Vendetta Mining (VTT.V) has updated the market with a fresh batch of drill results on the Pegmont Lead-Zinc project in Australia. As CEO Williams correctly states, the progress has been significant, as this year’s exploration program has validated the geological model which expected the zinc grades to increase towards the west.
At Zone 5, the drill bit intersected almost 15 meters (true thickness: 6.8 meters) of a combined 12% ZnPb (5.5% lead and 6.5% zinc, rounded) at a depth of 215 meters down-hole. That’s an excellent result, and perhaps one of the best ones we have seen this year as we can’t remember any other ‘pure’ lead-zinc project with a 12% equivalent grade (except for Arizona Mining (AZ.TO)). With a rock value of in excess of US$300/t (using $1.08 lead and $1.26 zinc), we can clearly talk about an exceptionally good assay result!
And it’s not just Zone 5 which continues to give. Vendetta also released assay results from Zones 2 & 3 (which are underground targets as well) and with intervals of 20 meters (true width) of 9.59% ZnPb and 5.5 meters (again, true width) containing 11.51% ZnPb we are now expecting a substantial resource upgrade in the upcoming resource update, scheduled for ‘early 2017’.
As a brief reminder, the current resource estimate contains a total of 5.2 million tonnes of sulphides and an additional 1.85 million tonnes of transition rock, for a total content of respectively 407 million pounds zinc and 941 million pounds of lead. We expect a substantial increase in tonnage (to approximately 10-12 million tonnes) and zinc grade. We will have a deeper look at the drill results in the next few days, but we would now aim for a total resource of just over 1 billion pounds of zinc and 1.7 billion pounds of lead in the upcoming resource estimate, making Pegmont one of the most advanced-stage zinc/lead asset that could benefit from the current strength in the base metals sector.
The total in-situ value of both the zinc and lead will very likely be in excess of C$4B, and using a basic zinc-equivalent calculation (ignoring the silver values), Every share of Vedetta Mining would give you exposure to 33 pounds of zinc-equivalent. And as the mineralization is high-grade, there’s absolutely no reason why Vendetta Mining should be trading at less than half a cent per pound of zinc-equivalent in the ground.
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