Wallbridge lures Lonmin to Parkin project

South Africa-based Lonmin (LSE: LMI), one of the world’s largest primary producers of platinum group metals (PGMs), has signed an option agreement to earn a 50% initial interest in Wallbridge Mining’s (TSX: WM) four Parkin properties in Sudbury, Ont.

Under the deal, Lonmin will spend US$11 million on exploration over the next four years. Lonmin can also earn up to another 15% interest in each of the four properties at Parkin by committing to fund them through to a definitive feasibility study.

“The transaction definitely speaks to the quality of the targets on the property,” Wallbridge’s vice-president of exploration Joshua Bailey says in an interview from the company’s head office in Sudbury, 400 km north of Toronto..

Exploration at Parkin has focused on high-grade polymetallic nickel, copper and PGMs over a 9.5 km strike length of the Parkin offset dyke, and the property includes the past-producing Milnet mine, the high-grade Milnet 1,500 zone and the historic, near-surface Parkin resource, which is undercut by high-grade drill intersections associated with offhole borehole geophysics anomalies.

The Lonmin-funded exploration program could start in October and include drilling to test the potential extension of the near-surface resource, and the extent of higher-grade PGM zones within the mineral envelope.

Parkin’s resource outcrops and extends at least 100 metres deep, but Bailey sees potential to put together between 1.5 and 5 million tonnes of resource from surface down to 600 metres deep.

“That’s the target area we’re focused on,” he says. “I’m obliged to say that we haven’t defined a resource that size yet, and more drilling is required — but that goal is based on the room we see there, on the mineralization that we see there; the holes under the historic resource; the geophysics that we have from the borehole geophysics that we’ve done to date; and our understanding of how these deposits occur in the various offset dykes in Sudbury.”

Bailey says the nickel-copper-PGM mineralization at Parkin is typical of that hosted by the quartz diorite offset dykes in the Sudbury mining camp, such as Vale’s (NYSE: VALE) Totten deposit in the Worthington offset dyke and KGHM International’s Victoria project in the Worthington offset dyke.

“Parkin has an identical mineralization style, it’s in a similar offset dyke and has the same assemblages of minerals, similar metal ratios, similar grade variations and associated rock types,” Bailey says.

“The deposits in Sudbury tend to start from surface and can go to several kilometres deep, so Parkin is probably one of the better targets in the area, because it’s so shallow,” he adds. “Most of the other work done in Sudbury is exploring for similar types of targets, but at depths that are well below 1 to 2 km … being in that top 500 metres of surface — so close to infrastructure in the Sudbury area — is appealing.”

The 22.8 sq. km Parkin property, 40 km northeast of the city, is also within 4 to 5 km of two past-producing mines — KGHM’s Podolsky and Vale’s Whistle — both of which were “significant deposits,” Bailey says.

In April, Wallbridge reported results from four holes testing three target areas beneath the near-surface resource. All of the holes intersected nickel-copper-PGMs, and downhole geophysics identified conductive zones next to the holes.

The holes ranged from 100 to 300 metres below the historic resource, which measures 264,000 tonnes averaging 0.7% copper, 0.7% nickel, 0.62 gram platinum per tonne, 0.80 gram palladium per tonne, 0.23 gram gold per tonne, 0.03% cobalt and 6.3 grams silver per tonne in the indicated category, and 87,000 tonnes of inferred resources averaging 0.7% copper, 0.4% nickel, 1.2 grams platinum, 1 gram palladium, 0.6 gram gold, 0.02% cobalt and 8.8 grams silver.

Drill highlights include 4 metres grading 2.96% copper, 0.7% nickel and 2.31 grams total precious metals (TPM, or platinum plus palladium plus gold), and another intercept of 11.6 metres at 0.6% copper, 0.8% nickel and 1.11 grams TPM, including 2.3 metres of 0.96% copper, 1.2% nickel and 4.58 grams TPM.

In June, Wallbridge uncovered massive sulphide nickel-copper-PGM mineralization at Parkin, after mechanical stripping exposed six areas with massive, semi-massive and net-textured sulphide mineralization at Parkin’s surface. The company began mechanical stripping to determine mineralization continuity and better understand geological controls to help future drill efforts.

The individual mineralized lenses range from 2 to 10 metres wide with up to a 25-metre strike length, and occur along a 700-metre strike length of the Parkin offset dyke.

The company is in the process of channel sampling and detailed geological mapping.

Lonmin agreed to pay the fees associated with Wallbridge’s option agreement earlier this year to acquire another 46% stake in Parkin from its former joint-venture partner Impala Platinum Holdings.

Bailey says the total dollar figure due to Impala hasn’t been released (it has made a $100,000 payment so far), but confirms that the price tag is significantly less than the $7.2 million Impala has invested in the project to date.

Parkin is not the only Wallbridge property in Ontario that has attracted investment from Lonmin. The Canadian junior has 15 projects in Sudbury that are being explored for copper, nickel and PGMs, as part of the North Range joint venture funded by Lonmin. It also has nine other projects in the area under the umbrella of the Sudbury Camp joint-venture, which is funded by Lonmin.

Wallbridge has a producing open-pit mine named Broken Hammer — also near Sudbury — that started commercial production last year, and will reach the end of its mine life sometime before October.

(As of July 31, the company had mined 235,000 tonnes from Broken Hammer, leaving 35% of the in-pit resource to be mined.)

“Broken Hammer has been an excellent opportunity for us to show our capability in bringing a project from the grassroots exploration stage into production, and it’s definitely been nice to have that revenue.”

Bailey says the company is looking at opportunities in Ontario that must be within a couple of years of either a prefeasibility study or a production decision.

“The main criteria is the timeline to production, and of course it needs to be a project that is close to processing facilities,” he says. “We’re not looking necessarily at enormous projects, but perhaps they would be non-core fo
r a larger firm. There are other juniors that are pursuing a similar strategy, but we feel we’d be a good candidate, because of the capabilities we’ve demonstrated at Broken Hammer. Our ability to maintain long-term, joint-venture relationships with companies like Lonmin also speaks to the quality of our technical team.”

Wallbridge has had joint ventures with Lonmin since 2002, and with Glencore (LSE: GLEN) since 1999. At its East Range properties, Wallbridge has a joint-venture with Glencore on the Frost Lake property. It also has a joint-venture with Glencore and Vale on the Capreol project.

Under its latest earn-in arrangement with Lonmin on the Parkin property, Wallbridge has granted Lonmin a substantial reduction in the minimum expenditure commitments on the Sudbury Camp joint venture and the North Range Joint Venture properties to $250,000 per year per joint venture, for two years from October 1, 2015.

Wallbridge was set up in Sudbury, one of the most productive mining camps in the world, in 1996. The ore deposits in Sudbury are located around the rim of the Sudbury basin, and are believed to be the remains of a 1.9-billion-year-old meteorite impact crater.