MOD Resources (MOD), the ASX listed copper explorer said it has a very positive December quarter, with a robust scoping study for the T3 copper/silver project a highlight of the period. Based on the highly encouraging project economics, MOD and joint venture partner, Metal Tiger Plc (30%), have commenced a pre-feasibility study (PFS) expected to be completed in mid-2017.
The scoping study outlined a 2mtpa open pit project producing 21ktpa copper and 665kozpa silver at C1 cash cost of US$1.29/lb, over a production life of 9.25 years. T3 is the second copper deposit discovered by MOD in the region, the other being the 100% owned T1 underground deposit, 20km north of T3.
MOD Resources’ Managing Director, Julian Hanna, said the December quarter was all about laying a strong foundation for growth heading into 2017 at a time of renewed global interest in copper.
“Completing the T3 resource and scoping study were key milestones in our path to becoming a long-life copper producer in Botswana. The exploration programs, metallurgical testwork, licence renewals and acquisitions during the quarter were also very important in building future growth opportunities for MOD in this highly prospective region,” said Hanna.
During the quarter, the Botswana Mines Minister granted two-year extensions for 10 joint venture licences centred around the Company’s T3 Project Area. Additionally, the Botswana operating company, Tshukudu Metals Botswana (Pty) Ltd entered an option agreement to acquire two additional licences immediately west of Ghanzi, resulting in over 200km strike length of the central structural zone now covered by granted licences with numerous targets.
Exploration and PFS programmes will accelerate from early 2017 with the focus on the 60km-long T3 Dome using a combination of magnetics, soil sampling, 3D IP and substantial drilling programs. At the time of this report, several activities had been delayed due to very heavy rains in early and mid-January limiting site access. Three drill rigs are now operating and the trial 3D IP survey across part of T3 Dome is progressing well with first results expected soon. 50% of the T3 geotechnical drilling program has also been completed.
“We’re entering an extremely busy and exciting period of exploration and project development and will be discussing MOD’s unique situation and the project’s wider potential with Australian and global investor groups,” he said.
T3 Maiden Resource
On 26 September 2016, six months after the discovery of T3, MOD announced a maiden resource at T3 comprising 28.36Mt grading 1.24% copper and 15.7g/t silver, containing approximately 350,200t copper (~772Mlbs copper) and >14Moz silver. The T3 resource includes 18Mt grading 1.35% Cu and 16.7g/t Ag in the Indicated Resource category which represents 64% of the total resource (Table 1). The resource is open along strike to the west and east and extension drilling will commence in February 2017 to test this potential.
T3 mineralisation consists of disseminated and vein hosted copper sulphides including chalcopyrite, bornite and chalcocite occurring within a shallow dipping sequence of sediments (‘host sequence’) up to 50m true width. T3 demonstrates strong zonation of sulphides from the top to the bottom contacts of the deposit, and down dip from near surface to the deeper part of the resource.
A review of T3 drill core by site geologists in the December quarter resulted in a clearer understanding of sulphide zonation within the deposit which is supported by the resource model. This interpretation is represented in a 1100m long section looking north through the centre of T3.
As part of the PFS programme, infill drilling commenced in January 2017 around areas of vein hosted bornite mineralisation in the western part of the resource to define the extent of this high-grade mineralisation. The results may provide potential for improving the grade of current production targets at an early stage of mining.
Two infill holes (MO-G-63D and MO-G-64D) of this program have already been completed and assay results will be reported once received (Figure 2). The T3 resource remains open along strike and a six-hole program will commence in early February 2017 to test the potential for the chalcopyrite vein zone to extend east beyond the current pit design and west of an interpreted fault where MO-G-22D intersected 0.6m @ 3.0% Cu and 59g/t Ag at the end of the hole (ASX announcement 29 July 2016).
T3 Scoping Study
On 6 December 2016, MOD announced the results of a scoping study for an open pit mining and processing operation at T3, based on the maiden resource. The scoping study was undertaken by independent specialist consultants located in Australia, South Africa and Botswana (Table 2). The scoping study has indicated potential for strong financial outcomes and will be further evaluated during the pre-feasibility study (PFS) which started in early 2017.
A cautionary statement included with the scoping study announcement on 6 December 2016 is also included in the Forward Looking Statements and Disclaimer section included in this Quarterly Report. Key Outcomes of T3 Scoping Study The scoping study includes an optimised pit design to approximately 220m vertical depth and construction of a processing plant to treat 2Mtpa of ore with potential for future low cost expansion if required.
Pre-stripping of the first stage of the planned open pit is scheduled to commence in 2019 with ore processing targeted to commence later in 2019. Total indicative mine life is approximately 10 years with 9.25 years of ore production with estimated life of mine (LOM) average production of approximately 21.8ktpa copper and 665kozpa silver.
Regional Licences and Exploration Programmes
In December 2016, the Botswana Mines Minister granted two-year extensions for 10 joint venture licences which cover the T3 Dome and extend to the Namibian Border. These licences have also been transferred into the joint venture owned Botswana operating company Tshukudu Metals Botswana (Pty) Ltd. In addition, Tshukudu Metals entered an option agreement to acquire two additional licences immediately west of Ghanzi which cover a wide domal structure interpreted from magnetics to be a potential extension to the regional structural corridor that hosts the T3 and T1 deposits, and Cupric Canyon Capital’s Zone 5 deposit and Banana Zone resources.
If the option is exercised, it will extend MOD’s JV and 100% holdings to over 200km strike length in the central structural zone with numerous targets identified for testing. There is minimal previous effective exploration and no known outcrop on the two Ghanzi West option licences.
A number of anomalous surface copper values reported on the licences are based on portable XRF analysis and require verification by conventional, systematic soil sampling and laboratory analysis.