Perth-based mineral explorer Perilya Ltd has formally approved the development of its Potosi mine, located two kilometres from Broken Hill.
Perth-based mineral explorer Perilya Ltd has formally approved the development of its Potosi mine, located two kilometres from Broken Hill.
This follows completion of a pre-feasibility study and receipt of draft state and local government approvals for the project to proceed.
The development of an exploration decline from the base of the Potosi open pit to initially access approximately 194,000 tonnes of high grade material from Potosi North is expected to commence in the March quarter 2007, with first ore delivery expected in the September quarter 2007.
An underground drilling program will be undertaken concurrently with the mining of the Potosi North deposit to infill the Potosi Extended area, directly along strike. This represents a more cost effective method of infilling, and assessing extensions, to the deeper Potosi Extended resource.
Capitalising on existing infrastructure and a highly experienced mining workforce at Broken Hill, the project has very competitive fundamentals and is expected to increase zinc production from Broken Hill by approximately 10,000 tonnes in the first year and by 35,000 tonnes in subsequent years.
The resource is open in a number of directions and there is good potential for the addition of further resources with the planned drill program. The company is targeting an ultimate resource for the Potosi project of at least 4 million tonnes at grades of 10-12 per cent zinc, 3-5 per cent lead and 40-50 grams per tonne silver.
Chief executive officer, Len Jubber, said that Potosi presents Perilya with significant near term upside exposure to the high zinc price at a low development cost.
"The decline development and the concurrent exploration program will be largely, if not totally, self funded through ore mined en route.
"We have already acquired some of the necessary capital equipment for the project and have commenced implementing the requisite organisational structure on site," he said.
"Potosi is a potentially significant stand alone mine that will provide a third source of ore, thereby de-risking the overall Broken Hill operations, presenting the opportunity to increase production, extend overall mine life and decrease cash costs.
"Mining of Potosi North and the results of the initial underground drilling program will enhance our geological interpretation and confirm the operating assumptions, enabling completion of the full feasibility study for the development of the Potosi deposit," he said.
