Promising news on the graphite and base metals fronts drives Peninsula Mines higher

By Trevor Hoey. Published at Aug 16, 2017, in Small Caps

A double dose of good news over the last two days has resulted in the share price of Peninsula Mines (ASX: PSM) rallying 20%.

Of course it should be noted that share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

The developments which have sparked interest in the company relate to different areas of its operations in South Korea.

On Tuesday, PSM announced that it had signed a non-binding Memorandum of Understanding (MoU) with Canadian Stock Exchange listed DNI Metals Inc that envisages the formation of a co-operative joint venture to initially supply (and potentially develop and produce) up to 20,000 tonnes per annum of large flake graphite concentrate to South Korean end users.

DNI has large flake graphite projects in Madagascar which could see the company’s co-operate to supply up to 20,000 tonnes per annum of flake graphite concentrate from calendar year 2018.

DNI owns one commercially permitted, saprolite-hosted, predominantly large-flake graphite deposit in eastern Madagascar, the Vohitsara Project, and has signed a Letter of Intent (LOI) to purchase a second, adjoining, graphite deposit.

It is important to note in terms of the MoU’s references to external sourcing of graphite concentrate, that DNI also has a graphite wholesale business in which it buys and sells high quality flake graphite. This business has shown a steady increase in volume over the past year.

Under the terms of the agreement, the parties could source concentrate from locations other than Madagascar which also encompasses potential supply to Korean expandable graphite producer Graphene Korea Co.

Aside from generating near-term income this development has the potential to provide a springboard for commercialisation arrangements in relation to production which may stem from PSM’s existing graphite tenements, as well as those that are currently at the application stage.

By way of background, PSM also signed a separate Memorandum of Understanding (MoU) with Graphene Korea in June which is also non-binding, but envisages long-term strategic co-operation regarding the offtake of graphite concentrate.

Importantly, this arrangement also could see PSM receive assistance in relation to the development of graphite mining and processing both within and outside South Korea.

Peninsula commences drilling highly prospective Copperhead target at Chilbo

News that PSM had commenced drill testing the highly prospective Copperhead target, part of the Ubeong project also located in South Korea sparked further interest in the stock on Wednesday with its shares up nearly 10% in morning trading.

Management explained that Copperhead is considered highly prospective for porphyry copper-gold mineralisation, as well as zinc-lead-silver skarn mineralisation. Initial drilling is testing the high chargeability anomaly initially detected in IP surveys.

The 3D Inversion modelling of the IP chargeability anomaly by Southern Geoscience Consultants indicates that the possible disseminated to semi-massive sulphide body has east-west and north-south dimensions as indicated below.

Ubeong project PSM

The initial drillhole is planned to intersect the Copperhead sulphide target zone from 50 metres to at least 300 metres downhole, continuing to more than 400 metres where it is expected to intersect intrusive rocks below the interpreted sulphide target. Further drilling may then be carried out from the same site subject to initial results.

Drilling is also planned to test the Taipan and Cobra targets where XRF soil sampling results indicated significant and broad, northeast-southwest oriented zones of highly anomalous zinc-lead-silver and copper mineralisation in the outcropping part of the skarn-limestone unit.

Promising high grade rock chip sample results of up to 48.8% zinc and 958 grams per tonne silver, as well as 27.9% zinc, 13.85% lead and 1.1% copper were identified at Taipan. Grades of up to 25.6% zinc, and up to 215 grams per tonne silver, as well as copper mineralisation grading up to 2.3% was delineated at the Cobra system.

Consequently, there is substantial upcoming news flow from PSM’s South Korean projects, and as indicated by the spike that has occurred in the last two days, this has the potential to trigger a significant rerating.

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