Ironbark Zinc: 53% increase in Measured and Indicated base metal resource at Citronen

Ironbark Zinc (ASX: IBG) has increased both the grade and confidence of the resource at the Citronen base metals project in Greenland through successful drilling during 2011.

The company has reported a 53% increase in resources in the higher confidence Measured and Indicated categories, an 11% increase in the total contained metal inventory and a 10% increase in the zinc and lead grade. 

The resource upgrade, which was calculated using the more conservative Ordinary Kriging method, is based on successful drilling conducted by the company during 2011 and on more than 60,000 metres of diamond drilling since discovery.
Managing director Jonathan Downes told Proactive Investors today it was a successful field season last year that resulted in a resource upgrade on two levels.

“It’s been a very successful result on two levels, to summarise – a higher feed grade to the mine, but it also allows us to evaluate a much larger tonnage for mining purposes and reserve conversion,” he said.

The resource remains open in almost every direction and, importantly, highlights that exploration at Citronen has resulted in resource expansion every year.

The global resource at Citronen now stands at 13.1 billion pounds of zinc and lead, using a 2% zinc cut-off, compared to the previously reported estimate of 132.6 million tonnes at 4% zinc and lead for 11 billion pounds.

Due to the predominantly infill nature of drilling in 2011, there is no material change in the global tonnage of material at the 2% cut-off grade, but greater continuity of higher grade material has resulted in an increase in resource category and honouring of higher grade material.

Ironbark has defined a target resource of 165-190 million tonnes at 5.7-6.5% zinc and lead, which the company said may be updated following the recent resource upgrade.

Mining studies have identified several areas which warranted further drilling in order to increase resource level confidence and allow reporting of optimisation work as part of the Citronen Feasibility Study.

Drilling at Citronen in 2011 was focused on infill resource definition at the Esrum Zone and Beach South.

Drilling was successful at defining continuous zones of higher grade material at the Esrum Zone within areas previously classified as Inferred resources.

This has resulted in the resources targeted for mine optimisation to be revised upwards in confidence level and also an increase in contained metal due to increased zinc and lead grades.

The new resource estimate contains 73 million tonnes at 5.7% zinc and lead above a 3.5% zinc cut-off for 9.2 billion pounds of contained metal. 

The previously published 2010 mining study resource quoted 59.9 million tonnes at 5.9% zinc and lead.

This was produced using Inverse Distance Squared interpolation globally and conditional simulation methodology for areas within the Beach zone and was reported above a 3.5% zinc cut-off. This contained 7.7 billion pounds of contained zinc and lead metal.


Citronen Feasibility Study

Ironbark is making solid progress towards finalising the Feasibility Study for the Citronen project. Early figures released in October last year indicate capital expenditure and operating expenditure could be lower than other major global mines.
Downes said the upgrade in Measured and Indicated resources will feed directly into the ongoing Feasibility Study, which is nearing completion.

“We’ve actually done the vast majority of it, but with the help of China Nonferrous who are working on the optimisation of the capital and the construction of the mine, and potentially financing, we’re also now providing updated mining schedules in the new resource,” he said.

The study is based on a 3 million tonne per annum mining operation to produce between 175,000 and 275,000 tonnes per annum of 55% zinc concentrate and 10,000-26,000 tonnes per annum of 50% lead concentrate over a mine life of at least 13 years, not including Inferred mineralisation which could see a mine life of 16 years, with substantial potential for a much longer mine life.

The current estimated costs are interim and do not include any Inferred resources, which require further drilling to reclassify to Indicated or Measured categories.

Enticingly, the resource remains open in almost every direction which may support future mine expansion.
The next step for Ironbark is to complete the Feasibility Study and begin construction, which Downes anticipates will be towards the end of the year subject to the outcome of the Feasibility Study results.


Company Growth

Ironbark has received shareholder approval to proceed with a US$50 million convertible note funding facility with Glencore International to pursue acquisition opportunities.

The facility has been struck by Ironbark managing director Jonathon Downes at a level that provides for conversions to shares at a significant premium to Ironbark’s last traded share price.

The funding facility could see Ironbark expand to become a significant base metals house with this further backing from Glencore.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23926/ironbark-zinc-53-increase-in-measured-and-indicated-base-metal-resource-at-citronen--23926.html