This article is a sponsored feature from Mining.com.au partner Thomson Resources Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
The chase for a junior exploration company to reach the 100m ounce resource milestone can be elusive for many.
A myriad of factors is at play that could thwart such a strategy, not least of which is a lack of being able to acquire enough resource-rich ground, or lacking access to important infrastructure.
Thomson Resources (ASX:TMZ) is one such company on a quest to reach the 100m ounce resource target. Except, as it stands it is likely it will surpass that, maybe even double it.
Thomson Resources holds a diverse portfolio of mineral tenements across the New South Wales/Queensland border region. Its strategy has been designed and executed to create a large precious (silver-gold), base, and technology metals (zinc, lead, copper, tin) resource hub that could be developed and potentially centrally processed.
The company’s primary focus is an ‘aggressive’ New England Fold Belt Hub and Spoke consolidation strategy in this region where Thomson is targeting, in aggregate, in-ground material available to a central processing facility of 100Moz of Ag-Eq.
As one of the main architects of its silver strategy, Thomson Executive Chairman David Williams notes the 100Mozs was “not a hard and specific number” but more a guide as to what the company believed would provide it scale and longevity.
The broader operation has included the expansive consolidation of five sub-projects over just a four-month period that provide solid historic production of precious, technology, and base metals, with significant potential exploration upside.
These projects include the Webbs and Conrad Silver Projects, Texas Silver Project, and Silver Spur Silver Project, as well as the Mt Carrington Gold-Silver earn-in and JV.
Thomson Resources now controls 22.8mt @ 119g/t AgEq for a total resource base of 87.1Moz Ag-Eq across the Webbs, Conrad, Silver Spur, Twin Hills and Mt Gunyan projects, including these restated resources at Strauss and Kylo. Restated Mineral Resource Estimates (MREs) are in the pipeline for the Guy Bell-Carrington-Lady Hampden-Silver King-White Rock deposits, leading into a project-wide polymetallic resource statement for Mt Carrington.
The rationale for acquiring this portfolio of assets is that the project area is historically prolific for silver and tech metals production.
Thomson Executive Chairman David Williams adds: “This is the first time all the projects comprising the New England Hub and Spoke strategy have been held by the one entity.
“This is the first time all the projects comprising the New England Hub and Spoke strategy have been held by the one entity”
(The company) recognised that each of the projects comprised in the Hub and Spoke Strategy, on their own, had insufficient size resources to sustain a commercial development.
“Thomson though, set about bringing together projects within reasonable transportation distance from each other, which each had published resources by previous operators which aggregated at least 100Mozs silver equivalent.”
Size does matter
Reaching 100Mozs would be necessary to enable an economically viable solution in the region.
An aggregated resource that size would not only allow Thomson to deal with the ups and downs of the silver price, it would also enable it to deal with a more sophisticated processing pathway to handle the blending of different ores from the various deposits and, importantly, allow it to extract value for the other metals, such as zinc and copper, associated with the silver and gold.
According to Mr Williams, if you apply the current gold-silver ratio of 91, the 100Moz of AgEq equates to 1.1Mozs Au. Or using the generally accepted gold-silver ratio of 65, it equates to 1.54Mozs of Au.
“Having said that we also selected these projects due to their exploration upside and believe that once all of the key additional minerals are included and some of the extensional additional resource potential is realised, we will more likely see the aggregate resources out somewhere between 150-200M ounces of silver equivalent.”
Economies of scale
Thomson Resources has identified a unique opportunity to create an economy of scale through the amalgamation of this series of projects in the New England region in northern New South Wales and southern Queensland.
The key deliverable of its strategy is a centralised processing pathway study. That will be added to the updated polymetallic MREs for the other Mt Carrington deposits and drill programs already started at Silver Spur continuing, including at Webbs and of the IP target anomalies at Texas.
The proximity of the 100% owned gold and tin projects in the highly prospective Lachlan Ford Belt in NSW is such that there is potential for a further centralised processing hub strategy 100km from top to bottom.
These regions are both ranked in the top 30 in the world by the Fraser Institute as attractive mining investment destinations. Both states have significant annual investment in direct mining and exploration expenditure with Queensland totalling $37.8 billion and NSW $13.7 billion in 2020.
Queensland is a leading producer of commodities such as silver, lead, and zinc, while NSW is well-endowed with copper, silver, and gold.
Mr Williams says the attractiveness of these assets is that they have previously been operational projects, so it is known the minerals can be extracted and the local communities are aware these areas have been mined before.
Each project had resources published by previous operators, which means Thomson is not starting from scratch as to its understanding of the assets, as each had extensive drill databases, “hence saving considerable cost and time”.
Generally, the focus of previous operators had been narrow – either on commodity (just gold or just silver) or on the previously mined areas.
Thomson Executive Chairman David Williams explains: “Therefore, there was a lot of upside potential by including and looking to get value for the other associated minerals and to step back and look at the bigger picture as to what was going on in the area and hence the potential for further higher grade resources.
“By reworking all the data critically …Thomson was able to re-evaluate the nature of the resources
By reworking all the data critically, along with viewing the combined projects as opposed to each project on its own, Thomson was able to re-evaluate the nature of the resources.
An illustration of this is that the three Texas deposits (Silver Spur, Twin Hills, and Mt Gunyan) which were traditionally looked at as low-grade resources, in fact contain higher grade cores which could be selectively mined, along with the fact that the recent IP geophysical survey Thomson undertook has thrown up a number of undrilled look alike targets.
Hence, Texas can now be looked at, potentially, as a smaller set of higher grade resources rather than the lower grade bulk mineable resource previously thought.”
Thomson Resources has been very clear to the market that it is an Australian silver-focused developer dedicated to becoming a long-term economically sustainable silver producer.
While it has access to proven historical data, Thomson is using up-to-date, robust, and completely reviewed geological models, metallurgy, and resource estimates to underpin its resource strategy.
The company is looking for new MREs at each deposit, is refocusing on Mt Carrington as a polymetallic opportunity, and is looking at various exploration programs for extensions and expansions.
However, it has not always been smooth sailing, yet Thomson is seeing a silver lining in overcoming some hurdles.
Thomson has two deposits that are gold-dominated with minimal silver. It is still trying to bring in the silver ounces from the likes of the silver dominant deposits of Lady Hampden, Silver King, and White Rock.
The first two deposits Thomson published updated polymetallic MREs for, Strauss and Kylo, were the deposits it had been working on as part of the original terms of the Mt Carrington earn-in. This was simply focused on developing a small gold resource in those pre-stripped pits and for which White Rock had previously published a prefeasibility study (PFS) for.
Mr Williams explains: “Thomson wanted to quickly demonstrate the potential it saw from the polymetallic perspective, whilst it had access to personnel who could enable this to be done.
Consequently, Thomson constrained itself to the existing floated pit shells for the gold only PFS for these gold-dominant deposits. It did not bring in mineralisation that is there outside of those pit shells.
As demonstrated, there is a significant uplift in the resources by adding in the zinc and copper and further associated silver.
Unfortunately, that personnel is no longer available to Thomson and therefore Thomson must first satisfy itself as to the validity of the databases for the other deposits and areas and then develop its own resource models and estimations.”
This will take more time but will be able to be done without the pit shell constraints applied for Strauss and Kylo and will include the silver-dominant deposits such as Lady Hampden, Silver King, and White Rock.
Mr Williams adds: “If we simply add the White Rock published silver only resources for the non-Strauss and Kylo deposits, you will see that Thomson’s 100M ounces silver equivalent target available to a central processing facility is exceeded.”
Strategic and aggressive
On 22 June, the company delivered a 14Moz silver-equivalent Indicated and Inferred MRE for its Webbs Deposit, which is located 65km northeast of Inverell in northern New South Wales, and forms part of its New England Fold Belt Hub and Spoke project.
The 2012 JORC-compliant resource, which is the fifth delivered by the company in under 12 months, brings the total resource for the combined 100% owned projects to 54.4Moz @ 101g/t AgEq, including a higher-grade portion of the resource (from the Webbs, Conrad and Silver Spur deposits) totalling 6.2Mt @ 192g/t AgEq for 38.2Moz AgEq. The aggregate of Thomson Resources published resources increased to 87.1Mozs AgEq at 119 g/t AgEq with the inclusion of Strauss and Kylo MREs in the Mt Carrington project.
Mineralisation at Webbs was first discovered in 1884, with mining undertaken through various phases until 1964. During the first 17 years of operation, the Webbs main shoot was mined to a depth of 210m, delivering about 55,000 tonnes of ore with grades of around 710g/t Ag.
The reason Thomson remains focused on this historic region is that silver’s industrial need has grown exponentially since the 1980s on the back of the growth of demand for solar panels, 5G technology, and electric vehicles (EVs).
The total global supply of silver is on the decline in a market dominated by China, which is a major producer, and in turn has created concerns for Western countries’ supply as relationships with China continue to deteriorate.
The company’s major shareholders include Silver Mines (8.90%), Bacchus Resources (4.32%), and Citicorp Nominees (3.55%), according to a May company presentation.
Images: Thomson Resources Limited