Today saw Phoenix Global Mining (LSE:PGM) leap by 12.8pc to 34.4p after revealing that it had encountered extensive evidence of copper sulphide mineralisation at its flagship Empire Copper Mine in Idaho, USA. Here, chief executive Dennis Thomas talks ValueTheMarkets through the ‘game-changing’ results and how they could ultimately lead Phoenix to alter its development plans at Empire in pursuit of a much larger resource.
Located in southeast-central Idaho, Empire consists of a skarn-hosted, open pit copper resource and a deeper-rooted and past-producing copper, gold, silver, and tungsten ore system. After establishing a copper oxide JORC resource of 19.4Mt grading 0.47pc copper, a PEA released in April put Empire’s annual copper production at 8,124t, generating $65m a year over an eight-year mine life.
Since June, the company has been undertaking a major targeted drilling programme to prepare a bankable feasibility for Empire’s open pit. The work involves increasing the open pit’s resource and carrying out infill drilling to upgrade existing inferred resources into the measured and indicated category. At the same time, it has been looking to build up additional copper resources around the open pit through step out drilling to the west, south and east of the designated open pit and northwards towards its adjoining Horseshoe Block.
Search for sulphides
Today’s update saw Phoenix announce numerous high-grade copper drill intersections to upgrade the inferred resources inside the open pit. Alongside its existing efforts, the company said it hopes this infill drilling will have a positive effect on Empire’s overall grade and tonnage and ‘materially enhance the economics of the project’.
But what really excited investors and pushed Phoenix’s market cap to £9.7m today was the news that the firm has found extensive evidence of copper sulphides below and to the north-west, east, and south of Empire. Historically, there has been no sulphide exploration at Empire, but what has been found has yielded ore grades of up to 11.4pc copper equivalent.
In this morning’s update, Phoenix said step out drilling beyond the open pit has intersected high-grade copper sulphide mineralisation with high zinc, gold, and silver values. Specifically, five drill hole intercepts contained predominantly chalcopyrite and bornite copper sulphide mineralisation while another confirmed sulphide mineralisation beneath Empire’s oxide open pit.
To investigate the mineralisation further the firm is now targeting additional drilling, which it will complete over the next two months. Thomas, who described the results as ‘game-changing’ in Phoenix’s update today, told us the results confirm the potential he has long thought to be present at Empire:
‘It is a bit like peeling an onion; as we continue to remove the layers Empire’s story continues to look better. When we first took over the project nobody had strayed underneath it or given any consideration at all to the potential for sulphides. We realised that this ore system could expand going north and south along strike. This batch of results has given us the confidence to explore for sulphides properly. Specifically, they provide evidence that a feeder system exists below the Empire oxide resource and demonstrate the existence of such a sulphide system within the Empire Mine. Also, the gold and silver grades we have encountered could boost project economics significantly.’
In a final bit of news, Phoenix also announced that it had discovered an entirely new zone of mineralisation 330m north-west of the open pit, towards the Horseshoe Block. According to the company, the outcrop, which it has named Red Star, is 20m wide and contains heavy oxide/sulphide mineralisation. It has sent trench samples for assaying and plans to drill the site before year end. Thomas says Red Star is an excellent example of the along-strike extension of the orebody to the north and especially the sulphide potential that previous operators have missed:
‘Our infill drilling is expanding the ore body, but the underlying sulphides have suddenly started to show themselves in the drill holes. We are actually seeing the sulphides come up to the surface in the North. Nowhere is this more evident than at Red Rock, which is carpeted in blue rock thanks to a mix of oxides and sulphides with strong chrysocolla and bornite showings, exposed in a heavily timbered canyon. Despite the fact the zone is located just 330m from the northern pit boundary, no one previously knew it was there. We are thinking outside the box, looking outside the pit boundaries, and finding more ore and sulphides.
With all this potential starting to present itself, Thomas told us Empire is looking less and less like a simple copper heap leach operation. As a result, he believes the business will have to reassess its approach once the current drilling programme has completed:
‘All of this potential means we will have to take a step back to look at processing routes and where we move on to next. If this orebody is as significant as we think it is, then there will be other ways to process it and optimise production. Our approach isn’t necessarily written in stone. If we find that we have high-grade sulphides as well as oxides and these are nearer surface than originally thought, then obviously it is going to affect the processing route and we might have to opt for something other than heap leach. We have to be quick on our feet to make the best of all these opportunities for our shareholders and stakeholders.’