Exco has reached agreement with Tennant Limited to acquire the rights to sulphide resources on Tennant’s mining leases in the Cloncurry area in Queensland.
The leases contain reported resources of 4.2Mt at 2% copper within two main deposits and two smaller deposits.
The bulk of the reported resources are hosted by the Monakoff deposit, located 12km south of Exco’s E1 North deposit, and the Great Australia deposit, located 1km south of Cloncurry.
The agreement with Tennant effectively involves a swap, where Exco is granted the right to explore for and mine sulphide ores on Tennant’s leases in the Cloncurry area and in return Tennant is granted the right to explore for and treat oxide ore on Exco’s tenements in the area.
Tennant operates the Great Australia copper oxide heap-leach and solvent extraction plant and is seeking new sources of copper oxide ores.
Exco has a number of potential oxide ore resources that may be of interest to Tennant and that are not a focus for Exco as stand-alone projects.
Exco is infill drilling a high-grade copper sulphide shoot at the E1 North deposit and intends to commence a feasibility study for development of the E1 project. Additional high-grade ores such as on the Tennant leases may be developed in conjunction with E1 and will add significantly to the project value and life of operations.
Exco will pay Tennant a 1% net smelter royalty on any sulphide ores from Tennant’s leases mined by Exco. Tennant is to pay Exco a per tonne royalty on any oxide ores from Exco’s tenements treated by Tennant. The amount of this royalty depends on the Cu grade and details of the operation, and whether Exco elects to deliver the ore to Tennant or if Tennant undertakes mining on Exco’s leases.
The sulphide resources have been calculated using available drilling data, mostly conducted by Cloncurry Mining Company in the late 1990s. The drilling data density is variable and depth of drilling is rarely greater than 100m as most drilling has targeted the shallow oxide resources that were amenable to acid heap leach treatment.
The sulphide potential of the resources has never been the focus of development feasibility studies or systematic exploration due to the previous focus on acid leachable ores.
The deposits at Great Australia, Monakoff and the other leases are all iron-oxide copper-gold type deposits, the same as E1 and Ernest Henry, with similar geological settings, style of ore lodes, geochemistry and mineralogy. It is very likely they will have similar metallurgical properties.
Exco will apply its experience in exploration of these styles of systems to systematically evaluate the identified resources and explore for extensions and new resources. A number of holes are planned for drilling after the current program at E1 to test key parts of the resource modelling and collect metallurgical samples.
A review of resources and metallurgy on the deposits will be run in parallel with Exco’s current program of work for E1 North.
Drilling is still in progress at E1 North and a further announcement will be made soon to confirm details of the forthcoming work program and schedule. Significance for Exco’s development plans The addition of the Tennant sulphide resources significantly expands the scope for Exco to undertake development of copper and gold production in the Cloncurry area. The resource grades are high and, while further work is required to evaluate mining issues, there is a reasonable expectation that significant resources will be converted to open pit mine reserves.