TIDMS32
RNS Number : 6262M
South32 Limited
12 May 2020
12 May 2020
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 ESTIMATE declaration
South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is
pleased to report for the first time a Mineral Resource estimate
for the Clark Deposit which forms part of its 100% owned Hermosa
project located in Arizona, USA (Appendix 1 - Figure 1). The Clark
Mineral Resource estimate (Table A) is reported in accordance with
the JORC Code (2012) ([1]) at 55 million tonnes, averaging 2.31%
zinc (Zn), 9.08% manganese (Mn) and 78g/t silver (Ag).
The Clark Deposit is interpreted as the upper oxidised,
manganese-rich portion of the mineralised system that contains the
previously reported Taylor Mineral Resource estimate. A scoping
study to advance our understanding of the processing and end-market
opportunities for the Clark Deposit is underway, while a
pre-feasibility study for the separate development of the Taylor
Deposit is due for completion in the September quarter 2020.
South32 Chief Executive Officer, Graham Kerr said "The
declaration of a Mineral Resource estimate for the Clark Deposit
marks another important milestone for the Hermosa project,
following our initial Mineral Resource estimate for the Taylor
Deposit in June 2019.
"When completed, the Taylor Deposit pre-feasibility study is
expected to further de-risk our investment by demonstrating its
ability to deliver strong shareholder returns over many decades.
The Clark Deposit provides an additional option to realise longer
term value from within the broader land package.
"With ongoing exploration programs testing possible extensions
to the Taylor Deposit and newly identified prospects in the
regional land package, we expect this work to reaffirm our view
that Hermosa is one of the most exciting base metals projects in
the industry."
The Hermosa project is a polymetallic development option located
in Santa Cruz county, Arizona and is 100% owned by South32. It
comprises the zinc-lead-silver Taylor Deposit, the
zinc-manganese-silver Clark Deposit and an extensive, highly
prospective land package with potential for discovery of zinc 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.
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. With a focus on
growing our base metals exposure, we also have two development
options in North America and several partnerships with junior
explorers around the world. Our purpose is to make a difference by
developing natural resources, improving people's lives now and for
generations to come. We are 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
Rebecca Keenan Jenny White
T +61 8 9324 9364 T +44 20 7798 1773
M +61 402 087 055 M +44 7900 046 758
E Rebecca.Keenan@south32.net E Jenny.White@south32.net
JSE Sponsor: UBS South Africa (Pty) Ltd
12 May 2020
Table A: Mineral Resource estimate for the Clark Deposit as at
12 May 2020 in 100% terms (1,2)
UG
Oxide - - - - 33 2.49 9.39 56 22 2.04 8.64 110 55 2.31 9.08 78
Total - - - - 33 2.49 9.39 56 22 2.04 8.64 110 55 2.31 9.08 78
------- ----- ---- ---- ----- ------- -------- -------- ----------- ----- ----------- --------- ------------ -------- ------------ ----------- ---------------
Notes:
1. Cut-off grade: NSR of US$175/t.
2. Input parameters for the NSR calculation are based on
South32's long term forecasts for zinc, manganese and silver
pricing; haulage, treatment, shipping, handling and refining
charges. Metallurgical recovery assumptions are consistent across
geological domains and are approximately 62% for zinc, 80% for
manganese and 81% for silver. 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 Resource for the Clark Deposit
South32 confirms the first time reporting of the Mineral
Resource estimate for the Clark Deposit as at 12 May 2020 (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. This report
summarises the information contained in the JORC Code Table 1 which
is included in Appendix 1 to this report. The breakdown of the
total Mineral Resource estimate into the categories specified in
the JORC Code is contained in Table A.
Geology and geological interpretation
The Clark Deposit within the Hermosa project (Appendix 1 -
Figure 2) is the oxidised portion of a carbonate replacement
deposit (CRD) style, massive sulphide deposit. It is hosted in
Mesozoic Hardshell volcanic rocks and underlying Permian carbonate
rocks of the Pennsylvanian Naco Group of south-eastern Arizona
(Appendix 1 - Figure 3).
The zinc-manganese-silver oxide mineralisation of the Clark
Deposit is interpreted to be an up-dip extension of the
zinc-lead-silver sulphide Taylor Deposit, although of different
mineralogy and geochemistry. Mineralisation primarily spans the
contact between the Hardshell volcanic rocks and the underlying
Concha carbonate stratigraphy for approximately 1.3km from near
surface down a general northwest dip of 30 deg to where it abuts
the Taylor sulphide mineralisation. The 800m lateral extent of
mineralisation at the Clark Deposit has not been closed off by
drilling.
Drilling techniques
Initial drilling of the Clark Deposit conducted by ASARCO
between 1950-1991 utilised three different drilling methods of
rotary air hammer (RH) (91 holes), diamond core (DDH) (22 holes),
and reverse circulation (RC) (one hole). Wildcat Silver, later
becoming Arizona Minerals Inc (AMI), drilled 165 RC and 267 DDH
drill holes between 2007 to 2018. South32 drilling continued to
extend the drill footprint at both the Clark and Taylor deposits
following the acquisition of AMI in August 2018, adding an
additional 31 DDH drill holes to the total drill hole database
considered for this Mineral Resource estimation.
Four AMI and three South32 DDH drill holes twinned ASARCO RH
drilling to validate geology and assay data.
The geological model is based on data from 579 drill holes of
various styles including RH, RC, and DDH of HQ (95.6mm) or NQ
(75.3mm) diameter (Appendix 1 - Figure 4), all drilled from surface
of which 311 intersect the mineralisation at the Clark Deposit and
were utilised in the Mineral Resource estimation (Appendix 1 -
Figure 5).
Sub-vertical drilling was undertaken until August 2018 and 259
of these holes were utilised in the estimation. Since August 2018
all holes were angled between 60 deg and 85 deg to maximise the
mineralisation intersection angle. Core orientation was introduced
from October 2018 to incorporate structural measurements into
geological modelling for stratigraphic and fault
interpretation.
Sampling and sub-sampling techniques
Details of the sampling procedures are unknown for the ASARCO
drilling campaigns of 1950-1991, however sample lengths were
predominantly 1.5m (5'), ranging between 6cm and 6m. AMI drill
holes were sampled at nominal 1.5m (5') intervals or terminated at
litho-structural boundaries for DDH, producing a sample range
between 15cm and 2m. Diamond drill core was sampled by hydraulic
splitting until 2013, from then onwards a core saw was used for
sampling. RC holes were drilled wet by AMI, with cleaning of the
holes between 5' sample intervals.
AMI and South32 samples were submitted for preparation at
external certified laboratories in Tucson (Skyline Laboratories and
Australian Laboratory Services (ALS)) and Reno (Inspectorate
Laboratories). Preparation involved crushing of the sample, a
rotary split portion for each sample, and pulverisation to generate
pulps for assay. Specific preparation methods vary between
laboratories and drilling campaigns. Since 2014, samples have been
prepared by ALS Minerals Tucson and involve drying, crushing the
entire sample to more than 70% passing 2mm, rotary splitting to
achieve a 250g subsample and pulverizing to > 85% passing
75um.
Sample analysis method
AMI re-analysed 4,272 ASARCO pulp samples at Skyline
Laboratories in 2006 to validate the copper, lead, zinc, and
manganese assay results using inductively-coupled plasma and atomic
absorption spectrometry (ICP-AAS). Silver and gold fire assays of a
second split from each pulp were undertaken by Assayers Canada in
Vancouver.
AMI drill samples taken between 2007-201 2 were prepared at
Skyline Labs and analysed by ICP for copper, lead, zinc, and
manganese. Silver assays of 250g duplicate pulps for all samples
were sent to Assayers Canada from 2006-2009 (fire assays) and
Inspectorate Laboratories in Reno for 2010-2012 (fire assay with
AAS finish).
Over 2013-2014, AMI identified a low bias for silver reported by
fire assay through a quality control program using in-house
standards. A re-assay of 8,078 samples from 188 holes mostly from
the Clark Deposit was undertaken by ALS Minerals using a four-acid
digest and ICP-AAS. These replaced the original fire assay silver
results in the database.
Since 2014, a ll samples have been prepared by ALS Tucson and
analysed at ALS Vancouver using four-acid digestion, ICP-AAS, and
more recently inductively-coupled plasma and optical emission
spectrometry (ICP-OES). Quality control protocols introduced and
maintained since this time comprise certified reference material
(CRM) inserted every 20 samples, field duplicates every 15m (50'),
blank material submitted at the start and end of every sample
batch, coarse crush and pulp repeats every 40 samples, and
third-party laboratory pulp repeats every 50 samples.
Efforts to validate ASARCO sampling over the project history
comprise two campaigns of pulp re-assay by AMI in 2006 (4,272
samples) and South32 in 2019 (3,070 samples). The findings for the
2019 re-assay program generally indicate excellent reproducibility
in ICP results for zinc, manganese and silver across grade ranges
material to the Mineral Resource work. Gravimetric fire assay
results for silver at lower grades (less than 10g/t Ag) generally
perform poorly against the modern ICP results. The poor performance
of these historical analytical techniques against modern results
has been well-documented in previous studies.
Minor element assays from the South32 re-assay program were also
inserted into the drilling database for historical samples where no
previous analysis had been undertaken and to underpin the
estimation of these elements.
Estimation methodology
Resource estimation was conducted using ordinary kriging
interpolation for three elements of economic interest (zinc,
manganese, silver) and seven elements for metallurgical or rock
characterisation (iron, lead, calcium, sulphur, magnesium,
potassium, aluminium). Estimation s earch criteria, nested as two
passes, are consistent with geostatistical models developed for
each estimation domain according to the appropriate geological
controls.
Sample selection criteria, block dimensions, and other
parameters of the estimation were reviewed against results of
qualitative kriging neighbourhood analysis (QKNA). 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. Initial testing and
comparison of pre- and post-drying sample weights from a small 280
sample population within two drill holes indicated a moisture
content of 2.03%.
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 overlaid on the geological modelling
classification criteria whereby estimation parameters such as slope
of regression are matched to block estimation criteria that relates
to the number and distance of data informing the estimate in
relation to semi-variogram models for each element. No Measured
Mineral Resources have been defined for the Clark Deposit due to
uncertainty associated with historical drill hole data, local
variability illustrated by the South32 twin drilling program and
considering the conceptual level of process flow sheet development.
Indicated Mineral Resources are estimated from at least five
samples in two drill holes with data spacing within approximately
100m and are not defined in the SE areas of the Clark Deposit which
is supported primarily by RC drilling. Inferred Mineral Resources
are constrained by the reporting of estimates to within
demonstrated grade and geological continuity ranges, and generally
to the extents of the confined Mineral Resource domains.
Mining and metallurgical methods and parameters
Reasonable prospects for eventual economic extraction have been
determined through assessment of mining, processing and financial
aspects at a scoping level study on the Clark Mineral Resource
estimate. The assessment outcome informs the net smelter return
(NSR) cut-off value used for reporting the Mineral Resource
estimate.
Cut-off grade
The Clark Deposit of the Hermosa project is a
zinc-manganese-silver deposit which uses an equivalent NSR value as
a grade descriptor. Input parameters for the NSR calculation are
based on South32's long term forecasts for zinc, manganese and
silver pricing; haulage, treatment, shipping, handling and refining
charges. Metallurgical recovery assumptions are consistent across
domains and are approximately 62% for zinc, 80% for manganese, and
81% for silver.
A dollar equivalent cut-off of NSR US$175/dmt forms the basis of
assessment for reasonable prospects for eventual economic
extraction, supported by inputs detailed to scoping study
level.
Competent Person's Statement
The information in this report that relates to Mineral Resources
for the Clark Deposit represents an estimate as at 12 May 2020, and
is based on information compiled by Matthew Hastings, a Competent
Person who is a Member and Chartered Professional of The
Australasian Institute of Mining and Metallurgy.
Mr. Hastings is a full-time employee of SRK Consulting (U.S.)
Inc. and was engaged by South32 to provide a Mineral Resource
estimate for the Clark Deposit. Mr. Hastings has sufficient
experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity 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'. Mr Hastings 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.
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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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