This article is a sponsored feature from Mining.com.au partner Belararox Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
“Grade is always king!”
Belararox (ASX:BRX) Managing Director Arvind Misra explains that in the current climate, the mining maxim that ‘grade is king’ – a statement usually applied to base metals such as copper and zinc, as well as precious metals – has never been more apt.
In his view, grade is always one of the most important aspects of a mining operation.
The reason, Misra says, that “grade is always king” is that higher grades mean lower costs, potentially higher profits, and the prospect of better returns for investors. The higher the grade, the less ore a company needs to extract out of the ground for it to be commercially viable.
Essentially, the All-in Sustaining Cost (AISC) is lower when grades are higher.
Enviable position
When Belararox floated on the Australian Securities Exchange (ASX) in January this year it knew it was in an enviable position of having very robust assets with historical data.
What it has since discovered is that one asset, the Belara zinc-copper-lead-silver-gold project located 100km north-northeast of Orange in Central New South Wales, not only has quantity with an existing resource – it also has quality. Very high-quality.
It’s a fortunate situation not lost on the managing director.
As Misra notes, with demand for commodities like copper growing exponentially, it has become harder to discover high-calibre and commercially viable deposits.
“It’s difficult these days to get high-grade mines”
“It’s difficult these days to get high-grade mines. We (mining companies) are not finding them at the speed that we are exploring it.
“In addition to that, there’s the energy demand that we’re seeing with new technology where copper demand is growing at such a rate that we simply need more to meet that energy demand, so it’s getting harder to find quality assets.
“But as technology advances more, we’re being able to identify ore that was previously undercover or not identified with old technology but still, finding high-quality is hard.
“The average grade is going down and the new mines coming online are not really massive scale so the new technology being used is giving more opportunities than in the past but the grades are much lower.”
Belara rocks!
While the average grades are declining, it seems Belararox is an exception to the rule.
The Belara project is the company’s current focus where massive sulphide mineralisation intersected in multiple drillholes of higher grade, for all metals, than in the historic model, include hole BLRC013 which has 3m at 4.73% Zn, 5.85% Cu, 1.30% Pb, 82.60g/t Ag, and 1.5g/t Au from 78m.
In addition, the recent drill results at BLRC013 include 7m at 2.22% Zn, 2.54% Cu, 0.63% Pb, 36.87g/t Ag, and 0.67 g/t Au from 78m.
Historical mining at Belara reported average mining grades of up to 3-5% Cu, 2-4.5g/t Au, and 2-3oz Ag. So, even historically the mine has produced above average current grades.
With the price of copper sitting at about US$8,100 and zinc surging last week as much as 7% on the London Metal Exchange (LME) to trade at US$3,755 per tonne, Belararox is well-positioned as a player exposed to both metals.
As Misra explains, the stronger zinc price in particular will help Belararox with its upcoming Mineral Resource Estimate (MRE).
In other words, as projects go – Belara rocks!
“These numbers just give you a good idea where the relative commercial viability of a project is.
“Some of our intersections are really high-grade when you compare it to the average operations of other companies”
“Some of our intersections are really high-grade when you compare it to the average operations of other companies.
Obviously, these are the best intersections but we have great results in general and we just have to wait until the resource comes out next month to see just how the resource will really look like.”
Lower grade needs more ore
Yet not all mines have the luxury of having high-grade ore like what is being found at Belara.
Currently, the global average grades for operating mines are about 0.5% for copper and 2.5% for zinc. That means for copper, as an example, for every 1,000 kilograms of rock mined, 5kg will be copper.
As Belararox’s managing director notes, some operations that have these types of low grades are generally only commercially viable and attractive if they are a very large operation.
For example, BHP’s (ASX:BHP) Olympic Dam mine has grades of copper ore of just over 1%, however it is an extremely large iron oxide copper-gold (IOCG) deposit with estimated reserves of 2.95 billion tonnes.
Fellow mining major Rio Tinto (ASX:RIO) is another example. It expects first ore at its Winu Copper-Gold Project in 2024, which has just 0.43% copper equivalent. A differentiating factor is that Winu is sitting on an inferred mineral resource of 503 million tonnes of ore.
For comparison, one of the world’s highest-grade copper mines, which is also in Australia, is CSA in New South Wales. This underground mine was discovered 150 years ago. At CSA the ore grade averages over 5% with some as high as 12%, making it one of the richest copper ore deposits in the world. Another is the Degrussa mine in Western Australia where the average grade is about 4.4%. The copper there was discovered in 2009 and mining operations began in 2012.
No Johnny-come-lately
As Belararox has only been listed on the ASX since January 2022, it is still working on uncovering what other grades exist and equally as important, the company is assessing just how large the Belara orebody is.
Unlike most other junior explorers, the company has an existing resource which has historic data available. This means, Belararox is no Johnny-come-lately and is further ahead in its journey than most newly listed junior exploration companies.
The reason the company is ahead of most of its peers lies in the assets it has in its portfolio.
Belararox has a 100% owned 643km-square tenement package in Central New South Wales, which includes two historic zinc-copper-gold mines Belara and Native Bee. Shallow targets remain, drilled to 400m, located close to good infrastructure.
Misra notes that the whole resource has about 25% value in copper, 50% in zinc, with the rest including lead, silver, and gold.
The copper grades are higher in the first 100m of drilling, however the orebody goes down to a deeper end where more intersections of zinc is found.
“It seems like really high-grade copper at the surface and good grade zinc at the bottom”
“It seems like really high-grade copper at the surface and good grade zinc at the bottom.
“So, higher the grade obviously the more economical the deposit is.”
Belararox on the cusp of a ‘significant’ asset
The company looks to be meeting all the criteria for an upcoming large, high-quality and ‘significant’ project.
According to Misra, there are two aspects to the economics of any viable mine – quality and quantity.
“Quality, obviously you have to have a good quality orebody but you have to have quantity also to have a commercial operation.
“It looks like we have quality in terms of the grade, so the next step is to prove how much of that we have to be able to see whether there’s a commercial asset there.”
In addition, Misra says that a quality asset also needs to have access to infrastructure, be close to transport options, and be located in an area in which the “locals” can be hired, all of which Belararox has.
In September this year, Belararox expects to announce Belara’s initial resource estimate and by all accounts it appears as though it will be receiving top grades.
Images: Belararox Ltd
