Eclipse Metals

A new beginning

Following a shareholder takeover last year, Perth-based explorer Eclipse Metals has shed its deadweight and is moving forward with a fresh burst of enthusiasm and purpose.

Can a mining company ever hold too much land? Prior to March 2013, the shareholders of diverse minerals explorer Eclipse Metals Ltd (ASX: EPM) certainly thought so. At the beginning of 2013, this junior company had accumulated 12 granted exploration licences and 33 exploration licence applications covering approximately 26,300 square kilometres in the Northern Territory, as well as six tenements covering 1,100 square kilometres across the NT, Queensland and New South Wales, yet hadn’t begun any exploration.

The company had listed on the ASX in 2011 brandishing a portfolio of uranium projects, but in an unfortunate twist of fate its listing coincided with the Japanese tsunami and earthquake that caused the leak at the Fukushima nuclear plant. This disaster hit uranium stocks hard and forced Eclipse to look at alternative commodities.

Carl Popal, a prominent investor in Eclipse as part of a shareholding consortium, saw this as a good opportunity for Eclipse to acquire Walla Mines, an unlisted Australian base metals exploration company.

“I was well acquainted with Walla Mines’ assets posing geological potentials to be developed to a mining stage and as a board member, we were in the process of listing the company on the ASX in 2011. However, with Eclipse needing to move into other commodities, and its shareholder consortium showing interest in Walla Mines, I thought it better to incorporate the two companies into one,” he explains.

The restructure

Eclipse acquired Walla Mines and its base metals assets in 2012 and went on to acquire further assets throughout the year. By the end of 2012, Eclipse had a bulging portfolio of assets but had made no move to develop them. With no progress within sight, Popal and the shareholding consortium decided that Eclipse needed an overhaul.

“We decided that the management of the time was not capable of taking the company forward,” he recalls.

“The expertise was not there and the motivation was not there, simply because their focus was based more on acquisition than on exploration and project development. But acquiring and sustaining assets is a financial burden, especially for a junior in a tough equity market.

“As major shareholders and investors in Eclipse, there was a need for us to rescue the company from its current situation by identifying which projects were economical and mineable,” he continues.

“It was also essential to change the Board.”

The Eclipse Board was formally asked to relinquish control of the company in March 2013, and with the support of the consortium Popal became the company’s new Managing Director. As the existing Chief Executive Director of Paynes Find Gold Ltd and Managing Director of Ghan Resources Pty Ltd and Popal Enterprise Pty Ltd, Popal possessed the experience and leadership necessary to rejuvenate Eclipse.

“The core business of an exploration company is to explore and develop your assets to a mine, in order to deliver shareholder value,” says Popal.

“Eclipse’s previous management had no clear understanding of the commodities the company had. In taking over the company, it was our job to assess and evaluate those assets so that we could implement strategies towards an exploration plan on some of the company’s assets.”

Following the Board restructure of March 2013, Eclipse’s geological team undertook a comprehensive assessment of the company’s assets with the help of international firm CSA Global and a newly appointed geological team. This led to Eclipse relinquishing a number of leases judged to have insufficient geological merit to justify further capital spend in the current equity market.

“In relinquishing these assets we reduced the burden on the company of sustaining them and thus minimised the expenses of retaining them,” Popal explains.

“Eclipse now holds 24,000 square kilometres of tenements, all in good standing order and with a lot of geological merit upon which to go forth with exploration to be developed to mine.”

Eclipse’s assets are divided into four commodity focuses: uranium, iron ore, gold and manganese. The company has released full evaluations for its projects targeting manganese, iron ore and most recently uranium.

Manganese potential

The historical data review for manganese identified very good potential in the Mary Valley Project, located approximately 14km southwest of Gympie Township in Queensland.

It determined that 32,724 tonnes of direct shipping ore (DSO) had previously been mined from surface workings at the project, with manganese grades ranging from 42% to 51% Mn. The limits of the deposit are not known either along strike or at depth. Historical assays also indicated that the levels of silica, iron and phosphate were all within direct shipping ore (DSO) parameters, further supporting the economic potential for standalone mining operations based on the Mary Valley Manganese Project. The nearest port is Brisbane, approximately 165km away.

Electro-magnetic (EM) geophysical surveys at Eclipse’s second manganese asset, the West McArthur River Project, defined 10 EM drill targets over an area of 135 square kilometres believed to host manganese/base-metal mineralisation. Target areas within the dolomite are thought to be analogous to the Woodie Woodie Deposit in Western Australia, and all elements required for the formation of dolomite-hosted, high-grade manganese deposits are present in the area.

These results stirred up substantial interest in the local Gympie press and from ABC Radio, which Popal took as great encouragement.

“As Eclipse’s Director, I see this as an excellent opportunity – not only to develop the manganese project on the basis of the geological merits we’ve defined, but also for benefitting the community and economy,” he says.

“It’s a huge plus for a project to have support from the government, the media and the public, and it motivates me to deliver a sustainable, socially responsible mine that’s beneficial to both Eclipse shareholders and the local economy.”

Iron ore, uranium and gold

The historical data review for Eclipse’s iron ore assets also highlighted good potential for mining activity. The West Bachelor Iron Project, located 61km south of Darwin and 174km northwest of Katherine in the Northern Territory, was found to contain two very promising prospects. The historical rock chip programme for the Mt Tolmer prospect yielded iron assays of up to 61.8% Fe from surface, while historical metallurgical studies conducted over the Table Top prospect indicate that magnetic beneficiation of its 20% to 40% Fe iron mineralisation is feasible.

The Moonford Iron Project, located 13km from the Monto Township rail line and 133km from Gladstone port by rail, has approximately 18 square kilometres of favourable iron-bearing lithology within the EL area. The project contains more than 18 historical percussion holes intersecting limonite mineralisation below 2m over overburden, ranging from 30.42 to 40.29% Fe.

“Moonford is quite a good project in my view; the shallow surface drilling delivered grades slightly lower than we would have liked, but it’s never been tested at depth so, for all we know, the grading could improve at greater depth,” Popal remarks.

“From the surface results alone, we’re in a position to calculate a resource of between 8-10 million tonnes. It’s not a huge number but, given the limited amount of work done there, it’s still a good number and the project is very close to the port, meaning it could be an economical mine. At this stage we just need to further explore it, see if we can raise the grade and also test the metallurgy, to see if we can reduce the phosphate level.”

In the uranium historical review, the Devil’s Elbow uranium-gold-palladium prospect in the West Arnhem Project area delivered high-grade surface uranium assays of up to 5.8%, with 38.1g/t Au and 28.02g/t Pd. The area of the South Alligator Uranium Project is a favourable host for unconformity style and high-grade vein uranium deposits, while the North Arunta Uranium Project is believed to be highly prospective for calcrete-hosted uranium deposits.

Of Eclipse’s gold projects the most prospective is probably the Yellow Jack Gold Project in North Queensland, which has a JORC Compliant Indicated Resource down to 50m vertical depth of 855,000 tonnes at 1.41g/t Au. Popal sees potential to mine that resource and put its 42,000 ounces through a neighbouring treatment plant just 15km from the project.

Moving forward

While some of Eclipse’s uranium and gold assets have development potential, the explorer is most likely to focus on manganese and iron ore as the commodities it believes most likely to prosper in 2014. Eclipse is still determining its next move at this point, and aims to release a small exploration plan early this year.

“We’re in a position now to go out there and say, this is what we’ve got; now is the time for us to start focusing on something,” says Popal.

“The issue is that we need to secure capital in a trajectory market economy before we can announce firm exploration plans as an ASX-listed entity; but it’s difficult to bring in investors without firm plans. It’s important now for Eclipse to promote itself to potential investors, so that they can see the potential beyond our ASX releases.”

Something Eclipse does have going for it is the very strong Board and geological team behind it. Managing Director Popal is joined by: Geological Consultant and Non-Executive Director Rodney Dale, a Fellow of Geology with more than 50 years’ experience; Non-Executive Director Justin Charles Barton, a chartered accountant with more than 16 years’ experience in international finance and mining; Geologist Pedro Kastellorizos, with 16 years’ experience in multi-commodity exploration across Australia; and Company Secretary Keith Bowker, with more than 13 years’ experience providing financial and corporate advisory services to resources companies listed on the ASX, AIM and NZX.

“Our team is very closely united, and all of us are focused on the same objective: developing ground and delivering results,” comments Popal.

“All the directors have selected to take equity in the company rather than cash, which for me is a big positive, because it shows that they really believe in the company and its projects. This motivates me to go further and to work even harder to deliver shareholder value.”

With all the faith and talent in the world, the fact remains that Eclipse is a small company with many projects and limited capital. For this reason, it is likely to seek out joint venture partners over 2014 to help to develop its projects; as well as sell off a few projects if the right opportunities arise.

“As an entrepreneur, I’m most concerned about ensuring the right people, the experts, take forward these projects and develop them to a stage where their true potential is realised,” Popal remarks.

“Eclipse has had a tumultuous history, but that is down to problems with the people – not with the assets. The assets have been neglected and the company has suffered as a result. It hasn’t received the attention from investors that it deserves. This needs to change, and it’s my goal to make sure it does.”

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