REG - South32 Limited - Hermosa - Mineral Update and Exploration Results
24/07/2023 07:15
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RNS Number : 8828G South32 Limited 24 July 2023
24 July 2023
South32 Limited
(Incorporated in Australia under the Corporations Act 2001 (Cth))
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32; ADR: SOUHY
ISIN: AU000000S320
south32.net
HERMOSA PROJECT - MINERAL RESOURCE ESTIMATE UPDATE
AND EXPLORATION RESULTS
South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) reports an update
to the Mineral Resource estimate for the Taylor deposit, as well as
Exploration Results for the Peake prospect, which form part of our 100% owned
Hermosa Project located in Arizona, USA (Annexure 1 - Figure 1).
The Hermosa Project is a polymetallic development option located in Santa Cruz
County, Arizona. It comprises the Taylor zinc-lead-silver deposit, the Clark
battery-grade manganese deposit, and an extensive, highly prospective land
package with potential for the discovery of polymetallic and copper
mineralisation.
The Taylor Mineral Resource estimate (Table A) is reported in accordance with
the JORC Code (2012 edition)(( 1 )) at 153 million tonnes, averaging 3.53%
zinc, 3.83% lead and 77 g/t silver. The upgrade includes a 41% increase in the
Measured Mineral Resource, providing a compelling base to underpin future
production. The deposit remains open in several directions, offering the
potential for further growth.
Separately, we have today released exploration drilling results from our Peake
copper-lead-zinc-silver prospect, a lateral zone prospective for copper
mineralisation, located south of the Taylor deposit.
The results include our best intercept at Peake to date, with diamond drill
hole HDS-813 returning a downhole intersection of 139m @ 1.88% copper, 0.51%
lead, 0.34% zinc and 52g/t silver at 2.49% CuEq 2 including 58.2m @ 3.1%
copper, 0.6% lead, 0.24% zinc, 74g/t silver and 0.015% molybdenum at 3.84%
CuEq. Further detail is shown in Annexure 1 - Sections 1 and 2.
We consider the results to be supportive of future exploration potential, with
the Peake prospect remaining open in several directions. Further exploration
drilling at Peake is planned in H1 FY24.
Full details of this update are contained in this announcement.
Competent Person Statement
Mineral Resource estimate
The information in this report that relates to the Mineral Resource estimate
for the Taylor deposit is based on information compiled by Paul Richardson, a
Competent Person who is a registered member of Society for Mining, Metallurgy
& Exploration, a 'Registered Professional Organisation' included in a list
that is posted on the ASX website from time to time. Mr. Richardson is a
full-time employee of South32 and has sufficient experience that is relevant
to the style of mineralisation and the type of deposit under consideration and
to the activity being undertaken to qualify as a Competent Person as defined
in the 2012 Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. Mr. Richardson consents to the
inclusion in the report of the matters based on his information in the form
and context in which it appears.
Exploration Results
The information in this report that relates to Exploration Results for the
Peake prospect is based on information compiled by David Bertuch, a Competent
Person who is a member of The Australasian Institute of Mining and Metallurgy.
Mr. Bertuch is a full-time employee of South32 and has sufficient experience
that is relevant to the style of mineralisation and the type of deposit under
consideration and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Bertuch
consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
About us
South32 is a globally diversified mining and metals company. Our purpose is to
make a difference by developing natural resources, improving people's lives
now and for generations to come. We are trusted by our owners and partners to
realise the potential of their resources. We produce commodities including
bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical
coal and manganese from our operations in Australia, Southern Africa and South
America. With a focus on growing our base metals exposure, we also have two
development options in North America and several partnerships with junior
explorers around the world.
Investor Relations
Ben Baker
T +61 8 9324 9363
M +61 403 763 086
E Ben.Baker@south32.net
(file:///C%3A/Users/wilsr1/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/3ZTI7L8N/Ben.Baker@south32.net)
Media Relations
Jamie Macdonald Miles Godfrey
T +61 8 9324 9000 T +61 8 9324 9000
M +61 408 925 140 M +61 415 325 906
E Jamie.Macdonald@south32.net
E Miles.Godfrey@south32.net
(file:///C%3A/Users/wilsr1/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/3ZTI7L8N/Jamie.Macdonald@south32.net) (file:///C%3A/Users/wilsr1/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/3ZTI7L8N/Miles.Godfrey@south32.net)
Further information on South32 can be found at www.south32.net
(http://www.south32.net) .
Approved for release to the market by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
24 July 2023
Table A: Mineral Resource estimate for the Taylor deposit in 100% terms(2)
As of 30 June 2023
Ore Type Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources
Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag
UG Sulphide(1,3) 41 4.22 4.25 67 83 3.38 3.91 76 28 2.96 2.97 93 153 3.53 3.83 77
Million dry metric tonnes(2), % Zn- Percent zinc, % Pb- Percent lead, g/t Ag-
grams per tonne of silver.
As of 30 June 2022
Ore Type Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources
Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag Mt(2) % Zn % Pb g/t Ag
UG Sulphide(1) 29 4.10 4.05 57 82 3.65 4.45 88 23 3.62 3.82 93 133 3.74 4.26 82
UG Transition(1) - - - - 3.7 6.11 4.21 60 1.4 5.55 3.91 64 5.1 5.95 4.13 61
Total 29 4.10 4.05 57 86 3.76 4.44 86 24 3.73 3.82 91 138 3.82 4.25 81
Million dry metric tonnes(2), % Zn- Percent zinc, % Pb- Percent lead, g/t Ag-
grams per tonne of silver.
Notes:
1. Cut-off grade: NSR of US80$/dmt for UG Sulphide. Input parameters for the
NSR calculation are based on South32's long term forecasts for Zn, Pb and Ag
pricing; haulage, treatment, shipping, handling and refining charges. Total
metallurgical recovery assumptions differ between geological domains and vary
from 85% to 92% for Zn, 89% to 92% for Pb, and 76% to 83% for Ag.
2. All masses are reported as dry metric tonnes (dmt). All tonnes and grade
information have been rounded to reflect relative uncertainty of the estimate,
hence small differences may be present in the totals.
3. UG Transition no longer reported separate from UG Sulphide due to change in
modelling methodology.
MINERAL RESOURCE ESTIMATE FOR THE TAYLOR DEPOSIT
South32 confirms reporting of the updated Mineral Resource estimate as at 30
June 2023 for the Taylor deposit and comparison to the previously reported
Mineral Resource estimate as at 30 June 2022 (Table A).
The Mineral Resource estimate is reported in accordance with the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(JORC Code, 2012 edition).
The breakdown of the total estimates of Mineral Resource into the specific
JORC Code categories is contained in Table A. This announcement summarises the
information contained in the JORC Code Table 1 which is included in Annexure
1.
Geology and geological interpretation
The Taylor deposit is predominantly hosted in Permian carbonates of the
Pennsylvanian Naco Group of south-eastern Arizona (Annexure 1 - Figure 3). It
is a CRD (Carbonate Replacement Deposit) style Zn-Pb-Ag massive sulphide
deposit. The deposit comprises upper Taylor Sulphide and lower Taylor Deeps
domains that have a general northerly dip of 30º and are separated by a low
angle thrust fault. Mineralisation within the stacked profile of the thrusted
host stratigraphy extends 1,200m from near-surface and is open at depth.
Mineralisation is modelled for multiple litho-structural domains for an
approximate strike of 2,500m and width of 1,900m. (Annexure 1 - Figures 5 and
6).
Drilling techniques
All recent drilling was conducted from the surface using HQ (95.6mm) diameter
core and reducing to NQ (75.3mm) at depth. PQ (122.6mm) core has also been
used to collect bulk metallurgical samples. Older Reverse Circulation (RC)
drilling exists for the Taylor deposit and is being replaced by core drilling
as infill drilling progresses.
The Taylor estimation domains are based on data from 273 surface diamond drill
holes.
Since August 2018, holes have been drilled between 60º and 85º dip to
maximise the angle at which mineralisation and structures are intersected.
Oriented drilling was introduced in October 2018 to incorporate structural
measurements into geological modelling for stratigraphy and fault
interpretation.
Sampling and sub-sampling techniques
The interpreted geology, geometallurgy and geotechnical modelling is based on
507,550m of drilling.
The mineralised intersections were verified by geologists throughout each
drilling program and reviewed independently against core photos by an
alternate geologist prior to geological interpretation.
The drill half cores were sampled at regular 1.5m intervals or broken at
geologic/structural intervals as needed. Samples were submitted for
preparation at Australian Laboratory Services (ALS), in Tucson, an external
ISO 17025 certified laboratory. Preparation involved crushing to 2mm, a rotary
split to 250g and pulverisation to 85% passing 75µm to create a 250g pulp.
Sample analysis method
Samples of 0.25g taken from the 250g pulp were processed at ALS in Vancouver
where samples were digested using a four-acid leach method. This was followed
by an Inductively Coupled Plasma - Atomic Emission Spectroscopy (ICP-AES)
determination for 33 elements.
A range of Certified Reference Materials (CRM) were routinely submitted to
monitor assay accuracy. Low failure rates were within expected ranges for this
deposit style, demonstrating reliable laboratory accuracy.
Results of routinely submitted field duplicates to monitor sample
representativity, coarse crush and laboratory pulp duplicates to quality
control sample preparation homogeneity, and certified blank submissions to
detect cross-contamination were all within an acceptable range for resource
modelling.
Estimation methodology
Resource estimation was performed using two passes of ordinary kriging and a
final outer pass of inverse distance squared interpolation for four elements
of economic interest (Zn, Pb, Ag, Cu), two potentially deleterious elements
(Arsenic (As), Manganese (Mn)) and four tonnage estimation elements (Iron
(Fe), Calcium (Ca), Sulphur (S), Magnesium (Mg)).
Search estimation criteria are consistent with geostatistical models developed
for each estimation domain according to the appropriate geological controls.
Validation includes statistical analysis, swath plots and visual inspection.
Specific gravity measurements from drill cores were used as the basis for
estimating dry bulk density in tonnage calculations for both mineralised and
non-mineralised material.
Mineral Resource classification
Mineral Resource classification criteria are based on the level of data
informing both the geological model and grade estimation.
Measured Resources are reported for blocks with a nearest three-hole average
distance of 60m or less and require a minimum of three holes (nine samples).
Indicated Resources require an average of nearest three-hole drillhole spacing
of approximately 110m.
Inferred Resources are constrained by the reporting of estimates to within
300m beyond data and require a minimum of one hole.
Mining and metallurgical methods and parameters
Reasonable prospects for eventual economic extraction have been determined
through assessment of the Mineral Resource at a pre-feasibility study level,
ranging from stope optimisation and mine scheduling through to mineral
processing and detailed financial modelling.
Underground mining factors and assumptions for longhole stoping on a sub- or
full-level basis with subsequent paste backfill are made based on industry
benchmark mining production and project related studies.
Cut-off grade
The Taylor deposit is a polymetallic deposit which uses an equivalent Net
Smelter Return (NSR) value as a grade descriptor.
Input parameters for the NSR calculation are based on South32's long term
forecasts for Zn, Pb and Ag pricing; haulage, treatment, shipping, handling
and refining charges.
Total metallurgical recovery assumptions differ between geological domains and
vary from 85% to 92% for Zn, 89% to 92% for Pb, and 76% to 83% for Ag.
A dollar equivalent cut-off of NSR US$80/dmt is supported by studies and forms
the basis of assessment of reasonable prospects for eventual economic
extraction.
Additional information is detailed in Annexure 1.
Annexure 1: JORC Code Table 1: Taylor Mineral Resource estimate and Peake
Exploration Results
The following table provides a summary of important assessment and reporting
criteria used for the declaration of Mineral Resource estimate for the Taylor
deposit and for the reporting of Exploration Results for the Peake prospect,
that form part of the Hermosa Project located in South Arizona, USA (Figure
1). Sections 1 and 2 below relate to the assessment and reporting criteria
used in respect to both the Taylor deposit and the Peake prospect, whilst
Section 3 relates to the declaration of a Mineral Resource estimate for the
Taylor deposit. The criteria are in accordance with the Table 1 checklist of
the Australasian Code for the Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, 2012 Edition) on an 'if not, why
not' basis. Unless otherwise specifically stated, the response in Table 1
relates to both Taylor deposit and Peake prospect.
Section 1 Sampling techniques and data
(Criteria in this section apply to all succeeding sections.)
Criteria Commentary
Sampling techniques · The FY23 Taylor deposit Mineral Resource Estimate is based on a
database comprising of 776 drill holes, including 282 historical Reverse
Circulation (RC), Rotary Air Blast (RAB), or Air Circulation (AC) and 494
Diamond Drilling (DD) drill holes of primarily HQ and NQ sizes. The Taylor
deposit is characterised predominantly by DD. 273 holes were used for the
Taylor deposit Mineral Resource estimation.
· In total, the database features approximately 507,550m of
drilling. 140 holes, totalling approximately 56,700m, are excluded from the
database where twinned holes were drilled or where the quality of drilling was
compromised historically due to deficiencies in logging, lack of assays, or
quality assurance/control data.
· For the FY23 Mineral Resource Estimate update, 31 holes were
added to the database to refine the geological model but could not be used in
estimation due to delays in delivery of analytical results. In addition, the
geological model reflects inputs from near-surface RC drilling.
· The Peake prospect is based on a database comprising 17 diamond
drill holes of primarily HQ and NQ sizes. Exploration results from 13 of these
holes were previously reported with four new holes reported in this
announcement. The Peake prospect is characterised by DD.
· A heterogeneity study was undertaken to determine sample
representativity. Recommendations to improve duplicate performance included
increasing sub-sample and pulverising volumes.
· Sampling is predominantly at 1.5m intervals on a half-core basis.
· Core is competent to locally vuggy and sample representativity is
monitored using half-core field duplicates submitted at a rate of
approximately 1:40 samples. Field duplicates located within mineralisation
envelopes demonstrate an 80% performance to within 30% of original sample
splits.
· Core assembly, interval mark-up, recovery estimation (over the 3m
drill string) and photography are all activities that occur prior to sampling
and follow documented procedures.
· Sample size reduction during preparation involves crushing and
splitting of PQ (122.6mm), (HQ (95.6mm) or NQ (75.3mm) half-cores.
Drilling techniques · Data used for estimation is based on logging and sampling of PQ
and HQ diamond core. This is reduced to NQ in areas of challenging ground
condition as well a historical RC drilling. Triple and split-tube drilling
methods are employed in situations where ground conditions require such coring
mechanisms to improve core recovery.
· Since mid-August 2018, all drill cores were oriented using the
Boart Longyear 'Trucore' system. In Q3 FY20, acoustic televiewer data capture
was implemented for downhole imagery for most drilling to improve orientation
and geotechnical understanding. From September 2021, the acoustic televiewer
was the sole drill core orientation method applied. Structural measurements
from oriented drilling are incorporated in geological modelling to assist with
fault interpretation.
Drill sample recovery · Prior to October 2018, core recovery was determined by summation
of measurement of individual core pieces within each 3m drill string. Recovery
of core has since been measured after oriented core alignment and mark-up.
· Core recovery is recorded for all diamond drill holes. Recovery
on a hole basis exceeds 90%.
· Poor core recovery can occur when drilling through the oxide
material and in major structural zones. To maximise core recovery, drillers
vary speed, pressure, and composition of drilling muds, reduce PQ to HQ to NQ
core size and use triple tube and '3 series' drill bits.
· When core recovery is compared to Zn, Pb, Cu and Ag grades for
either a whole data set or within individual lithology, there is no
discernible relationship between core recovery and grade.
· Correlation analysis suggests there is no relationship between
core recovery and depth from surface except where structure is a
consideration. In isolated cases, lower recovery is observed at intersections
of the carbonates with a major thrust structure, locally natural karstic voids
have been encountered alongside shallow historic workings.
Logging · The entire length of core is photographed and logged for
lithology, alteration, structure, Rock Quality Designation (RQD) and
mineralisation.
· Logging is both quantitative and qualitative, of which there are
several examples including estimation of mineralisation percentages and
association of preliminary interpretative assumptions with observations.
· All logging is peer reviewed against core photos. Context of
current geological interpretation and information from surrounding drill holes
are used when updating geological model.
· Geologic and geotechnical logging is recorded on a tablet with
inbuilt Quality Assurance and Quality Control (QA/QC) processes to minimise
entry errors before synchronising with the site database.
· Logging is completed to an appropriate level to support
assessment of exploration results and Mineral Resource Estimation.
Sub-sampling techniques and sample preparation · Sawn half cores and barren whole core samples are taken on
predominantly 1.5m intervals for the entire drill hole after logging.
Mineralisation is highly visual. Sampling is also terminated at
litho-structural and mineralogical boundaries to reduce the potential for
boundary/dilution effects on a local scale.
· Sample lengths vary between 0.75m and 2.3m. The selection of the
sub-sample size is not supported by sampling studies.
· Since the initial discovery of the Taylor sulphide deposit, all
sample preparation is performed offsite at an ISO 17025 certified laboratory.
This was performed by Skyline until 2012, after which it was performed by ALS.
Samples submitted to ALS are generally 4-6kg in weight. Sample size reduction
during preparation involves crushing of PQ (122.6mm), HQ (95.6mm) or NQ
(75.3mm) half or whole cores, splitting of the crushed fraction, pulverisation
and finally splitting of the sample for analysis. The process adopted is as
follows:
o The entire half or whole core samples are crushed and split in preparation
for pulverisation.
o Fine crushing follows until 70% of the sample passes 2mm mesh. A 250g
split of finely crushed sub-sample is obtained via rotary or riffle splitter
and are pulverised. The sub-sample split was recently increased to 1,000g to
address sample heterogeneity study outcomes.
o The samples are pulverised until 85% of the material is less than 75µm.
o These 250g pulp samples are taken for assay and a 0.25g split is used for
digestion.
· ALS protocol requires 5% of samples to undergo a random
granulometry QC test. Samples are placed on 2mm sieve and completely processed
to ensure the passing mesh criteria is maintained. Pulps undergo similar tests
with finer meshes. Results are loaded to an online portal for review by the
client.
· Precision in sample preparation is monitored with blind
laboratory duplicates assayed at a rate of 1:50 submissions.
· Coarse crush preparation duplicate pairs show that at least 80%
of Zn, Pb and Cu report within +/-20% of original samples, Ag reports at 78%.
Performance significantly improves for all analytes in higher grade samples to
better than 90%. Pulp duplicates reporting to 90% for Zn, Pb and Cu, with Ag
reporting at 82% within +/-20%. For higher pulp grade samples, the performance
improves to 99% for all elements.
· Sub-sampling techniques and sample preparation are adequate for
providing quality assay data to analyse exploration results and for Mineral
Resource estimation but will benefit from planned studies to optimise sample
selectivity and quality control procedures.
Quality of assay data and laboratory tests · Historical descriptions of the analytical techniques conducted by
ASARCO LLC (ASARCO) from 1950-1991 for the original drilling, 113 AC, RAB, RC
and DD are not available. ASARCO data does not form part of the Mineral
Resource estimate.
· Between 2006 and 2009, Arizona Mining Inc. (AMI) used Skyline
Laboratories sampling with Inductively Coupled Plasma - Atomic Emission
Spectroscopy (ICP-AES) with atomic absorption spectrometry (AAS) to test for
Cu, Pb, Zn, and Mn after a multi-acid digestion. Ag and Au fire assays were
undertaken by Assayers Canada in Vancouver from a split of each pulp using a
30g charge, occasionally reduced in weight for high manganese oxide samples.
In 2006, 4,272 ASARCO pulp samples, representing 90% of sampling, were
re-analysed to validate the Cu, Pb, Zn, and Mn assay results. For Ag, the
reanalysis program represented 77% of the total assays.
· Between 2010 and 2012, Arizona Mining Inc. (AMI) changed to
Inspectorate in Reno, Nevada laboratories for gravimetric fire assay of Au and
Ag, with repeat assays of Ag values greater than 102g/t (3 ounces per US ton).
· Between 2014 and 2020, samples of 0.25g from pulps were processed
at ALS Vancouver. ME-ICP61 analysis was used where the samples were totally
digested using a four-acid method. This was followed by analysis using a
combination of Inductively Coupled Plasma - Mass Spectrometry (ICP-MS) and
ICP-AES determination for 33 elements. Overlimit values for Ag, Pb, Zn, and Mn
utilise OG-62 analysis. In November 2020, the analytical method improved with
ME-MS61 for the four-acid 48 element assay for additional elements and
improved detection limits alongside the addition of overlimit packages of
S-IR07 for S and ME-ICP81 for Mn. Digestion batches of 36 samples plus four
internal ALS control samples (one blank, two CRM, and one duplicate) were
processed using the four-acid digestion. Industry standard and adequate
quality control measures and monitoring are utilised with CRM, duplicates,
blanks and internal reference material insertion.
· The nature and quality of assaying and laboratory procedures by
AMI and South32 are appropriate for review of exploration results and support
resource estimation.
Verification of sampling and assaying · In 2019, South32 completed a pulp re-assay program of 3,071
samples from 16 holes drilled between 2007 and 2012 from the Clark Deposit.
This program used 33 suite Inductively Coupled Plasma Optical Emission
Spectroscopy (ICP-OES) analysis after four-acid digestion to validate the
values for Zn, Mn, Ag, Pb and Cu in the database. This program compared
results from the original analytical methods - mixed digestion, spectroscopy
and fire assay techniques - with the more established methods employed on the
project since 2014 - based on ICP-AES and total digestion. A secondary
objective of the re-assay program was to provide a more complete analytical
suite for multielement data which had not been analysed in the 2007-2012
drilling.
o The re-assay results indicate good reproducibility in ICP-OES results for
zinc, manganese, silver and lead, from relative percent difference calculated
for each original and duplicate sample pair. Gravimetric fire assay results
for silver are generally not comparable around low values and issues with
these values are known from previous studies.
· Core photos of the entire hole are reviewed by geologists to
verify significant intersections and to finalise the geological interpretation
from core logging.
· Sampling is recorded digitally and uploaded to an Azure SQL
project customised database (Plexer) via an API provided by the ALS laboratory
and the external Laboratory Information Management System (LIMS). Digitally
transmitted assay results are reconciled once uploaded to the database.
· No adjustments of assay data were made.
Location of data points · Drill hole collar locations are surveyed by registered surveyors
using a GPS Real Time Kinematic (RTK) rover station correlating with the
Hermosa project RTK base station and Global Navigation Satellite Systems which
provide up to 1cm accuracy.
· Downhole surveys prior to mid-August 2018 were undertaken with a
'TruShot' single shot survey tool every 76m and at the bottom of the hole.
Between 20 June 2018 and 14 August 2018, downhole surveys were undertaken at
the same interval with both the single shot and a Reflex EZ-Gyro, after which
the Reflex EZ-Gyro was used exclusively.
· The Hermosa project uses the Arizona State Plane (grid)
Coordinate System, Arizona Central Zone, International Feet. The datum is
NAD83 with the vertical heights converted from the ellipsoidal heights to
NAVD88 using GEOID12B.
· All drill hole collar and downhole survey data were audited
against source data.
· Survey collars have been compared against a one-foot topographic
aerial map. Discrepancies exceeding 1.8m were assessed against a current
aerial flyover and the differences attributed to surface disturbance from
construction development and/or road building.
· Survey procedures and practices result in data location accuracy
suitable for mine planning.
Data spacing and distribution · Drill hole spacing ranges from 10m to 500m. The spacing supplies
sufficient information for geological interpretation and mineral resource
estimation.
· Drill holes were composited to nominal 1.5m downhole composites.
Orientation of data in relation to geological structure · Mineralisation varies in dip between:
o 30°NW in the upper Taylor Sulphide.
o 20°N and 30°N in the lower Taylor Deeps and Peake Sulphide domains.
· Drilling is oriented at a sufficiently high angle to allow for
accurate representation of grade and tonnage using three-dimensional modelling
methods.
· There is an indication of sub-vertical structures (possibly
conduits for or offsetting mineralisation) which have been accounted for at a
regional scale through the integration of mapping and drilling data. Angled,
oriented core drilling introduced from October 2018 is designed to improve
understanding of the relevance of structures to mineralisation, as well as the
implementation of acoustic televiewer capture.
Sample security · Samples are tracked and reconciled through a sample numbering and
dispatch system from site to the ALS sample distribution and preparation
facility in Tucson or other ALS preparation facilities as needed. The ALS LIMS
assay management system provides an additional layer of sample tracking from
the point of sample receipt. Movement of samples from site to the Tucson
distribution and preparation facility is currently conducted through
contracted transport. Distribution to other preparation facilities and
Vancouver is managed by ALS dedicated transport.
· Assays are reconciled and results are processed in an Azure SQL
project customised database (Plexer) which has password and user level
security.
· Core is stored in secured onsite storage prior to processing.
After sampling, the remaining core, returned sample rejects and pulps are
stored at a purpose-built facility that have secured access.
· All sampling, assaying and reporting of results are managed with
procedures that provide adequate sample security.
Audits or reviews · The FY23 Mineral Resource and database supporting exploration
results has been externally audited by Golder Associates Pty Ltd. The audit
concluded, in general, that modelling has been conducted in a manner
consistent with industry standards and supporting documentation has been
adequate.
· The ALS laboratory sample preparation and analysis procedures
were audited by internal South32 Geoscientists during the drilling campaign.
No significant issues were identified. Outcomes of the audit were shared with
ALS for them to implement recommendations.
· Recent changes have been implemented to improve duplicate
performance by increasing the size of sub-sample splits and pulverising
volumes.
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Criteria Commentary
Mineral tenement and land tenure status · The Hermosa Project mineral tenure (Figures 1 and 2) is secured
by 30 patented mining claims, totalling 228 hectares that have full surface
and mineral rights owned fee simple. These claims are retained in perpetuity
by annual real property tax payments to Santa Cruz County in Arizona and have
been verified to be in good standing until 31 December 2023.
· The patented land is surrounded by 2,505 unpatented lode mining
claims totalling 19,225.82 hectares. These claims are retained through payment
of federal annual maintenance fees to the Bureau of Land Management (BLM) and
filing record of payment with the Santa Cruz County Recorder. Payments for
these claims have been made for the period up to their annual renewal on or
before 1 September 2024.
· Title to the mineral rights is vested in South32's wholly owned
subsidiary South32 Hermosa Inc. No approval is required in addition to the
payment of fees for the claims.
· AMI purchased the project from ASARCO and no legacy royalties,
fees or other obligations are due to ASARCO or its related claimants (i.e. any
previous royalty holders under ASARCO royalty agreements). At present, four
separate royalty obligations apply to the project:
o Ozama River Corporation: A 2% NSR royalty payable by AMI to Ozama River
Corporation (Ozama) for the future sale of all production minerals from
certain identified claims.
o Osisko Gold Royalties Ltd.: A 1% NSR royalty to Osisko Gold Royalties Ltd.
(Osisko) on all sulphide ores of lead and zinc in, under, or upon the surface
or subsurface of the Hermosa project. This royalty also applies to any copper,
silver or gold recovered from the concentrate from such ores.
o Bronco Creek Exploration, Inc.: A 2% of production returns from those
claims to Bronco Creek claims.
o Allis Holdings Arizona, LLC: A 1.5% NSR royalty on all production minerals
extracted from three patented mining claims consisting of approximately 60.94
acres (24.66 hectares(ha)).
· In addition to the 30 patented mining claims with the surface and
mineral rights owned fee simple, South32 Hermosa Inc. also owns other fee
simple properties totalling approximately 3,120.09 acres (1,263.65 ha) which
are not patented mining claims, and which are a mix of residential and vacant
properties.
Exploration done by other parties · ASARCO acquired the property in 1939 and completed intermittent
drill programs between 1940 and 1991. ASARCO initially targeted silver and
lead mineralisation near historical workings of the late 19th century. ASARCO
identified silver-lead-zinc bearing manganese oxides in the manto zone of the
overlying Clark deposit between 1946 and 1953.
· Follow up rotary air hammer drilling, geophysical surveying,
detailed geological and metallurgical studies on the manganese oxide manto
mineralisation between the mid-1960's and continuing to 1991, defined a heap
leach amenable, low-grade manganese and silver resource reported in 1968,
updated in 1975, 1979 and 1984. The ASARCO drilling periods account for 113
drill holes in the database.
· In March 2006, AMI purchased the ASARCO property and completed a
re-assay of pulps and preliminary SO(2) leach tests on the manto
mineralisation for a Preliminary Economic Assessment (PEA) in February 2007.
Drilling of RC and diamond holes between 2006 and 2012 focused on the Clark
deposit (235 holes) and early definition of the Taylor deposit sulphide
mineralisation (16 holes), first intersected in 2010. Data collected from the
AMI 2006 campaign is the earliest information contributing to estimation of
the Taylor deposit Mineral Resource.
· AMI drill programs between 2014 and August 2018 (217 diamond
holes) focused on delineating Taylor deposit sulphide mineralisation, for
which Mineral Resource estimates were reported in compliance to NI 43-101
(Foreign Estimate) in November 2016 and January 2018.
Geology · The regional geology is set within Lower-Permian carbonates,
underlain by Cambrian sediments and Proterozoic granodiorites. The carbonates
are unconformably overlain by Triassic to late-Cretaceous volcanic rocks
(Figures 3 and 4). The regional structure and stratigraphy are a result of
late-Precambrian to early-Palaeozoic rifting, subsequent widespread
sedimentary aerial and shallow marine deposition through the Palaeozoic Era,
followed by Mesozoic volcanism and late batholitic intrusions of the Laramide
Orogeny. Mineral deposits associated with the Laramide Orogeny tend to align
along regional NW and NE structural trends.
· Cretaceous-age intermediate and felsic volcanic and intrusive
rocks cover much of the Hermosa project area and host low-grade disseminated
silver mineralisation, epithermal veins and silicified breccia zones that have
been the source of historic silver and lead production.
· Mineralisation styles in the immediate vicinity of the Hermosa
Project include:
o the Carbonate Replacement Deposit (CRD) style zinc-lead-silver base metal
sulphides of the Taylor deposit;
o the lateral skarn-style copper-lead-zinc-silver Peake prospect; and
o an overlying manganese-zinc-silver oxide manto deposit of the Clark
deposit (Figures 4, 5, 6, and 7).
· The Taylor deposit comprises the overlying Taylor Sulphide and
Taylor Deeps domains separated by a thrust fault. Approximately 600-750m
lateral and south of the Taylor Deeps domain, the Peake prospect copper-skarn
sulphide mineralisation is identified in older lithological stratigraphic
units along the continuation of the thrust fault (Figures 5 and 6).
· The north-bounding edge of the thrusted carbonate rock is marked
by a thrust fault where it ramps up over the Jurassic/Triassic 'Older
Volcanics' and 'Hardshell Volcanics'. This interpreted pre-mineralising
structure that created the thickened sequence of carbonates also appears to be
a key mineralising conduit. The thrust creates a repetition of the carbonate
formations below the Taylor Sulphide domain, which host the Taylor Deeps
mineralisation.
· The Taylor Deeps mineralisation dips 10°N to 30°N, is
approximately 100m thick and is primarily localised near the upper contact of
the Concha Formation and unconformably overlying Older Volcanics. Some of the
higher-grade mineralisation is also accumulated along a westerly plunging
lineation intersection where the Concha Formation contacts the Lower Thrust.
Mineralisation has not been closed off down-dip or along strike.
· Lateral to the Taylor Deeps mineralisation, skarn sulphide
mineralisation of the Peake prospect is identified in older lithological
stratigraphic units along the continuation of the thrust fault. This creates a
continuous structural and lithological controlled system from the deeper skarn
Cu domain into Taylor Deeps, Taylor Sulphide and associated volcanic hosted
mineralisation and the Clark oxide deposit.
· The Peake prospect is comprised of a series of stacked horizons
that have a general north-westerly dip of 30(0) hosting disseminated to
semi-massive sulphide. The upper and lower extents of the horizons tend to
have polymetallic mineralisation with the central component dominated by
copper sulphides, predominantly chalcopyrite. Mineralisation within the
stacked profile is approximately 130m thick, for an approximate 450m strike
and 300m width.
Drill hole Information · The Taylor deposit and Peake prospect drill hole information,
including tabulations of drill hole positions and lengths, is stored, within
project data files created for this estimate and exploration results review,
on a secure server.
· A drill hole plan view (Figure 4) provides a summary of drilling
collar locations that support the Peake prospect exploration results and
surface geology. Figure 5 provides the Peake prospect exploration drill holes
relative to the mineralisation domains. Figure 6 provides the drill hole plan
in cross section relative to the FY23 Taylor deposit and FY22 Clark deposit
Mineral Resource domains and simplified lithologies, and the Peake prospect.
Figure 6 shows a cross sectional view of the mineralisation domains and Figure
7 shows a level plan of the Peake prospect relative to drilling and current
mineralisation envelope.
· Table 1 summarises new drill holes to dates from Peake prospect
exploration.
· Table 2 summarises selective Peake prospect exploration result
significant intersections to date, both previously reported and new for
balanced reporting. All previous drill hole information is provided in the 17
January, 2022, Hermosa Project Update announcement released to Australian
Securities Exchange (ASX) and can be found in www.south32.net.
· Hole depths vary between 15m and 2,075m.
Data aggregation methods · Data is not aggregated other than length-weighted compositing for
grade estimation.
· Significant assay intercepts are reported as length-weighted
averages exceeding either 2% ZnEq or 0.2% Cu to report exploration results.
· No top cuts are applied to grades for intercept length-weighted
average calculations when assessing and reporting exploration results.
· Capping was undertaken for the updated Taylor deposit Mineral
Resource estimate.
· Percentage zinc equivalent (% ZnEq) accounts for combined value
of Zn, Pb and Ag. Metals are converted to % ZnEq via unit value calculations
using long-term consensus metal price assumptions and relative metallurgical
recovery assumptions. Total metallurgical recoveries differ between geological
domains and vary from 85% to 92% for Zn, 89% to 92% for Pb and 76% to 83% for
Ag. Average payable metallurgical recovery assumptions are 90% for Zn, 91% for
Pb, and 81% for Ag. Metals pricing assumptions are South32's long-term
consensus prices as at the April 2023 quarter. The formula used for
calculation of zinc equivalent is ZnEq (%) = ZnEq (%) = Zn (%) + 0.5859 * Pb
(%) + 0.01716 * Ag (g/t).
· Percentage copper equivalent (% CuEq) accounts for combined value
of Cu, Zn, Pb and Ag. Metals are converted to % CuEq via unit value
calculations using long-term consensus metal price assumptions and relative
metallurgical recovery assumptions. Total metallurgical recoveries differ
between geological domains and vary from 85% to 92% for Zn, 89% to 92% for Pb,
76% to 83% for Ag and 80% for Cu. Average payable metallurgical recovery
assumptions are 90% for Zn, 91% for Pb, 81% for Ag and 80% for Cu. Metals
pricing assumptions are South32's long-term consensus prices as at the April
2023 quarter. The formula used for calculation of copper equivalent is CuEq
(%) = Cu (%) + 0.3965*Zn (%) + 0.2331 * Pb (%) + 0.0068 * Ag (g/t).
Relationship between mineralisation widths and intercept lengths · Vertical (90-85º dip) drilling is used to create the geology
model. Where drilling intersects the low-to-moderately dipping (30°)
stratigraphy, the intersection length can be up to 15% longer than true width.
· Since August 2018, drilling has been intentionally angled between
60º and 85º to maximise the angle at which mineralisation is intersected.
· The mineralisation is modelled in three dimensions (3D) to
appropriately account for sectional bias or apparent thickness issues which
may result from two dimensional (2D) interpretations.
Diagrams · Relevant maps and sections are included with this announcement.
Balanced reporting · Exploration results for Peake prospect are reported as an update
to previous disclosed Exploration Results. All new drill hole intersections
are considered in this assessment for balanced reporting, alongside proximal
drillholes that have been previously reported. A list of drill holes is
included as an annexure and previous drill hole information is provided in the
17 January, 2022, Hermosa Project Update announcement released to ASX and can
be found in www.south32.net.
Other substantive exploration data · Aside from drilling, the geological model is developed from local
and regional mapping, geochemical sampling and analysis and geophysical
surveys. Metallurgical test work, specific gravity sampling and preliminary
geotechnical logging have contributed to evaluating the potential for
reasonable prospects for eventual economic extraction of the Mineral Resource
at a prefeasibility study level.
· Magneto-telluric (MT) and Induced Polarisation (IP) surveys were
conducted with adherence to industry standard practices by Quantec Geosciences
Inc. In most areas, the MT stations were collected along N-S lines with 200m
spacing. Spacing between lines is 400m. Some areas were collected at 400m
spacing within individual lines. IP has also been collected, both as 2D lines
and as 2.5D swaths, collected with a variable spacing of data receivers.
· Quality control of geophysical data includes using a third-party
geophysical consultant to verify data quality and provide secondary inversions
for comparison to Quantec interpretations.
Further work · Planned elements of the resource development strategy include
extensional and infill drilling, orientation and logging for detailed
structural and geotechnical analysis, comprehensive specific gravity sampling,
further geophysical and geochemical data capture and structural and
paragenesis studies.
· Additional drilling of the Peake prospect is planned for FY24 and
is guided by outcomes of a detailed assessment of recent drilling and
geophysical surveys in the area.
Section 3 - Estimation and Reporting of Mineral Resources
(Applies only to the Taylor Mineral Resource estimate)
(Criteria listed in section 1, and where relevant in section 2, also apply to
this section.)
Criteria Commentary
Database integrity · Drill hole data is stored in a Plexer database. Collar, survey,
sample dispatch data and analytical results are uploaded from .csv files as
they become available. The upload process includes validation checks for
consistency and anomalous values.
· Drill logs have been entered directly into Fusion from
paper-based records. This process was improved by the introduction of digital
logging in October 2018 whereby this data is generated as .csv files for
upload and validation.
Site Visits · The Competent Person has reviewed the Taylor deposit Mineral
Resource Estimate, visits the site regularly and is a full-time employee of
South32.
· The objectives of the site visit are to understand all inputs and
processes contributing to the FY23 Mineral Resource estimate, including core
drilling, changes in core logging procedures, digital core logging, database
audits and resampling programs to improve confidence in geological
interpretation, density estimation and geometallurgical inputs.
· The Competent Person discussed sample preparation and laboratory
procedures with ALS representatives to ensure that these procedures are
applied.
· The findings of site visits indicate the data and procedures are
of sufficient quality for Mineral Resource estimation and reporting. Review
and required improvement are continuously discussed and any required changes
are implemented.
Geological interpretations · 'Mineralisation domains' are created within bounding lithologies
using indicator modelling methods of the cumulative in-situ value of metal
content. The metal content descriptors, termed 'Metval' and 'Oxval' are
calculated by summing the multiplication of economic analyte grades for Mn,
Zn, Pb, Cu and Ag, price and recovery. Metval and Oxval cut-off ranges for
mineralisation domains ranged from US$6 to US$17 for the different
litho-structural domains. Material above the Metval and Oxval cut-off is
modelled utilising the indicator numerical model function in Leapfrog Geo™
to create volumes.
· Indicator models are guided using geologic trends based on
modelled lithologic contacts and structures within a post mineralisation fault
block model. Constraints on these domains include known bounding structures,
stratigraphy and manually digitised limits on the extents of mineralisation.
In addition to drill hole data, historic underground mine plans and mapping
and surface geologic mapping is used to help extend geologic features to the
topography. The purpose of these domains is to provide mineralised volumes
within the larger lithologic boundaries and to ensure relevant geological
controls and constraints are considered. Indicator cut-offs are selected to
create continuous volumes consistent with the overall modelling approach for
CRD-style mineralisation.
· Mineralised domains are evaluated against multiple indicator
scenarios for parameters such as inherent dilution, exclusion and volumetric
changes. These evaluations aim to balance the parameters with the understood
continuity of mineralisation from site geological staff interpretation.
· Alternate geological interpretations have not been used; however,
the model is continually evolving as new data is collected.
Dimensions · The mineralising system is yet to be fully drill tested in
multiple directions. The Taylor sulphide mineralisation is constrained up-dip
where it transitions to oxide mineralisation, representing a single contiguous
mineralised system. Taylor is open in multiple directions.
· The north-bounding edge of the thrusted carbonate rock is marked
by a thrust fault where it ramps up over the Jurassic/Triassic 'Older
Volcanics' and 'Hardshell Volcanics'. This interpreted pre-mineral structure
that created the sequence of carbonates also appears to be a key conduit for
mineralisation.
· The Taylor deposit has an approximate strike length of 2,500m and
width of 1,900m. The stacked profile of the thrusted host stratigraphy extends
1,200m from near-surface and is open in several directions. (Figure 5 and
Figure 6).
Estimation and modelling techniques · Geologic modelling was performed using Leapfrog Geo™ 2022.1.0
and grade estimations using Maptek Vulcan.
· Elemental estimation includes Zn, Pb, Ag and Cu. As and Mg are
estimated as potential deleterious analytes and Fe, Ca, S, and Mg are
estimated as tonnage inputs.
· The specific gravity is also estimated using a restricted search
guided by geologic trends.
· Estimation and modelling techniques reflect the interpreted
structural and lithological controls on mineralisation apparent in the core
and in data. These align with the current understanding of the formation of
CRD style mineralisation. Key assumptions include:
o The relative importance of structure and lithology in either facilitating
or constraining the deposition of mineralisation.
o Geological domaining according to these controls; and
o All boundaries are considered "hard."
· Search orientations are aligned with mineralised structures and
lithological contacts using locally varying anisotropy to assign directions on
a block-by-block basis. Search distances and variography parameters are
interpolated into 'parent' blocks of 9m by 9m by 4.5m from 3D geological
wireframes taken from the geological model.
· Assay data is composited to a nominal interval of 1.5m within
mineralisation domains for the purpose of exploratory data analysis to derive
estimation parameters for ordinary kriging.
· To manage the risk of local grade overestimation, high-grade
outliers in the drill holes are capped prior to compositing. Cap values are
determined using log probability plots for each domain. Selected thresholds
are typically above the 99.5 percentile where the distribution or sample
support deteriorates and to reduce the coefficient of variation. No bottom
caps are applied.
· The outputs of geostatistical analysis, including variography and
Quantitative Kriging Neighbourhood Analysis (QKNA), are used to optimise grade
estimation parameters such as search distances, sample selection criteria, and
block dimension. A parent block size of 9m by 9m by 4.5m is selected relative
to a data spacing of between 25m and 150m. However typically a data spacing of
approximately 50m within the core of mineralisation is used to support mining
study selectivity within the minimum Selective Mining Unit (SMU) dimension.
· Sub-cells to a minimum of 1.5m are built along the contacts of
the estimation domains to reduce the volume variance between wireframe models
and the orthogonal block model.
· The dimensions of the anisotropic search ellipses for each
estimation pass are generally matched to the ranges of the first and second
structures of the variograms per domain using ranges of the overall structure
of grade continuity for the zinc variogram models. The search ellipse ranges
vary between estimation domains but remain the same for all elements within
individual domains. While related elements (e.g. Pb-Ag, Pb-Zn, Ag-Zn) are not
co-kriged, their correlated nature is validated and confirmed that the
relationship is preserved in block estimates.
· Minimum and maximum sample criteria, an octant search strategy
and a restriction of the number of samples used from each drill hole are
applied to assist with reduction of local grade bias. A second search pass,
set at the entire range of the zinc variogram, is used to estimate lower
confidence areas of the model.
· Kriging tests with visual and statistical validation of results
indicate whether it is appropriate to apply an initial top cap, which is then
adjusted up or down to counter any global bias introduced. The degree of grade
smoothing between data and block values is analysed through a comparison of
mean differences, histograms, q-q plots and swath plots.
· Classification criteria constrain the reporting of estimates to
within demonstrated grade and geological continuity ranges. As all estimation
passes rely on at least two holes to inform the estimate, there is no
extrapolation from single holes in any classified material.
· The appropriateness of estimation techniques contributes to the
high confidence estimation outcome achieved in areas of data spacing within
the full ranges of grade continuity.
· The grade estimations are compared against previous estimates and
reviewed locally for differences in data/interpretation and globally using
graded tonnage plots and waterfall analysis.
· The Mineral Resource is reported for Zn, Pb and Ag without any
assumptions relating to recovery of by-products.
· Resource estimation is well established and reasonable for the
deposit.
Moisture · Moisture content of the core appears to be minimal, based on
logging observations and pre-and post-dried sample weights tested by ALS on
assay samples from July 2019 to February 2022 on over 50,000m. A dry bulk
density is assumed for estimation purposes.
Cut-off parameters · NSR reporting cut-off values are based on relevant project study
operational costs and pricing scenarios. Application of a nominal lower limit
of breakeven economics from these costs is considered as the reasonable
prospects for eventual economic extraction under current economic modelling.
· The calculations for each block are used to determine resource
block cut-off according to variability of physical costs such as logistics,
treatment costs, refining costs and economic factors such as metal pricing.
· The NSR cut-off values for reporting the FY23 Taylor deposit
Mineral Resource is US$80/dmt for material considered extractable by
underground open-stope methods.
· The input parameters for the NSR calculation include South32
long-term forecasts for Zn, Pb and Ag pricing, haulage, treatment, shipping,
handling and refining charges.
Mining factors or assumptions · Underground mining factors and assumptions are based on
pre-feasibility level project studies and are calibrated against South32's
Cannington zinc, lead and silver mine production. Longhole stopes on a sub- or
full-level basis with subsequent paste backfill is the assumed mining method.
· Reasonable prospects for eventual economic extraction are
determined through assessment of the model at Prefeasibility Study (PFS)
levels using processes ranging from stope optimisation and mine scheduling
through to detailed financial modelling.
· The NSR block value incorporates metallurgical recovery based on
test work for composite and individual mineralisation domains.
Metallurgical factors or assumptions · Total metallurgical recovery assumptions vary for sulphide
geological domains from 87% to 94% for zinc; 94% to 95% for lead; and 87% to
92% for silver. These assumptions have been verified through extensive
metallurgical test work.
Environmental factors or assumptions · Pre-Feasibility level environmental assumptions, including
possible waste and process residue disposal options, are factored into
physical and financial models that are used to evaluate reasonable prospects
for eventual economic extraction.
Bulk density · Dry bulk density is estimated for mineralisation domains where
data density is sufficient to estimate Zn on the first pass. Zn variograms and
first pass search criteria are applied to density measurements. The current
database records 25,272 Specific Gravity (SG) measurements.
· SG was originally calculated beyond the range of the first pass
using Zn, Pb, Ag, Fe, Ca and Mg using a regression formula. Measurements from
previous campaigns, low numbers of which were taken from sulphide and oxide
mineralisation in carbonates, are excluded from the analysis because assaying
did not include the full complement of elements used for the regression
formulae.
· A final pass of assigned average density values is applied to
fill blocks on the outskirts without grade.
· Historically SG measurements were taken from an approximate 20cm
representative section of competent core within a 1.5m sample interval. Since
May 2021, to improve the SG regression analysis, SG measurements are broken
out with an associated assay interval of approximately >60cm. The
measurement technique determines a specific gravity using the core weight in
air and weight immersed in water. Routine calibration of scales and duplicate
measurements are undertaken for quality control.
· The core is not oven dried or coated to prevent water ingress
prior to immersion unless porosity is noted in the sample. If porosity is
noted, the core was coated in plastic film.
· Lithology outside of mineralisation domains have an average bulk
density assigned by rock type.
Classification · Mineral Resource classification criteria is based on the level of
data informing both the geological model and grade estimation.
· Classification is ultimately achieved by manual selection of
blocks within a triangulation designated by the Competent Person. The
triangulation is a smoothed version of a model calculation field.
· The calculation used to guide the Competent Person's creation of
the triangulation, overlays grade estimation confidence indicators (such as
kriging variance) on block estimation conditions relating to the number and
distance of data informing the estimate in relation to semi-variogram models
for Zn, Pb and Ag.
· Classification criteria is determined on an individual estimation
domain basis:
o Measured Mineral Resource classification approximates an area of high
geological modelling confidence, with block grades for Zn, Pb and Ag informed
by a high number of data sourced within first pass search radii. The block is
also interpolated from data within a range equivalent to 'two-thirds' of the
variogram range.
o Indicated Mineral Resource classification meet similar conditions to
Measured, except data spacing criteria is expanded to ranges that match the
final variogram range. Search ranges constraining this classification are
typically around 150m for Sulphide.
· Estimated blocks exceeding prior criteria are classified as an
Inferred Mineral Resource, up to a maximum average distance of approximately
300m from the contributing data.
Audits or reviews · The FY23 Mineral Resource has been independently audited by
Golder Associates Pty Ltd. The audit concluded, in general, that modelling has
been conducted in a manner consistent with industry standards and supporting
documentation has been adequate.
Discussion of relative accuracy/ confidence · Geological modelling is such that there is a moderate-to-high
degree of predictability in the position and quality of mineralisation where
infill drilling is being conducted. Geostatistical analysis indicates a low
nugget effect and ranges of grade continuity are beyond drill spacing in
Measured and Indicated areas of the deposit.
· Measured Resources of the FY23 Taylor deposit Mineral Resource
global estimate is expected to be within 15% accuracy for tonnes and grade
when reconciled over any quarterly production volume using mining assumptions
matched to the determination of reasonable prospects for eventual economic
extraction. Indicated Mineral Resource uncertainty should be limited to ±30%
quarterly and ±15% annually. It is expected that Inferred Mineral Resources
will be converted to higher confidence classifications prior to extraction.
· The Competent Person is satisfied that the accuracy and
confidence of Mineral Resource estimation is well established and reasonable
for the deposit.
Figure 1: Regional location plan
Figure 2: Hermosa project tenement map
Figure 3: Hermosa project regional geology
Figure 4: Taylor deposit and Peake prospect local geology and Exploration
Results collar locations
Figure 5: Plan view of the Taylor, Clark, and Peake Mineralisation Domains
with exploration drill holes
Figure 6: Cross-section through the Taylor, Clark, and Peake mineralisation
domains showing the previously reported and new exploration holes, simplified
geology, and Taylor Thrust - looking east 2000 m wide.
Figure 7: Level plan map at 370m elevation showing Peake drillholes, and
mineral domains of the Peake prospect. Newly reported hole IDs are blue.
Table 1: Hole ID, collar location, dip, azimuth and drill depth of new drill
holes
Hole ID East (UTM) North (UTM) Elevation (m) Dip Azimuth To Depth (m)
HDS-810 525788 3480619 1593.4 -71 132 1618.2
HDS-813 525789 3480611 1593.4 -73 171 1613.0
HDS-814 525961 3479776 1665.5 -77 280 1752.0
HDS-815 525963 3479774 1665.5 -81 353 1683.0
Table 2: Significant intersections - selected previously reported and new
drill holes
Hole ID From To Cut Off Width Zinc Lead Silver Copper Molybdenum (%) CuEq
(m)
(m)
(m)
(%)
(%)
(ppm)
(%)
(%)
HDS-540 1279.2 1389 0.2% Cu 109.7 0.1 0.3 15 0.62 - 0.83
Including
1303.6 1309.7 0.2% Cu 6.1 0.2 0.4 61 3.48 - 4.07
1469.7 1488 0.2% Cu 18.3 0 0 10 0.63 - 0.70
HDS-552 1265.8 1273.9 0.2% Cu 8.1 0.2 0.5 27 0.39 - 0.77
1308.2 1384.7 0.2% Cu 76.5 0.2 0.4 25 1.52 - 1.86
Including
1309.9 1328.6 0.2% Cu 18.8 0.1 0.2 40 2.77 - 3.13
And
1364.3 1384.7 0.2% Cu 20.4 0.1 0.3 37 2.44 - 2.80
1478.9 1484.8 0.2% Cu 5.9 1 1.5 57 0.41 - 1.54
1646.8 1651.4 0.2% Cu 4.6 0.6 0.1 45 0.3 0.02 0.87
HDS-661 1298.4 1305.2 2% ZnEq 6.7 0.6 3.4 249 0.89 - 3.61
1322.2 1374.6 0.2% Cu 52.4 0.2 0.5 59 1.73 - 2.33
Including
1322.2 1346 0.2% Cu 23.8 0.1 0.8 81 3.32 - 4.10
Including
1322.2 1330.1 0.2% Cu 7.9 0.1 0.4 81 7.89 - 8.57
1386.8 1460.6 0.2% Cu 73.8 0.5 0.7 67 1.06 - 1.88
Including
1399.6 1410.3 0.2% Cu 10.7 0.7 1.5 227 2.84 - 5.01
And
1424 1446.9 0.2% Cu 22.9 0.5 0.6 45 1.24 - 1.88
1552 1570 0.2% Cu 18 3 1.4 88 0.39 - 2.50
HDS-662 1316.4 1329.2 0.2% Cu 12.8 3.4 4.4 137 0.95 0.01 4.26
1540.8 1546.7 2% ZnEq 5.9 5.9 2.1 250 0.45 - 4.98
HDS-663 1580.1 1591.8 0.2% Cu 11.7 0.1 0 16 0.95 0.016 1.10
1615.9 1651.1 0.2% Cu 35.2 1.1 0.1 27 0.56 - 1.20
HDS-691 1343.6 1353.6 2% ZnEq 10.1 3.8 3.5 61 0.47 0.024 3.21
1384.7 1395.4 0.2% Cu 10.7 2.7 2.9 38 1.03 - 3.04
1405.9 1415.2 0.2% Cu 9.3 0.5 0.7 11 0.26 - 0.70
1421.3 1452.1 0.2% Cu 30.8 0.7 0.8 22 0.59 - 1.20
1463.6 1509.7 0.2% Cu 46 0.4 0.5 21 0.43 - 0.85
1540.6 1549.3 0.2% Cu 8.7 0.3 0.9 51 0.61 - 1.29
1563.9 1581.3 0.2% Cu 17.4 0.2 0.2 23 0.55 - 0.83
1662.7 1677.9 0.2% Cu 15.2 2.8 1.1 155 1.19 0.011 3.61
1683.4 1692.6 2% ZnEq 9.1 1.5 0.3 45 0.14 0.038 1.11
1732 1735.2 2% ZnEq 3.2 6.2 0.3 107 0.18 - 3.44
1994.6 1997.4 2% ZnEq 2.7 1.7 0.3 54 0.08 - 1.19
HDS-810 No Significant Intersection
HDS-813 1302.7 1441.7 0.2% Cu 139 0.34 0.51 52 1.88 - 2.49
Including
1315.1 1424 0.2% Cu 109 0.32 0.52 60 2.27 - 2.93
Including
1333.8 1392 0.2% Cu 58.2 0.24 0.6 74 3.1 0.015 3.84
Including
1358.2 1368.9 0.2% Cu 10.7 0.05 0.09 79 5.7 0.011 6.28
Including
1358.2 1362.8 0.2% Cu 4.6 0.06 0.11 112 8.38 - 9.19
And
1381 1390.5 0.2% Cu 9.4 0.07 0.19 94 5.4 - 6.11
1454.5 1458.6 0.2% Cu 4.1 0.82 0.61 66 0.31 - 1.23
HDS-814 1192.7 1545.6 0.2% Cu 353 0.1 0.2 12.1 0.28 - 0.45
Including
1205.9 1221 0.2% Cu 15.1 0 0.1 22 0.44 - 0.61
1242.4 1268 0.2% Cu 25.6 0 0 14.3 0.7 - 0.80
Including
1242.4 1250.6 0.2% Cu 8.2 0 0.1 25.5 1 - 1.20
And
1260.3 1265.8 0.2% Cu 5.5 0 0 10.9 0.98 - 1.05
1279.2 1294.8 0.2% Cu 15.5 0 0.1 8.4 0.39 - 0.47
1302.4 1312.2 0.2% Cu 9.8 0.1 0.2 9.9 0.33 - 0.48
1315.8 1326.8 0.2% Cu 11 0.2 0.7 19.3 0.6 - 0.97
1388.4 1399.8 0.2% Cu 11.43 0.4 1 18.5 0.56 - 1.08
Including
1388.4 1392 0.2% Cu 3.65 0.6 2.4 43.7 1.24 - 2.33
1408.5 1418.5 0.2% Cu 10.1 0.2 0.4 11.8 0.4 - 0.65
1442.3 1476.8 0.2% Cu 34.4 0.5 0.5 17.3 0.35 - 0.78
1526.1 1539.5 0.2% Cu 13.4 0.2 0.3 42.2 0.43 - 0.87
HDS-815 No Significant Intersection
1 (#_ftnref1) Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, 2012.
2 (#_ftnref2) Detailed assumption on commodity prices and metallurgical
recoveries to derive Copper equivalent (CuEq) values are included in Annexure
1-Section 2 under Data aggregation methods.
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