TIDMS32
RNS Number : 4358C
South32 Limited
17 June 2019
17 June 2019
South32 Limited
(Incorporated in Australia under the Corporations Act 2001)
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32 ADR: SOUHY
ISIN: AU000000S320
south32.net
South32 Limited
hermosa project - mineral resource declaration
South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is
pleased to report for the first time a Mineral Resources estimate
for the Taylor Deposit which forms part of its 100% owned Hermosa
Project located in Arizona, USA (Appendix 1 - Figure 1). The
Mineral Resource (Table A) is reported in accordance with the JORC
Code (2012)([1]) guidelines at 155 million tonnes, averaging 3.39%
zinc, 3.67% lead and 69 g/t silver with a contained 5.3 million
tonnes of zinc, 5.7 million tonnes of lead and 344 million ounces
of silver. The Mineral Resource remains open at depth and
laterally, with multiple targets to be tested as we continue our
extensive surface drilling program.
72% of the Mineral Resource is in the Measured and Indicated
categories (Table A), including 21 million tonnes in the Measured
category at 4.07% zinc, 3.61% lead and 51 g/t silver, providing a
compelling base from which to advance the Hermosa Project's
pre-feasibility study and target additional mineralisation. To
demonstrate the deposit's optionality, a range of tonnages and
grades for the Mineral Resource at different NSR([2]) cut-offs is
included in Table B. The Mineral Resource estimate does not include
the zinc-manganese-silver oxide Clark Deposit([3]) .
South32 Chief Executive Officer, Graham Kerr said "Our
declaration of a Mineral Resource for the Taylor Deposit for the
first time in accordance with the JORC Code represents a key
milestone as we progress one of the most exciting base metals
projects in the industry. The ongoing drilling program, and the
resampling and relogging activity undertaken since our acquisition
of the Taylor Deposit has significantly de-risked our investment,
increased our confidence in the project and confirmed its ability
to deliver strong returns to our shareholders over many decades. We
expect to conclude our pre-feasibility study for the project before
the end of the 2020 financial year."
The Hermosa Project is a polymetallic development option located
in Santa Cruz county, Arizona which is 100% owned by South32. It
comprises the zinc-lead-silver Taylor Deposit, the
zinc-manganese-silver oxide Clark Deposit and an extensive, highly
prospective land package with potential for discovery of
polymetallic and copper mineralisation.
Full details of this update are contained in the attached
report.
Appendices prepared in connection with this report have been
submitted to UK Listing Authority (UKLA) national storage mechanism
and are available for inspection at
http://www.morningstar.co.uk/uk/NSM or are otherwise available on
South32's website at http://www.south32.net.
Foreign Estimate for the Clark Deposit
Information that relates to estimates of Mineral Resources for
the Clark Deposit (Arizona Mining Inc) are foreign estimates under
ASX Listing Rules and are not reported in accordance with the JORC
Code. Reference should be made to the clarifying statement on
Mineral Resources in the market announcement "South32 to acquire
Arizona Mining in agreed all cash offer" dated 18 June 2018, in
accordance with ASX Listing Rule 5.12. South32 is not in possession
of any new information or data relating to the foreign estimate
that materially impacts on the reliability of the estimates or has
the ability to verify foreign estimate as Mineral Resources in
accordance with the JORC Code. South32 confirms that the supporting
information contained in the clarifying statement in the 18 June
2018 market announcement continues to apply and has not materially
changed. Competent Persons have not done sufficient work to
classify the foreign estimates as Mineral Resources in accordance
with JORC Code. It is uncertain that following evaluation and
further exploration that the foreign estimates will be able to be
reported as Mineral Resources or Ore Reserves in accordance with
the JORC Code. South32 intends to conduct a work program to
increase confidence in the resource to ensure that resources are
reported in accordance with the JORC Code.
About South32
South32 is a globally diversified mining and metals company. We
produce bauxite, alumina, aluminium, energy and metallurgical coal,
manganese, nickel, silver, lead and zinc at our operations in
Australia, Southern Africa and South America. We are also the owner
of a high grade zinc, lead and silver development option in North
America and have several partnerships with junior explorers with a
focus on base metals. Our purpose is to make a difference by
developing natural resources, improving people's lives now and for
generations to come, and to be trusted by our owners and partners
to realise the potential of their resources.
Further information
INVESTOR RELATIONS
Alex Volante Tom Gallop
T +61 8 9324 9029 T +61 8 9324 9030
M +61 403 328 408 M +61 439 353 948
E Alex.Volante@south32.net E Tom.Gallop@south32.net
MEDIA RELATIONS
James Clothier Jenny White
T +61 8 9324 9697 T +44 20 7798 1773
M +61 413 391 031 M +44 7900 046 758
E James.Clothier@south32.net E Jenny.White@south32.net
JSE Sponsor: UBS South Africa (Pty) Ltd
17 June 2019
Table A: Mineral Resources for the Taylor Deposit as at 31 May
2019 in 100% terms(2)
Ore Type Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources
---------------
Mt(2) % % g/t Ag Mt(2) % % g/t Ag Mt(2) % % g/t Ag Mt(2) % % g/t Ag
Zn Pb Zn Pb Zn Pb Zn Pb
--------------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
UG Sulphide(1) 21 4.07 3.61 51 86 3.14 3.73 75 42 3.30 3.56 67 149 3.32 3.66 70
UG
Transition(1) - - - - 5.2 5.41 3.85 55 1.0 4.25 3.65 71 6.2 5.22 3.82 57
--------------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
Total
Sulphides 21 4.07 3.61 51 91 3.27 3.73 74 43 3.32 3.56 67 155 3.39 3.67 69
--------------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
Million dry metric tonnes(2) , % Zn- Percent zinc, % Pb- Percent
lead, g/t Ag- grams per tonne of silver.
Table B: Mineral Resources for the Taylor Deposit as at 31 May
2019 in 100% terms(2)
NSR(1) Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources
-------
Mt(2) % % g/t Ag Mt(2) % % g/t Ag Mt(2) % % g/t Ag Mt(2) % % g/t Ag
Zn Pb Zn Pb Zn Pb Zn Pb
------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
70 26 3.54 3.16 45 113 2.87 3.28 66 53 2.93 3.12 61 192 2.98 3.22 62
------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
90 21 4.07 3.61 51 91 3.27 3.73 74 43 3.32 3.56 67 155 3.39 3.67 69
------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
110 17 4.57 4.03 57 75 3.64 4.17 82 37 3.63 3.90 72 129 3.76 4.07 76
130 14 5.06 4.43 62 63 4.00 4.57 90 31 3.95 4.23 77 108 4.12 4.46 83
150 12 5.56 4.85 67 54 4.32 4.95 97 27 4.27 4.54 82 92 4.46 4.82 89
------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------- ------ ----- ----- -------
Notes:
1. Cut-off grade: NSR of US90$/t for both UG Sulphide and UG
Transition.
Input parameters for the NSR calculation are based on South32's
long term forecasts for zinc, lead and silver pricing; haulage,
treatment, shipping, handling and refining charges. Metallurgical
recovery assumptions differ for geological domains and vary from
85% to 92% for zinc, 90% to 94% for lead, and 75% to 83% for
silver.
2. All masses are reported as dry metric tonnes (dmt). All
tonnes and grade information have been rounded to reflect relative
uncertainty of the estimate, hence small differences may be present
in the totals.
Estimate of Mineral Resources for Hermosa
South32 confirms the first time reporting of the Mineral
Resource estimate for the Taylor carbonate replacement deposit
(CRD) as at 31 May 2019 (Table A).
The estimates of Mineral Resources are reported in accordance
with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, 2012 (JORC Code) and the
Australian Securities Exchange Listing Rules. The breakdown of the
total estimates of Mineral Resources into the specific JORC Code
categories is contained in Table A. This report summarises the
information contained in the JORC Code Table 1 which is included in
Appendix 1 to this report.
Geology and geological interpretation
The Taylor Deposit within the Hermosa Project is a CRD style
zinc-lead-silver massive sulphide deposit. It is hosted in Permian
carbonates of the Pennsylvanian Naco Group of south-eastern Arizona
(Appendix 1 - Figure 3).
The Taylor Deposit comprises the upper Taylor Sulphide and lower
Taylor Deeps domains that have a general northerly dip of 30(0) and
are separated by a low angle thrust fault. Mineralisation within
the stacked profile of the thrusted host stratigraphy extends 1200m
from near-surface and is open at depth. Mineralisation is modelled
for thirteen litho-structural domains for an approximate strike of
2500m and width of 1900m. (Appendix 1 - Figure 5).
Drilling techniques
The Mineral Resource estimate is based on data from 251 surface
diamond drill holes of HQ (95.6mm) or NQ (75.3mm) diameter
(Appendix 1 - Figure 4). Vertical drilling was undertaken for 146
of 251 holes used in this resource estimate. Since August 2018,
holes have been drilled between 60(0) and 75(0) dip to maximise the
angle at which mineralisation is intersected. Oriented drilling was
introduced in October 2018 to incorporate structural measurements
into geological modelling for stratigraphy and fault
interpretation.
Sampling and sub-sampling techniques
All 289,660m of drilling used for geology, geometallurgy and
geotechnical purposes is diamond core. The drill half cores were
sampled at either 1.5m (5') intervals or terminated at
litho-structural boundaries. Samples were submitted for preparation
at an external ISO-17025 certified laboratory, Australian
Laboratory Services (ALS), in Tucson. Preparation involved crushing
to 2mm, a rotary split to 250g and pulverisation to 85% passing
75um from which a 25g pulp was measured for assay. The mineralised
intersections were verified by geologists throughout each drilling
program and reviewed independently against core photos by an
alternate geologist prior to geological interpretation.
Sample analysis method
Samples of 1g taken from 25g pulp were processed at ALS in
Vancouver where they were digested using a four-acid leach method.
This was followed by Inductively Coupled Plasma - Atomic Emission
Spectroscopy (ICP-AES) determination for 33 elements. A range of
certified reference materials (CRM) were routinely submitted to
monitor assay accuracy, with low failure rates within expected
ranges for this deposit style, demonstrating reliable laboratory
accuracy.
External third-party laboratory pulp duplicate and CRM checks
indicate no significant bias was determined for the primary assay
laboratory. Results of routinely submitted field duplicates to
monitor sample representivity, coarse crush and laboratory pulp
duplicates to quality control sample preparation homogeneity, and
certified blank submissions to detect cross-contamination were all
within an acceptable range for resource modelling.
Estimation methodology
Resource estimation was performed by ordinary kriging
interpolation for four elements of economic interest (Zn, Pb, Ag,
Cu), two potentially deleterious elements (As, Mn) and four tonnage
estimation elements (Fe, Ca, S, Mg). Search estimation criteria are
consistent with geostatistical models developed for each estimation
domain according to the appropriate geological controls. Validation
includes statistical analysis, swath plots and visual
inspection.
Specific gravity measurements from drill cores were used as the
basis for estimating dry bulk density in tonnage calculations for
both mineralised and non-mineralised material.
Mineral Resource classification
Mineral Resource classification criteria are based on the level
of data informing both the geological model and grade estimation.
Grade estimation confidence is overlain on the geological modelling
classification criteria whereby kriging variance is matched to
block estimation conditions - that relates to the number and
distance of data informing the estimate in relation to
semivariogram models for Zn, Pb and Ag. Measured Resources are
interpolated from data within a range equivalent to a likely grade
control drill spacing of 30m to 50m. Indicated Resources are
estimated from data spacing within approximately 180m, 120m and 15m
in the maximum, intermediate and short-range grade continuity
directions. Inferred Resources are constrained by the reporting of
estimates to within demonstrated grade and geological continuity
ranges, and generally to a maximum of 400m beyond data.
Mining and metallurgical methods and parameters
Reasonable prospects for eventual economic extraction have been
determined through assessment of the Mineral Resource at a scoping
study level for processes, ranging from stope optimisation and mine
scheduling through to mineral processing and detailed financial
modelling. Underground mining factors and assumptions for longhole
stoping on a sub- or full-level basis with subsequent paste
backfill are made based on industry benchmark mining production and
project related studies, calibrated against South32's Cannington
zinc, lead and silver mine production.
Cut-off grade
The Taylor Deposit of the Hermosa Project is a polymetallic
deposit which uses an equivalent net smelter return (NSR) value as
a grade descriptor. Input parameters for the NSR calculation are
based on South32's long term forecasts for zinc, lead and silver
pricing; haulage, treatment, shipping, handling and refining
charges. Metallurgical recovery assumptions differ for geological
domains and vary from 85% to 92% for zinc, 90% to 94% for lead, and
75% to 83% for silver.
A dollar equivalent cut-off of NSR US$90/dmt forms the basis of
assessment for reasonable prospects for eventual economic
extraction, supported by scoping level studies.
Competent Person's Statement
The information in this report that relates to Mineral Resources
for the Taylor Deposit is presented on a 100% basis, represents an
estimate as at 31 May 2019, and is based on information compiled by
Matthew Readford.
Mr. Readford is a full-time employee of South32 and is a member
and Chartered Professional of the Australasian Institute of Mining
and Metallurgy. Mr. Readford has sufficient experience relevant to
the style of mineralisation and type of deposit under
consideration, and to the activities being undertaken, to qualify
as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. The Competent Person consents to the
inclusion in this report of the matters based on his information in
the form and context in which it appears.
Additional information is contained in Appendix 1.
[1] Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, 2012.
[2] Net smelter return.
[3] Formerly known as the Central Deposit.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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