Pacifico flies under the radar with historic Sorby Hills deal
Geology doesn’t change, but companies and technology do — which is why the Sorby Hills zinc and lead deposit in the Kimberley region of WA is back in the news.
Since its discovery 47 years ago by an offshoot of the French oil company Elf Aquitaine, there have been repeated attempts to develop Sorby Hills.
The latest effort is starting to take shape in a small but well-connected explorer, Pacifico Minerals (ASX:PMY).
Not a company with a notable record of success, Pacifico has scoured the world for a project to call its own.
It’s been active at times in the search for gold and base metals in South America and Queensland — but without much success, as can be seen in the share price which has rarely moved above 1c over the past three years. (See share price graph below).
An indifferent history and stock market value of just $9 million are two reasons there was minimal reaction last month when Pacifico announced the acquisition of Sorby Hills from the receivers of the failed KBL Mining.
Another interesting issue is that Pacifico has agreed to pay $4 million for the Sorby Hills assets in staged payments. The delayed payments are a function of the company only having $1.4 million in the bank at March 31, the last cash reporting date.
If ever there was a company and a project designed to fly under the radar of most investors Pacifico and Sorby Hills are it – or are they?
High calibre directors
The first clue that something good might be brewing can be found in the surprisingly high calibre of the people who run Pacifico.
Chairman Richard Monti is a 30-year corporate veteran with time in senior positions at Rio Tinto, Normandy and Rio Tinto. Fellow director Peter Harold is best known as the founder of successful nickel miner Panoramic Resources.
Perhaps significantly Panoramic is already active in the Kimberley at the Savannah nickel project which is being re-opened to catch the recovery in the nickel price which has risen by 60 per cent over the past 12 months.
The metals in Sorby Hills, which is located about 250km north of Savannah, have enjoyed a similar revival.
Zinc and lead, despite recent price corrections, are close to double where they were two years ago. Zinc is trading at $US1.24 a pound and lead around $US1.08/lb.
At those latest zinc and lead prices Sorby Hills would be a profitable mine — if it was in production.
The obvious problem — and it’s one that the team at Pacifico reckons it can fix — is raising the capital to finally develop a discovery that has been on the sidelines for almost half-a-century despite the best endeavours of previous owners.
Apart from the higher metal prices, which will be having a significant effect on the business case for Sorby Hills (especially if they can be sustained), there is the wealth of accumulated knowledge in the project itself.
Technically, Sorby Hills is a structure (or series of structures) called Mississippi Valley deposits which can be prolific producers of base metals such as zinc and lead. The area around the edges of the Kimberley are known to host several similar orebodies, such as the old Cadjebut mine near Fitzroy Crossing.
The challenge, which first thwarted Aquitaine in the 1970s, is that the mineralised material it discovered was in a series of relatively small pods averaging half-a-million tonnes in size. That called for an exercise in “joining the dots” in order to make a mine — a challenge which proved too much for French company which eventually walked away.
A mountain of data
Pacifico will start its period of ownership of Sorby Hills with a mountain of data from previous owners and could use that to mount an immediate attack on the deposits, with a fast start on mining backed by a fresh search for bigger and richer zones of mineralisation.
A measure of how much work has gone into the project in the past can be gauged by there being close to 1000 drill holes into the structures with information gathered forming the basis of a total indicated and inferred resource of 2.74 million tonnes grading 5.8% lead and 0.4% zinc – not big or rich, but perhaps viable at current metal prices.
In a presentation explaining the upside of the project Pacifico described it as: “a large Mississippi type lead, silver and zinc mineralised system with significant upside along 10km of mineralised trend and at depth within the project area”.
Mining — if and when it proceeds — would be a simple affair with some ore in the best pods little more than 20 metres from surface.
In terms of infrastructure such as roads, airport and bulk cargo facilities in the port of Wyndham, Sorby Hills has almost everything at its doorstep.
While there is not a lot new about Sorby Hills improvements in exploration, mining and mineral processing technology could turn an old base metals discovery into a mine.