe) and Bigrlyl (Energy Metals Ltd 0.19% V2O5 and 0.17% U3O8).
Internationally, production from from the Bushveld Complex averages 1.5% V2O5 from many operations held by Xstrata and Highveld steel. This constitutes approximately 45% of world production. Mount Kachkanar, Gusevogorsk and Pervoural'sk in Russia, contain approximately 0.5% V2O5 and are operated by Nizhny Tagil Iron and Steel Works and the Chusovskoy Metallurgical Works. Largo Resources in Brazil reports production from a reserve grading 1.35% V2O5.
Vanadium enriched carbonitised volcaniclastics and a barite unit are unconformably juxtaposed with Zn/Pb/Ag mineralisation, in veins hosted by mafic intrusives and volcanics. The carbonistised volcaniclastics and barite cap, outcrop over approximately 4 kilometres. Vandium grades above detection limits (>1%), as proffered by an independent laboratory (ALS Laboratory). Absolute vanadium concentrations are not reportable due to the specialised nature of the samples and very high grade. At this stage preliminary investigations suggest the vanadium to be extractible by conventional methods. Preliminary and independent mineralogical analysis by "Roger Townend and Associates", described samples as mottramite and vanadinite (both of which are vanadium ore minerals) in spatial association with copper minerals such as chalcocite, malachite, covellite, bornite, digenite and chalcopyrite, in addition to barite.
In view of the high grades encountered in the preliminary work described above, the Company has commissioned a mineralogical study in relation to vanadium, and is investigating metallurgical studies.
FEASIBILITY RESULTS
Abesque Engineering & Construction Ltd (Abesque) has completed a feasibility study covering the process plant and related supporting surface infrastructure. This study is now complete and the results are summarised below. The design is intended to treat 500,000 tpa of base metal ore, which at a 91.3% availability, equates to a throughput rate of 62.5 tph.
The process plant is designed to produce 113,240 dry tonnes of zinc concentrate per annum and 18,022 dry tonnes of lead concentrate per annum. The key parameters for the two concentrates are set out in Table 1.0 and Table 1.1.
Table 1.0-------------------------------------Zinc Concentrate Analysis -------------------------------------Zinc Concentrate Unit-------------------------------------Concentrate tonnes dtpa 113,240Zinc grade % 50.3Zinc metal content dtpa 56,960Silver grade ppm 121Silver metal content ounces 201,585Lead grade % 3.9Lead metal content dtpa 4,420Gold grade ppm 0.21Sulphur grade % 29.2Iron grade % 5.9Silica grade % 2.3Copper grade ppm 895Arsenic grade ppm 99Bismuth grade ppm 0.3Antimony grade ppm 577Mercury grade ppm 682-------------------------------------Table 1.1-------------------------------------Lead Concentrate Analysis -------------------------------------Silver Concentrate Unit-------------------------------------Concentrate tonnes dtpa 18,022Silver grade ppm 1275Silver metal content ounces 385,455Lead grade % 63.6Lead metal content dtpa 11,696Zinc grade % 6.6Zinc metal content dtpa 1,190Gold grade ppm 0.85Sulphur grade % 15.2Iron grade % 1.1Silica grade % 2.5Copper grade ppm 2470Arsenic grade ppm 40Bismuth grade ppm 0.9Antimony grade ppm 2760Mercury grade ppm 105-------------------------------------
Provision has been made in the current plant layout for a future upgrade of the facility, including additional crushers, screens, mill and flotation cells which will allow an increase in the design throughput to 1,000,000 tonnes per annum if required.
The zinc concentrate will grade 50.3% zinc for annual production of 57,000 tonnes of zinc metal. The lead concentrate will grade 63.6% lead for annual production of 11,700 tonnes of lead metal.
The estimated capital expenditure for the process plant and supporting infrastructure is AUD86 million based on the May 2008 dollar, being made up of a cost for the process plant of AUD52 million at +/- 10% and a cost of AUD34 million at +/- 20% for the supporting infrastructure.
Operating costs from the ROM pad to delivery of concentrate to Port Hedland (or an equivalent port) have been calculated at AUD41/tonne milled while processing at 500,000 tpa rate. The largest operating cost component is concentrate transport, followed in order by power supplied from gas generators and personnel.
Mining feasibility work will commence pending complete results from the latest resource definition drilling program on the Main Lode expected in late December. Mine optimization on the basis of the results from current drilling is targeted towards a substantial increase in the high grade reserve base.
Environmental and Native title processes have been initiated on behalf of the Company and are proceeding. Ongoing work includes flora and fauna characterization of the proposed mining lease including stygofauna. Furthermore, hydrological desktop studies and assessment design are continuing completed with an outlook to finalisation in the new year.
OTHER PROJECTS
Active negotiations are being undertaken with respect to joint venture agreements for the Coppermine Bore, Longreach Well and Perenjori Projects.
CORPORATE
The Company's cash balance at 30 September 2008 was A$6.85 million. There are no plans to raise further capital at this time.
Shareholder Information
As at 30 September 2008 the Company had 2,508 shareholders and 72,890,598 ordinary fully paid shares on issue with the top 20 shareholders holding 40.05% of the total issued capital.
Contact
Alec Pismiris
Director/Company Secretary
Prairie Downs Metals Limited
Tel: +61-8-9225-5755
www.prairiedownsmetals.com.au
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