Sherlock Bay Project

Sherlock Bay Project

Sabre Resources Limited hold a 70% interest in the Sherlock Bay Project.

The Sherlock Bay Project is located in the Pilbara region of Western Australia, approximately 75 km to the east of the town of Karratha and 120 km southwest of Port Hedland (Figure 1). The project is located in a region with excellent mining-related infrastructure and can readily be accessed via sealed highway and upgraded pastoral station tracks.
 

Figure 1: Location map of the Sherlock Bay Project in Western Australia

History

The Sherlock Bay Ni-Cu-Co deposit was originally discovered by Australian Inland Exploration (Texasgulf) in 1967 as described by Miller and Smith (1975). In May 2002 Central Kalgoorlie Gold Mines Ltd (CKG) entered into an option agreement to acquire 100% of the Sherlock Bay Project. CKG was subsequently renamed the Sherlock Bay Nickel Corporation Ltd (SBNC), who completed extensive drilling on the deposit, completed a resource estimate and commenced preliminary feasibility-level studies. In mid-2006 SBNC changed its name to Australasian Resources Ltd (ASX:ARH) and continued development work, reporting an updated resources estimate for the Sherlock Bay deposit in October 2005 (see below) and continuing feasibility studies on the project. Limited exploration work has been conducted on the Sherlock Bay deposit and surrounding areas since 2010.

Geology

The Sherlock Bay Ni-Cu-Co deposit is located on the Sholl Shear Zone, a major regional strike-slip fault that traverses the northwestern margin of the Caines Well Granitoid Complex in the west Pilbara Craton. The deposit is covered by a veneer of sheetwash sediments (average of 12m thickness) and consists of remobilised base metal sulfides spatially associated with mafic to felsic volcanics, metasedimentary rocks, and mafic-ultramafic intrusives (Hoatson et al, 2006). The mineralised horizon is a steeply-dipping banded quartz-magnetite-amphibole schist (also referred to as a siliceous banded iron formation or amphibole-bearing chert). Several small elongated bodies of serpentinised peridotite and talc-chlorite-calcite rock are spatially associated with the mineralised schist adjacent to the Caines Well Granitoid Complex (Hoatson et al, 2006).

Resource

The total Mineral Resource 24.6 Mt grading 0.4% nickel, 0.09% copper and 0.02% cobalt

The Mineral Resources have been classified as Measured, Indicated and Inferred Mineral Resource in accordance with the JORC Code, 2012 Edition.

Mining Study

In 2018, Sabre commissioned AMC Consultants Pty Ltd (AMC) to undertake a review of the previous mining study for the Sherlock Bay deposit to update costs for the open pit mining and evaluate the underground mining. The results of the review were reported in August 2018 (refer to Sabre Resources ASX announcement 14th August 2018). The results of the mining study were positive and have encouraged the Company to proceed with further studies of processing options and to update estimates for the capital and operating costs for the Sherlock Bay Project.

The open pit cost update was based on the updated resource estimate, which is restated in compliance with the JORC Code 2012 (refer to Sabre Resources ASX announcement 12th June 2018).

The underground cost update was based on the resource model and evaluation detailed in the Sherlock Bay mining study report completed by AMC in 2005 (2005 Report).

The open pit optimisation, pit design and all cost updates (both open pit and underground) were carried out by AMC at scoping study level. The updates are based on contractor mining costs. The scoping studies referred to in the report are based on low-level technical and economic assessments and are insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the scoping studies will be realised.

The updated resource estimate block model, relevant input parameters and mining costs were used by AMC to create optimal pit shells using Whittle Four-X software. A suitable pit shell was used to prepare a preliminary pit designs (Figure 3), pit stages and schedule.

The updated costs for the underground were applied to the evaluation detailed in the 2005 Report for mining using a longitudinal sublevel caving method. There were no changes to:

• Resource model used;
• Mining method;
• Access and infrastructure;
• Ventilation;
• Materials handling;
• Mining designs; and
• Schedules (capital development, operating development, production).

In the December quarter the Company engaged Mineralogical consultancy group Vintage94 Pty Ltd to review previous studies on metallurgical and mineral processing and to recommend alternative processing flowsheet options and ascertain the effect on CAPEX and OPEX costs.

Vintage94 has recommended producing nickel sulphide as the end product, rather than the more common nickel sulphate product, because it results in lower cost processing and is more marketable that nickel sulphate. Based on this revised mineral processing flowsheet, Vintage94 generated a life of mine financial model incorporating the updated mining cost estimates from AMC and nickel price forecasts. The financial model allows input costs and assumptions to be modified highlighting sensitivities and critical factors that will impact project development.

The Vintage94 study is part of SBR’s review and update of the substantial feasibility study work that has previously been completed on the development of the Sherlock Bay deposit. The extensive information already available and the mining and processing studies that have been carried out by SBR will allow the Company to rapidly advance the evaluation of the project to feasibility stage.

 

Figure 2: 3D visualization of conceptual Sherlock Bay open pit designs looking down and to north

 

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