Bolt from the blue: junior chases cobalt near Broken Hill

BPl has two mining leases in the Thackaringa region, with an inferred resource of 15mt of cobalt at 2.2 pounds per tonne. The AJM understands it is one of the few cobalt-only deposits in the world and unprecedented in Australia.

Cobalt is a small but rapidly expanding market. Currently, 25% of cobalt produced is used in battery production, but that figure is expected to rise to 45% by 2018. Computers, mobile phones and a host of other electronic devices benefit from batteries including cobalt. Electric only and hybrid powered cars are the fastest growing areas of battery application.

Primary producers account for roughly 15% of cobalt worldwide. The vast majority is a by-product of nickel and copper operations. The Democratic Republic of Congo holds one third of known cobalt resources and is expected to produce around 50% of the world total by 2015.

Against this background BPL completed an IPO in early February, raising $4.47m and listing on the ASX on February 17 at 20 cents.

In addition to cobalt targets, BPL is also pursuing 13 base metal prospects on its leases, after a review of its tenements in 2009 established the existence of Broken Hill-style mineralisation. Over the last 127 years, more than 200 million tonnes of high-grade base metal ore worth an estimated $80 billion has been extracted from Broken Hill. Despite this, BPL said that much of the region remains under-explored.

The company’s 64km2 Thackaringa tenements include two cobaltiferous pyrite deposits, at Big Hill and Pyrite Hill, with, as the AJM went to press, a new prospect discovered at Pyrite Hill South. Approximately $2.6m of the company’s IPO funds are earmarked for cobalt and base metals exploration over the next two years. Roughly $1.5m will go to cobalt exploration at Big and Pyrite Hill, with the balance to be spent on base metals targets.

First exploration began in the area in 1885 when Big Hill Silver Mining sunk shafts seeking silver and lead. It wound up in 1889 and Big Hill lay untouched until 1951 when further sampling and mapping reported no lead or zinc. Cobalt was first reported at both Pyrite and Big Hill in 1960. Subsequent exploration and analysis confirmed the presence of cobalt in solid solution appearing with primary pyrite.

BPL director Geoff Hill said that Adelaide stockbroker Norm Shierlaw, who was involved in the discovery of nickel at Windarra with Poseidon, did a deal with Consolidated Zinc to drill at Thackaringa. Hill said that the rise of cobalt prices in 1980 was the essential catalyst for re-appraisal of the potential of the Thackaringa project.

“Cobalt went up over $14 per pound and was in demand as an additive for ion batteries. The stock price reflected the demand for that. The cobalt price is now about $20 a pound, which makes it potentially economic on our deposit.”

Hill said that BPL’s primary initiative is to establish its cobalt resource and capitalise on these favourable conditions. “Our first objective is to demonstrate we have 25mt of ore. Our secondary objective is to grow this up to 40 or 50mt tonnes over time. Recently, 25mt of cobalt is the magic number, because that is the number several Chinese groups have indicated they are interested in investing in.”

BPL is confident that, if it meets its 50mt resource target, a partner can be introduced at the production stage. Hill explained “ultimately it will need a big company. Cobalt itself is fairly easy to process, but the by-products are sulphur and sulphuric acid, so we need technical expertise to do that.

“The Chinese are interested in the project not only for the cobalt, but also because of the pyrite. It is a major component in the manufacturing of sulphuric acid. Sulphuric acid is in demand at the present time, for nickel extraction and a number of other uses. “We have not got a definitive process at the present time, but we are aware of three commercial processes that have been used elsewhere. Until we have done further metallurgical testing, and until we have the resource up to the size we are talking about, we won’t be able to do a definitive feasibility study. The important thing is that even in the last 10 years technology for the extraction of pyrite has increased significantly.”

In regards to base metal targets identified on BPL exploration leases, geological consultant and member of BPL’s management team Wolf Leahy said “it is very likely, in fact, that Broken Hill will continue to produce economic ores for an extended period well in excess of the next 20 years at least.”

Leahy explained that evidence is mounting that electric geophysical techniques have produced flawed results.

“Serious problems involve regionally widespread disseminated pyrite and local graphite, saline creeks and saline ground waters which being conductive in their own right often produce spurious anomalies or seriously interfere with true anomalies from much smaller metal sources in the basement.”

Electrogeophysics use is also known to be non-responsive to non-conductive zinc (sulphide) rich mineralisation. “The sequences we are exploring for Broken Hill Targets are known from their geology elsewhere to be more often than not decidedly a host for zinc rich unresponsive styles,” Leahy said.

“The outlook for the Broken Hill Block and its surrounds is becoming far more favourable for a major discovery than ever before. The area is currently still well and truly underexplored.”

In late February, BPL updated its exploration progress. A 12 hole RC drilling program at the Pyramid Hill and Himalaya North prospects at Thackaringa returned encouraging visuals signs of copper mineralisation. Assay results were not available as AJM went to press.

BPL had also approved a 5,000 metre RC drilling programme for cobalt, to start after conclusion of the base metals campaign. This programme will test for strike and depth extensions of known resources at Pyrite Hill and Big Hill, as well as a new prospect at Pyrite Hill South.

Contact: www.bhpl.biz