A fresh set of eyes on Australia’s biggest undeveloped base metals project has revealed high-grade copper and cobalt, writes Barry FitzGerald in his weekly Garimpeiro column

Prospects for near-term development of Aeon Metals’ Walford Creek base metals project in north-west Queensland have soared thanks to new geological thinking which directs drilling to high-grade copper-cobalt mineralisation.

And it’s a good time to be uncovering high-grade copper-cobalt mineralisation.

Copper prices are 33 per cent above last year’s average and cobalt is up a phenomenal 130 per cent in response to the lithium-ion battery boom.

Walford Creek already ranks as one of Australia’s biggest undeveloped base metals projects — and it has been that way for a long time.

Originally kicked over by Western Mining Corporation (now part of BHP) between 1986 and 1994, there have been several other groups which have tried to get Walford Creek to the production starting stalls.

That became Aeon’s (ASX:AML) task in 2014 after it acquired the project from the receivers to the unlisted Aston Metals, the base metals exploration arm of Nathan Tinkler before the former electrician’s coal and horse racing empire came crashing down.

The fresh set of eyes Aeon brought to Walford Creek, and drilling programs since it picked up the project and those conducted by others in the last 30 years, led to the development of a revised geological model which draws on similarities with the sediment hosted copper-cobalt mineralisation which has made the Zambian copper belt famous.

Aeon says the new geological model (it directs drilling for the best copper grades in a lower pyrite unit) has successfully guided drill targeting and enabled better definition of high-grade zones along the prospective Fish River Fault.

Best results from targeted drilling in to the lower pyrite unit have included a 27m intersection grading 3.13% copper and 0.25% cobalt, along with 1.34% lead, 0.18% zinc and 38g/tonne of silver from 126m, including a 9m zone grading 6.85% copper and 0.18% cobalt.

Aeon says it is now confident it can expand Walford Creek in to a world class copper-cobalt deposit by targeting the zone at depths of 120m along the 25 km strike of Fish River Fault.

A new drilling program targeting high-grade copper mineralisation has recently started and will continue until the wet season starts in coming months.

Funding for the program comes from cash on hand ($1.9m) at June 30, and the $5.5m pulled in from a share placement in August at 14c a share.

The funds are also being used to advance a bankable feasibility study on the previously outlined Vardy resource, a high-grade subset (6.6m tonnes at 1.25% copper and other metals) of the current global resource estimate at Walford Creek (73m tonnes at 0.4% copper).

Aeon shares last traded at 15.5c, valuing the company at $62 million.

While ahead of the upsized August placement price of 14c, the current price suggests investors are holding back on getting too excited about the emerging high-grade Zambian-style copper-cobalt thematic until more confirming drill results roll in.

Bell Potter acted as manager to the August placement and one of its mining analysts, David Coates, said in a recent note on the new drilling program that first assays results from the program will start to flow from the second half of October.

“While still early days, exploration success from this round of drilling has the potential to add significant value to the project and potentially give a hint of the scale of the high grade copper-cobalt zone at Walford Creek,’’ Coates said.

He values the stock at 25c a share or some 61 per cent above the ruling market price.

Coates noted that the adoption of the Zambian copper belt model represented a “fresh understanding of the deposit and is the culmination of a complete review of all historical data.

“Since being applied to drill hole targeting in mid-2017, it has delivered the highest grade intersections ever achieved at Walford Creek,’’ Coates said.