Peel Mining is onto a big system with a maiden resource due soon
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Peel Mining’s latest drill results from its Southern Nights project suggest it’s onto a big system with a maiden resource estimate likely next year, writes Barry FitzGerald in his weekly Garimpeiro column
Glen Campbell, the American country singer who died last year, would be pleased.
He has had one of the best zinc discoveries in recent times named in his honour – Peel Mining’s Southern Nights discovery near Cobar in NSW.
It seems Peel managing director and seasoned geologist Rob Tyson doesn’t mind the odd country tune.
And so it was in July last year when returning a car in country NSW he noticed a CD of Campbell’s greatest hits loaded up and ready to go.
After hitting the play button, Southern Nights came on, a Tyson favourite. Roll forward to August last year and it turns out Campbell died on the same day that an aggressive step-out hole drilled to the south of Peel’s known high-grade Wagga Tank zinc-lead-silver-gold-copper deposit came up trumps.
“I knew I had to find a decent name for the discovery, and as it was 1 km south of Wagga Tank, I came up with Southern Nights,’’ Tyson confessed to Garimpeiro.
The discovery hole in August last year was significant without being stellar. But what it told Peel was that it had hit exactly the same rocks and alteration as that found at Wagga Tank — originally discovered by others in the mid-1970s.
Peel (ASX:PEX) followed up the discovery hole with two spectacular hits almost immediately — one of which assayed 31 per cent zinc over a 21m, with high lead, silver and gold values as well.
Peel shares took off, surging from around the 20c level to as much as 86c by January.
While there is clearly spectacular high-grade mineralisation in the system, the expectation is that Southern Lights will end up with a good-sized tonnage at a pretty decent grade.
Importantly, other deposits and prospects in the region suggest Peel is onto a mining “camp’’ scale opportunity, as is common in the Cobar region.
Its shares have recently settled back at 60c for a market capitalisation of $110 million.
The retreat is despite zinc doing the right thing by holding nice and strong at $US1.45/lb – up by 52 per cent on its average (annual) price in 2016 of US95c/lb.
The galvanising metal is in supply deficit after the closure of some big mines here and overseas, and a lack of new mines coming forward.
Some in the market worry about the return of zinc production shuttered by Glencore when prices were much weaker. But Glencore’s trading DNA means the production will only be returned in a way that avoids damaging prices.
Peel’s retreat to 60c also reflects the current investor interest in gold and battery material stocks.
Peel nevertheless put itself front and centre of investors yesterday with the release of latest drill results from Southern Nights. The results continued to suggest it is on to a big system, with a maiden resource estimate likely next year.
Peel’s own summary of the latest drilling and geophysical results from Southern Nights was that the project is “rapidly emerging as one of the most significant zinc polymetallic discoveries in Australia in recent years’’.
There is some more potential copper excitement to come with the planned drilling of an offhole conductor identified from a previously reported copper rich drill hole (14.45m at 2.43 per cent copper) in the Wagga Tank-Southern Nights corridor.
Perth broker Euroz initiated coverage of Peel in March ahead of the latest drill results. It said the Southern Nights discovery was a game-changer for the Cobar-focused company.
“The quality of the results thus far indicate a sizeable, high-grade resource is possible. We believe this could ultimately become a mine and should this occur Peel is likely to be multiples of its current price (it was 67c at the time),’’ Euroz said.
In the meantime, it placed a 90c price target on the stock.