Re: THX - Thundelarra Exploration
September 12, 2007
Thundelarra Breaks Its Duck
By Our Man In Oz
www.minesite.com/aus.html
No corks are popping yet in the offices of ASX listed Thundelarra Exploration, but there have been sightings of a delivery van from the local pub pulling up at the back door - a sign that celebrations are planned. The preparations are underway because Thundelarra is on the verge of joining the stampede of small Australian companies which have made the all-important transition from explorer to producer. A cocktail of nickel, copper and cobalt will be the first product from Thundelarra which is working with its partner, Sally Malay Mining, to develop the Copernicus project in the far north of Western Australia. First stage will involve a small opencut, possibly followed by a deeper underground development. For investors, the critical point is that Thundelarra is “breaking its duck”, with money coming in rather than going out.
Cash from Copernicus will be a useful fillip for Thundelarra’s expanding uranium exploration programme – though it must be said up front that the fact that the two companies have struck a mutually agreeable joint venture falls into the category of a modern miracle. It was only last year that Thundelarra and Sally Malay were at each other’s throats over disputed terms of technical studies into how best to mine Copernicus which is close to Sally Malay’s namesake nickel mine and processing plant. After a brief period of “loaded lawyers at 10-paces” sanity broke out and warring “friends” settled on a 60/40 partnership, with Sally Malay holding the bigger share.
The plan is to mine the near-surface ore of Copernicus in a lightning-fast campaign of less than a year. The ore, grading around 1.24 % nickel, 0.81% copper and 0.05 % cobalt, will be batch processed through Sally Malay’s plant, with processing expected to last 27 months and produce 6,500 tonnes of nickel in concentrate, plus 4,750 tonnes of copper and 220 tonnes of cobalt, with product probably sold to the Chinese metal group, Jinchuan, under the existing Sally Malay contract.. During this time, and assuming the nickel price holds at a reasonable level, the partners will decide whether to access the deeper ore, effectively adding another four years to the mine.
In fact, mine life could be a lot longer because drilling is continuing at depth, and returning tantalising assays. Thundelarra’s newly-appointed chief executive, Brett Lambert, told Minesite that a series of anomalies identified by electromagnetic tests had been drilled in June, all were associated with nickel sulphide mineralisation. “Two of the targets were about 250 metres below surface, but it’s not clear whether these were an extension of the existing resource or a new lens,” Lambert said. “The third hole was even more interesting because it hit 13 metres grading 1.84 % nickel and 1.03 % copper at just over 400 metres below surface. This result is significant as it’s the second best intersection so far and 100 metres below the existing reserve.”
The challenge for future exploration is to “join the dots” and see whether Copernicus is revealing a continuation of the existing structure, or revealing an entirely new lens of mineralisation. In general, the geology at Copernicus is similar to the “komatiite” structures found at Kambalda, and in Finland from where the name comes. These are effectively ancient lava flows which can be thin and difficult to mine, or thick and rich, a bit like some people we all know.
Getting Copernicus into production will not be an expensive operation for Thundelarra. Lambert estimates that his capital cost requirement is a lowly A$5.3 million because most of the required mining and processing equipment is on hand. The real trick will be in judging when,or whether, to launch the underground phase. To do that the Thundelarra board must be convinced that the price of nickel will hold US$25,000 a tonne, or better. Given that nickel has slipped back from its stratospheric heights of almost US$55,000 a tonne in May to around US$29,400 now and that price question could be tricky one.
Whatever happens with the second phase of Copernicus there will be many Thundelarra shareholders delighted to see their company making the transition to producer, no matter how small. Lambert said the open pit should start production in the middle of next year, with ore hauled the 40 kilometres to the Sally Malay plant. When, and if, the underground mine is developed it will be from a decline driven off the bottom of the open pit.
While nickel, copper and cobalt will provide Thundelarra with its first positive cash flow the next phase of work could be all about uranium. Lambert said the company had a “strong commitment” to uranium, with 18 projects on its books, covering 9,400 square kilometres. Current work was designed to cull the good prospects from the ordinary, and move from project generation to active exploration. High on the list of targets are the Spinifex project in Western Australia which has already yielded fabulous surface grades of up to 13.6 per cent uranium (yes, per cent – so stay clear of the field hand who kicked that rock around!), the Kunderong prospect also in Western Australia which has Canada’s Cameco and Brazil’s CVRD as neighbours, and ground in the Ngalia Basin, in the Northern Territory, with Paladin and Energy Metals alongside. First drilling, at the Frances Maude project in the Northern territory, is expected to start soon.