Zinc of Ireland targeting new zone at Kildare
Zinc of Ireland NL (ASX:ZMI) has released promising drilling results from areas adjacent to the McGregor and Shamrock deposits that form part of its Kildare Zinc Project in Ireland.
Diamond drill hole HZDD004 intersected 6 metres at 12.5% zinc+lead (11.7% zinc, 0.8% lead) from 400 metres downhole depth and 10 metres at 9.1% zinc+lead (8.2% zinc, 0.9% lead) from 418 metres downhole depth at the base of Waulsortian Reef position.
With regard to establishing parameters, management used a 5.5% zinc equivalent cut-off, four metre minimum intersection width and four metre maximum internal dilution.
Before looking more closely at the results released today, it is worthwhile gaining an appreciation of ZMI’s strategy leading into the drilling campaign as it outlines both the geology of the area and management’s expertise in targeting certain zones.
The following map will assist in providing an understanding of the areas being targeted by ZMI as it shows where the drilling is being conducted relative to established mineralisation.
Following the drilling of HZDD002, the management recognised the potential for FC-3 (fault compartment) to host base of reef style zinc-lead mineralisation and subsequently HZDD004 was completed from the same drill pad, targeting the centre of FC-3.
HZDD002 did not test the base of reef in FC-3 due to faulting but a range of very encouraging indications were encountered, leading the company to drill HZDD004.
The higher grade intersections were contained within a larger mineralised zone of 37 metres at 6% zinc+lead (5.5% zinc, 0.5% lead) from 390 metres, and using a 4% zinc equivalent cut-off, four metre minimum intersection width and six metre maximum internal dilution.
This indicated promising potential for additional zinc mineralisation within FC-3 which lies approximately 250 metres east of the McGregor zone and 200 metres south-west of the Shamrock zone.
FC-3 has a surface area of just over 100,000 square metres.
Providing an insight into how large this resource could be, the fault compartments which host the McGregor and Shamrock components of the resource (9 million tonnes at 9.5% zinc+lead) are approximately 160,000 square metres and 127,000 square metres respectively.
Mineralisation open in all directions
As indicated above, HZDD004 intersected the base of reef position approximately in the centre of FC-3.
Mineralisation is open in all directions, including 300 metres to the south before the bounding accommodation fault structure and transfer fault are encountered.
As such, drilling around HZDD004 will step out towards the faults to test the extent of mineralisation within FC-3.
HZDD004 was drilled at 75 degrees towards the north-west and intersected the expected stratigraphy with the Waulsortian Reef encountered at 184 metres until entering into the subreef at 420 metres.
Executive director, Patrick Corr explained the significance of the broader mineralised body in saying, ‘’It is of note that HZDD004 also intersected zinc mineralisation higher in the stratigraphic sequence between 219 metres and 237 metres (diluted overall intersection of 18 metres at 1.8% zinc, including 4 metres at 4.4% zinc from approximately 230 metres).
‘’In addition, the reported larger mineralised zone (from 391 metres to 428 metres down hole) is surrounded by a wide zone of lower grade zinc and lead mineralisation (from 365 metres to 468 metres down hole), which suggests that a volumetrically significant mineralised system has been intersected.’’
All intersections have been reported as downhole widths, which given the drill hole orientation and the overall low angle of bedding towards the south east, would mean that reported intervals are close to true widths.
As a point of reference, a 10% zinc grade within the McGregor zone would have a bulk density of approximately 3.3 tonnes per cubic metre.
Further drilling underway
Drilling of a follow-up diamond drill hole HZDD005 has commenced.
The drill hole is targeting the base of reef position approximately 90 metres to the north from the HZDD004 intersection within FC-3.
Exploration drilling continues within the Allenwood Graben with two diamond drill rigs.
One drill rig will continue to test the potential of FC-3, while the second drill rig will continue to test the next highest ranked fault compartments.
ZMI’s shares spiked 50% in July as the company began drilling at the Kildare Project and released an updated Mineral Resource Estimate.
With continued exploration results being released in the near term there is the prospect of maintaining this share price momentum.
While the zinc price has retraced from peak levels earlier in the year, it is still hovering around the midpoint of its long-term range.
Furthermore, support appears to be building just above the US$1.00 per pound mark, and this could well be the platform for a rally given that five-year London Metals Exchange zinc warehouse stock levels are at a near record low.
It is worth noting that the steep fall in 2016/2017 as indicated in the following chart underpinned a strong rally in the zinc price which saw it increase from around US$0.70 per pound to US$1.60 per pound during that period.
Industry dynamics should work in ZMI’s favour given there is an anticipated reduction in the supply of zinc concentrate of approximately 400,000 tonnes by 2021 which can partly be attributed to the closure of multiple zinc smelters across North America and a decrease in production from China.
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.