Crumb For The Giants May Be Food Of Success For Pegmont

The Age

Thursday July 11, 1996

Barry FitzGerald

THE Pegmont lead-zinc deposit near Cloncurry in north Queensland has been around for as long as Garimpeiro cares to remember.

Discovered by Placer in the early 1970s, not much has been heard about the deposit since, a reflection of its ownership in more recent times by the likes of BHP, MIM and Newcrest.

The 11.1 million-tonne resource, grading 7.56 per cent lead and 3.09 per cent zinc, was always going to be on the smallish side for that lot with their focus on world-class deposits.

That is not to say that someone a whole lot smaller than them couldn't make a go of it.

Pegmont Mines NL falls into that category. It has acquired the deposit and has set about enhancing its appeal with a view to it underpinning a $5-$10 million float later this year.

The company is wholly owned by Pegasus Enterprises, the unlisted venture capital company headed up by Malcolm Mayger.

It was the Mayger/Pegasus combination that floated Clocurry Mining, the group that developed the Great Australia copper mine - a project that is now starting to hit its straps after some earlier difficulties.

Pegmont lies about 25 kilometres from BHP's $400 million Cannington lead/zinc/silver development. The Pegmont's silver count of about 10 grams a tonne is insignificant compared with that at Cannington, but Pegmont is in the same rock types and according to Mayger, is just about one of the best exploration plays he has come across.

The Selwyn and Osborne copper/gold mines are also within 30 kilometres of Pegmont, giving the deposit the benefit of a new wave of infrastructure that would only have been dreamt of in the 1970s.

The immediate need is to crank up the Pegmont resource base to something more like 20 million tonnes, with a pod here or there to sweeten its appeal.

A limited drilling program to confirm the early 1970s work has already thrown up some new targets, giving Mayger confidence that the 13 square kilometre mining lease holds some surprises yet.

THANKS to Mr Hamanaka at Sumitomo, it has not been a great couple of weeks in copper stocks.

The meltdown in the copper price has made it difficult for copper stocks to convince the sharemarket that they have some good news, particularly at the smaller end of the business.

That was the case during the week for Straits Resources and Murchison United, with their upgrade of the Maroochydore project in the east Pilbara.

Maroochydore is shaping up as a serious copper project.

Garimpeiro reckons the 885,000 tonnes of (contained) copper reported earlier in the week, with some cobalt credits along the way, point to a 25,000 tonne-a-year copper project before too long.

The clincher from the joint venture was that about two-thirds of the ore was amenable to standard heap-leach treatment followed by solvent extraction-electro-winning of the copper.

That represents a whole new world. In this case, Straits provides the expertise developed at the Girilambone operation in New South Wales.

When these SX-EW things work, they can be low-cost producers.

It would not surprise to see Maroochydore come out the other side of a feasibility study sporting a unit cost of below 60 US cents a pound.

Even the current copper price is well north of that figure.

Garimpeiro is also backing a bounce in the copper price, so he awaits with interest the stirring of interest when the nervous nellies are put to bed.

THERE is nothing Garimpeiro likes more than being right, even if the market is yet to recognise that is the case.

That's a long way of saying that Australasian Gold Mines NL (17 May) has begun to deliver on its promise.

The ever-young Mike Fotios was able to announce this week that the group's resource inventory in the Norseman area of Western Australia - life does exist there outside of Central Norseman - was now 400,000 ounces of gold.

The increase in the resource base has been driven by the company's Mount Henry area, some 12 kilometres south of the recently upgraded treatment plant near the starter-pit at Red, White and Blue.

The regional play is coming together nicely, giving the stock the potential to be rated as an 80,000-ounce producer within the limitations of Garimpeiro's horizon . . . say two years.

© 1996 The Age

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