Galena Mining has pulled off its exquisite strategy to convert the giant Abra lead silver play in W.A from a massive tonnage, low-grade resource to a large tonnage high-grade play that now looks almost a certainty to be mined.
The company’s shares soared on the release of a new resource estimate this week that smashed the previous exploration target and dramatically boosted the chances of a positive development decision.
The new JORC 2012 resource estimate follows a maiden 8000-metre drill program in December that saw 12 out of 12 drill holes hit the ore body.
Abra now boasts a high-grade resource of 11.2 Mt of both indicated and inferred ore grading an impressive 10.1% lead and 28 g/t silver, based on a reasonably high cut-off grade of 7.5%. This ranks it as the highest-grade lead deposit in Australia and one that is now globally significant.
The high-grade resource sits within 36.6 Mt at 7.3% lead and 18 g/t silver, using a 5.0% lead cut-off.
Galena said the resource grade and size confirmed Abra as one of the largest undeveloped lead-silver projects in the world.
The company’s shares spiked 27% on the back of the new resource announcement after coming out of a trading halt. This brings Galena’s share price gain to more than 60% since the first week of January, when high-grade drill intercepts from the maiden drill program were released.
The new resource estimate smashes the high-grade exploration target in Galena’s prospectus last September, which ranged from 7 Mt at 6% lead up to 14 Mt at 8% lead.
The 2018 resource also represents a 129% increase in tonnes and an 18% increase in grade compared to a 2008 estimate by a previous owner of the deposit, when using comparable 5% cut-off grades.
Drilling at Abra has also produced significant copper and gold hits at depth, but these metals are not yet included in the resource estimate.
Galena CEO, Ed Turner, said: “These resource numbers have exceeded our expectations and confirm Abra as a truly world-class asset with global significance in the lead market. What is even more exciting for the company and its shareholders is that this looks like just the beginning of a much bigger project and that potential upside exists in and around where we have drilled to date.”
“We have a clear strategy to bringing Abra on line as one of Australia’s next base metals producers and our focus now is progressing a robust pre-feasibility study over the coming months.”
Galena’s high-grade strategy to bring Abra into development contention is fortuitously timed, with lead prices hitting their highest level in seven years back in January and climbing by more than 60% or US$1000 a tonne in the past two years.
Interestingly, whilst the primary use of lead is in batteries, demand is forecast to climb because most hybrid electric vehicles contain lead-acid batteries as well as lithium ion batteries.
Pre-feasibility work at Abra is well underway under the supervision of COO, Troy Flannery. Key work programs already initiated include hydrogeological, geotechnical, environmental, transport, logistics and metallurgical studies.
Galena is on track to deliver a pre-feasibility study in the second half of calendar 2018.
By Matt Birney
