Phoenix Global Mining (LSE:PGM) has bought nearly 400 acres of new land at its flagship Empire Mine in Idaho to give it the opportunity to expand its vast copper resource. It has increased its land position by 28pc through the addition of 21 unpatented mining claims near its existing Horseshoe Claim Block,
Phoenix has an 80pc interest in Empire and wants to fast-track it back into production with the aim of mining 7,000 tonnes of copper cathode a year by 2020. The first step has been developing Empire’s shallow oxide pit into a low-cost production operation with a 10-year initial mine life. The business hopes that the pit’s production revenues will fund additional development and exploration to extend mine life further.
In November, Phoenix reported that the total copper resource of Empire’s oxide pit had risen to 19.4m tonnes, 50pc higher than previous calculations. A $1m infill drilling also revealed that total contained copper rose by a third to 90,547 tonnes. Furthermore, the programme found 51,925t of zinc, 165,686 ounces of gold, and 6.4m ounces of silver. The discovery marked the first addition of the three metals to Empire’s inventory and drilling them will not cost Phoenix any more money.
In today’s update, Phoenix said it expects the preliminary economic assessment on Empire’s oxide resource imminently. Following this, the firm plans to launch its accelerated development plan and commencement of Bankable Feasibility Study activities in the area. Dennis Thomas, Phoenix’s chief executive, said today’s extension gives the business a large enough footprint at Empire for future operational expansion, particularly to the east of the Horseshoe Claim block.
He added: ‘The western extension provides both an enlarged future operational footprint and access to the possible extension of historical Horseshoe Mine mineralisation. Following the 33pc expansion of the Empire oxide resource in November 2017 and understanding the likelihood of additional resource expansion following the upcoming 2018 resource drilling programme, the company believes it is vital to control adequate footprint for any and all operational expansions.’
Following the news, Phoenix’s shares had risen by 8.2pc, or 0.4p, to 4.6p, as at the time of writing, giving the company a market cap of around £9.8m. Bearing in mind the operational plans that Phoenix laid out to us in an interview in January, this could still provide a good entry point.
According to Phoenix’s consulting geologist, exploration has only been carried out on 5pc of Empire’s potential ore system. If accurate, this could be an opportunity to increase the pit’s resources significantly through phased exploration. Thomas told us that Phoenix would be able to generate earlier production cash flow from this 5pc for a ‘very modest capital investment’. He hopes that this will enable it to begin paying dividends to shareholders earlier than otherwise possible.
But the early cash generation will also help fund the second phase of Empire’s development, which will see the firm drill beyond the pit to focus on deeper, higher-grade sulphide exploration and development. Work has already begun, and in October the first of two diamond drill holes targeting the sulphides started. A second launched in November.
There has been a very limited exploration of these sulphides, but they have historically yielded ore grades of up to 11.4pc copper and contain metals like gold, silver, zinc and tungsten. Phoenix#s directors believe that using previously unavailable modern drilling techniques to explore here will present significant upside and provide multiple revenue streams.
Empire is not Phoenix’s only opportunity, either. In October, the firm entered the booming cobalt market by adding two Idaho-based copper-cobalt properties to its portfolio. Earlier this year, Phoenix reported that 46 samples taken from the two sites showed cobalt mineralisation above detection limits. As a result, Phoenix plans to begin a focused drilling programme later this year.
Since our piece went out, Phoenix has announced that it has entered an exclusive option to acquire 80pc of the high-grade Gordon Lake gold property in Canada, from ExGen Resources. Gordon Lake has a similarly high-grade geological setting for previously producing mines in the area grading up to 21 g/t gold over 7.2 metres.
Author: Daniel Flynn
Disclosure: The author does not hold positions in any of the stocks mentioned above