Geotechnical drilling by Polymetals Resources Ltd (ASX:POL) of the high-grade Upper North Lode (UNL) at the Endeavor Mine near the mining town of Cobar in central New South Wales has returned up to 13.5 g/t gold, 1,410 g/t silver, 12.5% zinc and 34.0% lead prompting a positive response from investors.
Diamond drilling results of up to 67.1 metres at 517 g/t silver equivalent increase confidence that ore extraction rates from the UNL may be significantly improved as Polymetals remains on track to restart the mine in the first half of 2025.
The results, which include 45 metres at 2.01 g/t gold, also indicate that a significant portion of the UNL, particularly the massive sulphide mineralisation, will be sufficiently competent to support accelerated mining rates, pointing to more robust production cashflows earlier than modelled.
Shares climb
Impressed by the results described as “exceptional”, investors have sent Polymetals shares as much as 22.06% higher intra-day to $0.415.
Polymetals executive chairman Dave Sproule said: “As previously announced, the optimised Endeavor mine plan demonstrates a robust initial 10-year life.
"The competency of the Upper North Lode mineralisation demonstrated by the geotechnical drilling provides us with a great deal of encouragement that the mining rate and extracted volume of the main high-grade area may be increased beyond that currently modelled.
"This would deliver a significant increase in revenue earlier, derisking the operation during its first year.
Gold encouragement
The gold results have provided particular encouragement for the company with the further metallurgical optimisation test work now underway, to also include gold recovery.
"Also, whilst gold revenues have not been included in the mine plan, the approximately 13,000 ounces of gold hosted within the UNL represents another potential significant source of revenue during the early stages of the project,” Sproule said.
"Gold recovery test work will be completed alongside the silver, lead and zinc flotation optimisation work underway.”
Diamond drill results
Polymetals recently completed a program of five diamond drill holes targeting the UNL for the purpose of collecting geotechnical data.
Drill core will also be used for further metallurgical test work aiming to optimise process metal recoveries including potential recovery of gold.
All four holes ended in mineralisation with intercepts as follows:
PGNL005, 67.1 metres at 517 g/t silver equivalent -
- 67.1 metres at 1.04 g/t gold, 395 g/t silver, 7.19% zinc and 4.57% lead from 66 metres.
PGNL003, 53.8 metres at 551 g/t silver equivalent -
- 53.8 metres at 1.19 g/t gold, 405 g/t silver, 7.28% zinc and 6.24% lead from 96 metres.
PGNL002, 45.1 metres at 483 g/t silver equivalent -
- 45.1 metres at 2.01 g/t gold, 345 g/t silver, 5.97% zinc and 6.61% lead from 72.5 metres including 6.1 metres at 8.77 g/t gold.
PGNL001, 54.1 metres at 455 g/t silver equivalent -
- 54.1 metres at 1.24 g/t gold, 334 g/t silver, 6.05% zinc and 5.06% lead from 98.75 metres.
Stoping being considered
Geotechnical drilling shows that the majority of the UNL is likely to be sufficiently competent for lower cost and more rapid small open stoping and backfilling as the mining method.
The proposed ‘cut and fill’ mining method for the UNL in the current mine plan is a conservative assumption due to uncertainties around ground conditions and data collected from the geotechnical holes is helping build a better picture of the variability in rock properties and stability.
Advice from the independent geotechnical consultants suggests alternate mining methods (stoping) that would reduce the time and cost to mine the main part of the UNL may be possible.
Stoping will allow faster and more complete extraction of the UNL at lower costs in comparison to the ‘cut and fill’ mining method assumed in the mine plan.
Further geotechnical analysis and assessment of the most suitable mining method will be undertaken once access is re-established to current development in the UNL.
On track for restart
The Endeavor Mine is on track to be re-started and first cashflows in H1 2025. In August 2024, an optimised mine plan demonstrated the mine will produce 260,000 tonnes of payable zinc, 90,000 tonnes of lead and 10.6 million ounces of silver to generate A$1.85 billion in revenue over an initial 10-year Stage 1 mine life.
"As momentum builds with the recent recommencement of refurbishment works, continued recruitment of operational staff and with imminent drawdown of project funding, we are very much looking forward to generating first concentrates and cash flow during H1 2025,” Sproule added.