Norfolk Metals is about to hit its stride in Chile with the rods now turning at its Carmen copper project, where the company is going after a grab bag of tantalising targets in a very shallow oxide zone littered with historic drill holes that look like they have been begging for follow-up for years.
Below the oxide zone is an equally tantalising sulphide zone that has historically thrown up some serious drill numbers, such as 69 metres at 1.37 per cent copper from just 43m. A 24m intersection grading at a respectable 2.15 per cent copper was contained within the old hit.
More on the sulphide zone later. For now, it’s all about the shallow oxide zone that kicks off from surface and Norfolk’s vision to twin some of the old holes, drill the prospect out further and then cost effectively mine it via a heap leaching operation – a strategy that has proven to be lucrative elsewhere in Chile.
Norfolk farmed into 70 per cent of the Carmen copper project in March in exchange for a $3 million exploration commitment in the ground and now has the rods turning on site. That deal was done with private operators Jason Greive and David Fowler, whose company Transcendence Mining holds an option over the project.
Carmen sits in the copper‑rich Huasco Province, in Chile’s highly prospective Atacama region, a jurisdiction that has delivered some of the planet’s biggest porphyry copper mines. Notably, it is just 16 kilometres from Teck–Newmont’s Relincho and Fortuna deposits in a geological postcode that oozes credibility.
The combined Relincho and Fortuna porphyry deposits weigh in with a stunning proven and probable mineral reserve totalling about 16.6 billion pounds of copper, 8.9 million ounces of gold and 464 million pounds of molybdenum.
Historically, different players put almost 150 holes into Carmen for about 10,000m, some as far back as the late 1800s. Small-scale high-grade artisanal mining is also evident at the project – generally a sure sign of mineralisation.
By 2002, more modern geophysics had sniffed out an elongated chargeability anomaly between 100m and 300m wide and 2400m long. In 2004, mapping and additional soil sampling confirmed the extent of the copper oxide zone, which is the focus of Norfolk’s attention.
The historic oxide zone drilling results clearly warrant more attention, given numbers such as 27.5m going 1.12 per cent copper from just 1.5m, including an 11.5m stretch coming in at 1.88 per cent copper. A 19m intersection showed 0.93 per cent copper from 9m and a further 2m hit graded more than 7 per cent.
By 2007, mining consultancy SRK Consultants had wrapped a starter, non-JORC-compliant 43-101 resource around the project of 5.6 million tonnes at 0.6 per cent copper.
Norfolk says the resource is still open in all directions and, notably, does not include some of the stellar hits that were never worked into the resource. These hits include 41m at 2.46 per cent copper from surface and 4m going a whopping 17.37 per cent copper.
Another 39m intersection in the oxide zone, grading 1.48 per cent copper from surface, is also yet to be worked into the resource, along with 29m at 1.25 per cent copper from surface and 14.9m at 1.82 per cent copper from just 8.9m. Norfolk is now planning to twin some of those holes to prove they were real and drill out the oxide zone resource ahead of building a low-cost, high-margin heap leach operation to produce copper cathode.
This strategy is not a shot in the dark - Chile and its neighbours have a deep track record of successful heap leach operations, where favourable metallurgy, low stripping ratios and established infrastructure create projects with rapid paybacks and robust margins. Norfolk says Carmen has all of these advantages and the geology gives the company multiple shots at goal.
The oxide cap is highly soluble and amenable to heap leaching - historical column testwork recorded 72 per cent to 82 per cent copper recoveries with only moderate acid consumption, while the consistent, at-surface oxide blanket points to a scenario where the stripping ratio may end up being embarrassingly low.
Norfolk also looks to have put together a cast of people to develop Carmen with some serious horsepower, including Transcendence’s two directors Greive and Fowler. Both men will sit on the project’s operational oversight committee and have been buying Norfolk shares.
When it comes to heap leaching operations, Fowler has been there and done that in his leadership role at Finders Resources, which operated the 20,000-tonne per annum Wetar copper heap leach project. He is also handy at passing the hat around, having put away $400 million in equity raises and a whopping $4 billion in debt as the chief financial officer of $9 billion miner Merdeka Copper Gold.
Grieve was recently Merdeka’s chief executive officer and has a calling card of mining majors he has worked with over about three decades, including Barrick Gold, Placer Dome, Rio Tinto, North Ltd and Evolution Mining. He was the general manager of Evolution’s Cowal gold mine in New South Wales and chief operating officer at Red 5’s King of The Hills operation and was instrumental in the greenfield development of both Cowal and King of the Hills.
Both Greive and Fowler appear to be taking more than just a passing interest in Norfolk – both pitched in to July’s oversubscribed $3.5 million capital raise for Norfolk and Transcendence. They may end up hanging around at the top of Norfolk’s share register, given Norfolk has an option to take out Transcendence’s final 30 per cent of Carmen using Norfolk stock as payment. Transcendence will also appoint a director to Norfolk’s board.
Norfolk and Transcendence have also pulled in Alex Raab as the project’s general manager. Raab is well-placed to be overseeing drilling operations at Carmen given he was intimately involved in eking out more than 8 million ounces at the Challenger gold mine. He also has an arms’ length-long resume working in and around some of the most successful mining projects in Chile.
In combination, Raab, Fowler, Greive and Norfolk’s well-known Perth-based executive chairman Ben Phillips appear well-placed to realise Norfolk’s vision of a high-margin low capex heap leach operation at Carmen.
Phillips has another lucrative-looking plan that he says is only taking up partial focus - for now. Under Carmen’s oxide zone are a handful of historically drilled, potentially company-making copper hits of 69m at 1.37 per cent copper from 43m, including 24m at 2.15 per cent copper, 14m at 1.77 per cent copper and a 52m hit going 0.92 per cent copper from 66m.
The maiden campaign will see four wildcat holes sunk into the sulphide zone, which might provide a step change in excitement. This nicely rounds out Norfolk’s strategy to drill out the oxide zone, build a low-cost heap leaching operation and start printing cash, or alternatively, drill out the sulphide zone and use the cash from the heap leach operation to build a potential standalone mine if the sulphide numbers end up being real.
And unlike most maiden drill programs, with so much historic copper already discovered at this project it is difficult to think there will be many - or even any - dusters in this campaign.
Norfolk is also something of a freak structurally, with only 65 million shares currently on issue, about half of which are tightly held by its top 20. A further 15 million shares will be issued in September as part of the company’s latest raise, leaving its register still incredibly tight at just 80 million shares. It has a very modest $10 million market cap too – and about half that amount in cash at bank.
It is now starting to make a bit of sense why Norfolk’s July capital raise was oversubscribed and why both Greive and Fowler are hitting their own wallets to buy up Norfolk shares. This could get interesting - and with the copper price starting to test recent highs in the past couple of months - it could get interesting quickly.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
