Acquiring the Burraga Copper Project in New South Wales last year has furnished Elysium Resources with high-grade tailings to process and prospective ground to explore.
Sydney-based explorer Elysium Resources (ASX: EYM) has just completed the busiest and most significant year of its life. In the space of 12 months, the company gained a new board and management, changed its name, acquired a copper-gold project in Indonesia and successfully took over fellow explorer Burraga Copper Limited (BCU). The largest triumph in all this was acquiring the Burraga Copper Project, inclusive of three tenements and two historic mines: Lloyds Copper Mine and Lucky Draw Gold Mine.
Executive Director Maxim Carling, also founding partner of investment group Carling Capital Partners, played a central role in Elysium’s transformation. Over more than 30 years in corporate finance he has become well-accustomed to identifying undervalued assets, building them up and then selling them off for a large profit. He believes the Burraga Copper Project to have spectacular potential thus far unrecognised within the market.
“Burraga is a tailings, slag and hard rock ore project that includes tailings from historic mines that mined copper down to a grade of approximately 3% Cu. In this day and age, where the average copper mine worldwide has a grade of just 0.49%, 3% is very, very rich,” Carling explains.
“We plan to erect a simple processing plant to treat the tailings, which we calculate will make us approximately US$1 million of free cash flow per month over the next five years.”
The Burraga Copper Project
Lloyds Copper Mine and Lucky Draw Gold Mine sit within the 84 square-kilometre EL6463 tenement of the Burraga Project. The Lloyds Mine produced 19,443 tons of copper from 469,626 tons of ore between 1880 and 1920, implying a recovered grade of 4.14% Cu. It and another few mines in the area contributed towards a tailings dump and two slag dumps, which today hold up to 350Kt. The dumps contain a drill-proven 234Kt at 1.2% Cu, and metallurgical testing of the tailings confirms that a recovery rate exceeding 70% is possible.
A scoping study commissioned by Elysium concluded that a project to reprocess the tailings, slag and hard rock resources on Lloyds’ surface is financially and commercially viable, with an estimated start-up capital expenditure of $10.8 million and a potential net profit of $75 million over 4.4 years of operation. The remaining ore body at the mine is Elysium’s primary focus for its own copper exploration.
The Lucky Draw Gold Mine is the more recently operated of the two. Renison Goldfields Consolidated Ltd discovered the Lucky Draw deposit in 1980 and mined 1.41 million tonnes of ore at an average grade of 4.2 grams per ton (g/t) Au in the early 1990s. Elysium is currently assessing the unmined portion of Lucky Draw, as well as that of the nearby Hackney’s Creek Project, to see if they are worth exploiting. It has set an exploration target of 500,000 ounces Au for the two locations.
Further to that area are tenements EL6874, of 24 square kilometres, and EL7975, of 75 square kilometres. Their geology is characterised by the Burraga Granite and Rockley Volcanics and Elysium plans to establish drill-ready targets for Lucky Draw style mineralisation there based on preliminary geophysics and surface geochemistry sampling.
“I think we’ve got a very interesting project in Burraga, which – based on the nature of the ore body and its proximity to infrastructure – we’re very confident will produce a lot of cash in a very short period of time,” Carling remarks.
“Our first focus is definitely to build the tailings processing plant, but simultaneously we’ll be conducting a drilling programme to follow up on the IP (Induced Polarisation) work we’ve done on the ground. We want to find more ore to process and also to improve the resource, turn it into a reserve. Given all the work we’ve done on the project already, we expect to get the mining licence for Burraga by the end of 2014.”
Malang and other projects
Elysium is doing exploration work at the Malang Project in East Java, Indonesia, in partnership with Indonesian company Gata Sumbar Daya who owns 100% of the project.
The partnership came about through a long-standing association between Adi Maryono of Gata and Elysium Chief Technical Advisor Neb Zurkic, dating back to their working together on Newmont Mining’s world-class Batu Hijau and Elang deposits.
Work over the 100 square-kilometre Malang Project thus far has comprised initial soil and stream sampling. The four prospective areas identified within the project are geochemically characterised by elevated Au, Cu, As and Sb, which according to Elysium are typical pathfinders for high sulphidation epithermal mineralised systems.
Significant rock chip sample results for the area so far include 8.11g/t Au, 0.10% Cu, 490g/t As and 36g/t Sb1. Previous explorers have reported low oxide gold values of 0.3-0.7g/t Au in the area.
“It’s a pretty low-cost, high-impact project in regards to money spent and the results we can get out of it,” comments Carling.
“Once we’ve figured out our funding and budgeting for 2014, we’re going to run some airborne geophysics as a priority, but it comes after Burraga in terms of priority.”
Elysium’s remaining, lower-priority projects are the Horseshoe South and Redmond Projects in Western Australia. Horseshoe South is a 5.5 square-kilometre tenement over a VMS-style high-grade copper ore body, while Redmond is a 37 square-kilometre tenement centred on the Blue Gum prospect. These tenements require further exploration work, but will remain on the backburner in 2014.
The coming year will see Elysium fully occupied with constructing its tailings processing plant at the Burraga Copper Project, so as to establish its future source of revenue.
Once the money – a projected $1 million each month – is rolling in, that will enable the company to undertake further exploration across the rest of the Burraga Project area, with the aim of starting up a larger scale mining operation.
“We will use the cash flow from our processing plant to fund an aggressive exploration programme, to find a significant deposit,” Carling explains.
“We believe there are a number of them along the tenements we hold on the Lachlan Fold Belt of New South Wales, which is a widely recognised location for copper-gold deposit systems. So our strategy is to continue what we’re doing – we’ve got a very good area, we’ve done a lot of very good work on it privately for the last four years, and we all believe in the project long-term. Our goal is to build a mid-tier copper-gold mining company.”