Polymetals Resources: behold, a new Endeavor

This article is a sponsored feature from Mining.com.au partner Polymetals Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

There was a quiet sense of optimism when, at the end of March this year, Polymetals Resources (ASX:POL) announced its intention to acquire the Endeavor mine in central New South Wales. Somewhere between the ring of fate and the call of opportunity, this merry band of go-getters had seen fit to breathe new life into one of the state’s oldest and most lucrative mining operations.

Six months later, the company is tantalisingly close to sealing the deal. But, as General Manager of Corporate Development Linden Sproule tells Mining.com.au, one key hurdle remains.

One more box to tick

“One of the hurdles that we have with this project,” Sproule says, “is the replacement of the environmental rehabilitation bond, which is the final condition for the transaction to complete. It’s a big one for a company of our size, but I think we have it under control.”

According to the initial March announcement, Polymetals must replace $27.96 million worth of environmental rehabilitation bonds by 30 April 2024, if it’s to assume full ownership of the project currently held by CBH Resources.

at the end of the mine life, you have to restore the mine to — as best as possible — its appearance pre-mining”

“Basically, at the end of the mine life, you have to restore the mine to — as best as possible — its appearance pre-mining. You have to take out all the infrastructure, you need to cap the tailings dams with topsoil, you need to plant trees and all that stuff. So, at the moment, there’s $27.96 million, or let’s call it $28 million, of money that’s lodged with the NSW government. If CBH or us walk away from the project, the government has that money to then rehabilitate the mine.”

But in a mid-August stroke of good fortune, Polymetals’ offtake partner, UK-based trading firm Ocean Partners, came skipping along with a memorandum of understanding (MoU), $28 million, and the promise of bond surety if Polymetals can deliver ‘a positive MRS outcome’.

That MRS, or mine restart study, was launched in mid-June following a site visit to Endeavor, which sits in the highly prospective Cobar Basin. Due to be published in October, the study aims to demonstrate the long-term economic viability of the mine which — according to a March presentation — still hosts 44 million ounces of silver, 1.3 million tonnes of zinc, and 730,000 tonnes of lead.

“It’ll be a travesty if this mine is closed”

“On an annual basis, when it was operating, it was contributing between $50 million and $80 million to the local township of Cobar, which has a population of 4,000 people. So it’s significant,” Sproule says. 

“It’ll be a travesty if this mine is closed. But if we were unable to replace that environmental bond which is lodged with the government, then that would be the outcome. Instead, what we’ve been looking at is, how can we squeeze more years out of this project? One of the things that feeds into that is the potential reprocessing of these high-value tailings, which might extend our mine life by 5, 10, 15 years.”

Caught by the tailings

One of the more interesting things to come out of Endeavor’s pending reanimation is a study by the University of Queensland, commissioned by the Geological Survey of NSW in collaboration with Geoscience Australia. Carried out in the latter months of 2022, the study is based on a ‘stream 1’ geochemical and mineralogical assessment of process tailings at 10 sites across NSW, including Endeavor.

Tailings are the materials left over from the processing of ore, are often stored at dedicated facilities on-site, and — with the influence of technological advancement — can present enviable opportunities for near-term revenue.

“All you’re doing, basically, is moving the material that’s very near to where you’re processing already, and then putting it back in the mill and reprocessing it, so you’re not mining or disturbing new areas,” Sproule says.

There are all sorts of other processing techniques now that they didn’t have then, and it’s leveraged to metal prices as well”

“The chemistry doesn’t change, but there are quite a few efficiencies that have increased over, let’s call it the last 40 years, because that’s how long Endeavor has been operating. In the early days, the recovery of metals was far lower than what it was when they stopped mining and far lower than what we’re looking to get. There are all sorts of other processing techniques now that they didn’t have then, and it’s leveraged to metal prices as well. The prices of metals back then were far lower than what they are today, so now it’s economic to retreat.”

Of the 10 active, legacy, or care-and-maintenance operations that were assessed in the study, Endeavor was found to have the highest concentration of gold in its tailings, as well as elevated distributions of zinc, silver, antimony, and copper. For a company bent on revitalising an existing mine, it’s difficult to overstate the significance of such economically viable tailings.

“There are a number of factors that came into why we acquired Endeavor, but a big portion of it is the in-situ value of those tailings,” Sproule explains.

“There’s almost $6 billion worth of metal still in the tailings. If we’re able to extract, let’s call it 5% of that, over a period of 5 or 10 years, that’s on the low side. We might be able to get 10% or 20% of that. It’s a significant amount of money.”

“There’s almost $6 billion worth of metal still in the tailings”

It’s partly for this fact that Sproule expects Polymetals to be in cashflow by June next year — “from either the tailings or what’s left in the mine.”

Even a modest amount of pre-mining income will allow the company to continue its regional exploration efforts, which have been progressing at a desktop level for the last 16 months. 

“We’ve got 1,100km-square in the Cobar Basin, which is highly prospective,” Sproule says.

“We will do some exploration, but it’s not the main focus. We’re at the point now where we have economic material that we know is there. We need to get into cash flow and then out of cash flow we’ll fund the exploration.”

Troubled times in Guinea

That things seem to be going well for Polymetals in NSW is particularly good news given the company’s recent, fairly conclusive, and quite understandable departure from the West African nation of Guinea, where it still holds the Alahiné and Mansala projects in the Siguiri Basin.

According to an update released on 21 August 2023: “Polymetals continues to await exploration licence renewals for its Alahiné and Mansala gold exploration licences in Guinea, with no visible timeframe to renewal. Having exhausted all reasonable avenues to obtain licence renewals, the board has resolved to place the project on care and maintenance until such time as the project can be joint ventured, farmed-out or sold.”

As is sadly often the case, the situation stems from a September 2021 military coup, during which Guinea’s then-President Alpha Condé was captured and held hostage, and special forces commander Mamady Doumbouya declared both the government and the constitution dissolved. The country hasn’t renewed a single mineral licence since.

That, in the grand scheme of things, isn’t too bad. Following a similar coup in neighbouring Mali in May 2021, the country’s interim President Assimi Goita — in an effort to claw back major revenue shortfalls — signed into law a new mining code in August 2023. The revision allows the military-led government to assume stakes in mining projects up to 35%, compared with 20% before. But critics say the decision will likely cripple future investment.

With the political environment in the region so unstable, plus the ongoing threat of terrorism, many explorers have found themselves wondering whether Africa’s impressive metal distribution just isn’t impressive enough.

“Once the military coup happened in September 2021, we really pulled back from there. It’s a great place for metal endowment, but as soon as things like that start kicking in, it’s a disaster,” Sproule says.

“There are other, better places. We made a conscious decision that we were going to exit there, and that’s what we did. The problem with the guys that have big and potentially advanced projects there, it’s very difficult to walk away. Hopefully we still have some residual value, but we’re certainly not focused on West Africa.”

Hopefully we still have some residual value, but we’re certainly not focused on West Africa”

Indeed, few thinking people will look at Polymetals’ Guinea reversal and call it an odd choice. But factor in the acquisition and pending revival of Endeavor, and the whole thing looks like a remarkably nimble pivot from disaster to success. The true, real-world extent of that success, however, will be very interesting to watch unfold.

Write to Oliver Gray at Mining.com.au

Images: Polymetals
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.