Kristie Batten: This early stage silver project already looks like a mine

One of Australia’s top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

There are a number of catalysts ahead for Maronan Metals (ASX:MMA) in the first six months of 2025.

Maronan’s namesake silver-lead project is in Queensland’s Cloncurry district, an area featuring a concentration of base metal mines.

The Maronan project has an indicated and inferred resource of 32.1 million tonnes at 6.1% lead and 107 grams per tonne silver for 1.96Mt of contained lead and 110.6 million ounces of silver.

“We do have this sizeable deposit in elephant country for base metal deposits – a lot of metal in the ground,” Maronan managing director Richard Carlton told the Resources Rising Stars Summer Series in Melbourne earlier this month.

The company is about to wrap its 2024 drilling program, which has comprised about 10,000m.

Carlton said the company was aiming to increase the indicated component of the resource, which currently stands at 2.1Mt, to closer to 5Mt.

“A near-term catalyst for re-rate is coming in March with our resource update,” he said.

“We’re hoping that will put us in a really good position with the updated resource and be in a position to be able to talk to the market about the economics of the project that we’ve been excited about internally but unable to talk about publicly.”

Scoping study coming

GBA Capital head of research Trent Allen recently visited Maronan and initiated coverage of the company.

“It’s rare to see an exploration project and think ‘this looks like a mine’. Maronan has been one of those positive occasions,” he wrote in his initiation note last month.

The updated Maronan resource will pave the way for a scoping study, due in the June 2025 quarter.

The scoping study will focus on the 500m long by 600m deep ‘Starter Zone’, which sits less than 90m from surface.

“We believe that if we’re going to get a mine going, it needs to be somewhere close to the surface and it’s got to have high grades so that’s where we’re focused,” Carlton said.

The higher-grade Starter Zone hosts about a third of the project’s total resource and all of the indicated resource.

While Maronan is yet to wrap any numbers around the project, Allen published his early estimates.

“After a site visit to the project, our financial model considers underground polymetallic production for plus-15 years, at an average silver-equivalent rate of 13.5Moz, which is about the same as 45,000 tonnes per annum of copper, or hypothetically 160,000 ounces per annum of gold,” he said.

“Opex would be in the first half of the cost curve. Based on industry studies of similar projects, we expect capex could be A$350-450 million, with site opex of circa A$100 per tonne – the easy-milling silver-lead mineralisation is an advantage.”

Carlton said the favourable geometry of the orebody opened up multiple development options, while the thick continuous horizons would offer high mining efficiency.

Maronan will consider a standalone mill or possible toll treating processing options.

The project is 15km from AIC Mines’ (ASX:A1M) Eloise copper-gold mine, 70km from Evolution Mining’s (ASX:EVN) Ernest Henry copper-gold operation and 90km from South32 (ASX:S32) Cannington lead-zinc-silver mine.

“All of these mines have capacity in their mills,” Carlton said.

Carlton said all of Maronan’s current activities at the project were building confidence.

“We’re advancing rapidly towards what we’re calling mining ready,” he said.

Mine technical studies are underway at a pre-feasibility study level, while environmental baseline surveys and stakeholder engagement is also underway.

Silver surging

Even after a recent dip, silver has been one of the best performing commodities of 2024, driven by its industrial applications, particularly in solar panels.

The Silver Institute is forecasting a silver deficit of around 200Moz.

“That 200Moz shortfall is the equivalent of about 20 Cannington mines,” Carlton said.

Carlton said while Maronan was a polymetallic deposit, the company was promoting it as a silver deposit due to its high grades.

However, some investors can be perplexed by polymetallic orebodies.

Allen said Maronan was the third-largest undeveloped silver resource in Australia and the highest-grade silver deposit.

He noted Maronan traded at an enterprise value to resource multiple of A$13/oz silver equivalent, well below the peer average of A$95/oz.

“The company itself has been overlooked by investors, although the surging silver price is changing that,” he said.

Copper-gold sweetener

In addition to the main lead-silver resource, the Maronan deposit also hosts a copper-gold resource.

The copper resource is 32.5Mt at 0.84% copper, 0.61g/t gold and 0.61g/t silver for 272,000t of contained copper, 640,000oz of gold and 7.2Moz of silver.

In Maronan’s most recent drill results, reported last month, it reported a hit of 0.9m at 4.93% copper and 1.92g/t gold.

Metallurgical test work on the fresh and transitional copper mineralisation returned recoveries of 85-90% and indicated a saleable concentrate of 25-27% copper could be produced.

“This copper-gold material seems to be metallurgically unproblematic and should be economic to mine, assuming simultaneous production of higher-grade silver-lead and after initial capex has been recovered,” Allen said.

He is assuming copper-gold production could begin from year six of his projected 15-year mine life.

At Stockhead, we tell is like it is. While Maronan Metals is a Stockhead advertiser it did not sponsor this article.