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.
With an uptick in global industrial output following COVID, is silver finally ready to outshine gold?
One New England-focused miner thinks so, and is on a mission to assemble what may turn out to be one of the world’s great silver operations, right here in Northern NSW.
With a belief that ‘together is better’, Thomson Resources (ASX:TMZ, OTCQB:TMZR) has seized an opportunity to amalgamate a series of projects that individually may not provide spectacular economics, but combined have the potential to form the genesis of a significant, long-life new silver-producing district.
And with a combination of proven historical output and excellent exploration potential, all eyes are on the emergence of this potentially significant new project.
Managing Director David Williams explains: “We had seen that not many were focused on silver in Australia and with the growth in demand for silver we could see the opportunities. Each of the projects we targeted have operated as mines and have resources published by previous operators coupled with extensive exploration expenditure. That meant we started up the development curve with significant derisking.”
Silver comes into its own
In contrast to gold, about half of global demand for silver comes from industrial applications due to its high level of conductivity for electricity and heat, light sensitivity and anti-bacterial nature.
Apart from its traditional role in the manufacture of jewellery and tableware, silver is a key input in a range of growing technological and medical applications including solar cells, batteries, photographic applications, dentistry, semiconductors, glass coatings and LED chips.
Industrial demand for the metal is expected to rise to record levels in 2022 on the back of increasing fabrication from traditional and green technologies. The Silver Institute has predicted that global demand could increase by 8% during 2022 to over 1.1 billion ounces.
In addition, demand for investment-grade bullion and coins is expected to increase at an even faster pace as investors turn to safe-haven investments due to the outbreak of the Russia-Ukraine war.
“Whilst the precious metal aspect has silver broadly linked to the ups and downs of gold, it is its growing industrial demand that is giving it a quite different pathway”
“Silver is considered as both a precious metal and as a technology metal. Whilst the precious metal aspect has silver broadly linked to the ups and downs of gold, it is its growing industrial demand that is giving it a quite different pathway. That demand has grown exponentially since the 1980’s primarily through the growth in demand for solar panels and electric vehicles, given silver is one of the best conductors of electricity. However, with 75% of the world’s production of silver is as a by-product, supply is not as sensitive to demand as with other minerals. Thomson could see that this long term gap was going to grow and hence its decision to move forward with a silver development focus.”
Hub & Spoke brings innovative strategy to New England
Thomson has identified a unique opportunity to create an economy of scale through the amalgamation of a series of projects in New England region in northern New South Wales and southern Queensland, with the aim of both reducing production costs and delivering significant scale to progress near-term production.
The broader operation has been developed via the aggressive consolidation of five sub-projects that provide solid historic production of precious, technology, and base metals, along with significant exploration upside.
“The northern New South Wales and southern Queensland border region were a hive of activity with a focus on mining and producing silver in the late 1800’s through to the mid 1910’s. There are a number of old silver mines and workings from that era scattered throughout the region. It seems that once World War 1 distracted everyone no one thought to come back, other than for some sporadic exploration and review of individual projects. It must be remembered that this region was producing high grade silver from those mines with, for example, the Silver Spur underground mine (now part of Thomson’s Texas silver project) producing approximately 2.19 Moz silver (average grade of 800 g/t Ag) and 690 t of zinc, as well as other minerals.”
The company has been working at impressive speed to bring the projects through the development pipeline, having already completed key deskwork milestones along with delivering new JORC-compliant Mineral Resource Estimates.
Key to the success of the project is Thomson’s focus on metallurgy and the mineralisation of each deposit, which will enable the company to centrally process ore from the various projects though a standardised setup at its Texas facility.
“The issue with each of the projects in the New England Hub and Spoke strategy, whilst each was mined at different times in the past, when looked at today, each on their own is not commercially viable. They simply do not have the scale required to enable an efficient processing pathway to be adopted nor the necessary mine life to support the required capital investment.
“By bringing the projects all together, the first time done by a single operator, you have that necessary scale”
By bringing the projects all together, the first time done by a single operator, you have that necessary scale. However, you have to ensure that they can each work together and hence why we have spent so much time and effort in understanding the metallurgy and mineralisation of each deposit.
That is being rewarded as we start to see clear process pathways for the deposits emerge. These will be refined during the central process pathway study which has already commenced. So far it remains, all systems are go.”
Texas District Silver Project – 19.5 Moz AgEq (indicated and inferred)
Located in Southern Queensland, Texas is a large, under-explored silver and polymetallic district responsible for 4.2 Moz of historical silver production, along with minor high-grade base metal output.
The project comprises the Mt. Gunyan, Twin Hills and Silver Spur silver deposits with all tenements 100% owned by Thomson.
In 2016 Moreton Resources (ASX: MRV) reported a JORC-2012 measured, indicated and inferred Resource for Twin Hills and Mt Gunyan. However they did not carry out any new hard rock mining operations prior to suspending heap leach operations on existing pads in late 2019.
Mt Carrington Silver & Gold Project – 23.3Moz Ag, 352,000oz Au (indicated and inferred)
An advanced gold-silver epithermal project with polymetallic opportunity, located 5km from the township of Drake in northern NSW. Thomson is in the process of earning-in up to 70% under an agreement with White Rock Minerals (ASX: WRM).
The Project’s tenement package includes a 1,000Ha mining lease along with an exploration licence covering 183km2, and comes with ‘considerable’ existing infrastructure.
Webbs Silver Project – JORC-2012 MRE Pending
Considered one of the highest-grade undeveloped silver projects in Australia, with mineralisation discovered back in 1884.
The considerable work undertaken by Thomson to understand this deposit has led to a new understanding of the geology and mineralisation style. This change of thinking and investigation is what has made this the last of the MREs to be produced by Thomson. This though is not far away. However, this new thinking on Webbs has shown considerable upside potential as recently demonstrated by Thomson.
Conrad Silver Project – 20.7 Moz AgEq (indicated and inferred)
Containing what was previously one of the largest silver mines in the New England region, Conrad has produced 3.5 Moz of silver from approximately 175,000 tonnes of ore. The understanding of where the mineralisation is at in Conrads is pretty clear and there is therefore good extensional and expansion potential.
Hortons Gold Project
The 58km² project is situated 30km south-east of Tenterfield and is in the process of being acquired from private miner Syndicate Minerals.
Hortons boasts high potential for an intrusion-related gold system, and has delivered impressive historic gold intersections including 67m @ 3.8 g/t Au.
Lachlan Fold Belt provides bonus opportunity
Despite its primary focus on silver opportunities, Thomson retains its status as a diversified miner, with a series of complementary precious and base metal projects across New South Wales’ Lachlan Fold Belt region.
Bygoo Tin Project – JORC-2012 MRE Pending
Acquired in 2015, Bygoo consists of a single exploration licence surrounding the major tin deposit at Ardlethan, which has has delivered around 31,500 tonnes of historic output.
“I often refer to the tin and gold projects in our Lachlan Fold Belt, NSW portfolio as the set of steak knives. In fact, they are more than that. Bygoo is a world class tin project in its own right and with tin’s growing importance as a technology metal, like silver, the tin price continues to rise.
“I often refer to the tin and gold projects in our Lachlan Fold Belt, NSW portfolio as the set of steak knives”
Whilst I am sure the maiden mineral resource estimate we define for Bygoo tin deposit will not be huge, importantly it will be high grade, and there will plenty of room to add to it. With the other areas in the portfolio boasting tin, silver and gold, it readily lends itself to another application of a Hub and Spoke Strategy. We have just completed the current drilling program at Bygoo tin deposit which should fill the gaps and enable us to produce that maiden resource estimate.”
Harry Smith Gold Project
30km south of Ardlethan, Harry Smith has delivered significant gold intercepts across three distinct gold-bearing quartz reefs, which are reported to have produced over 16,000 oz of gold from discovery in 1893 through to 1941.
Yalgogrin Gold Project
Acquired in 2019, the project encompases a tenement package across the Yalgogrin Gold Field which has delivered an estimated 15,000 oz of historic output at an average grade exceeding 30g/t Au.
Maiden drilling by Thomson in August 2020 intersected high-grade gold results reporting 5m @ 10.3g/t Au.
Gibsonvale to the north and Buddigower to east bring further tin prospectivity.
Branching out north of the border
In addition to its New England and Lachlan Fold Belt projects, Thomson holds a series of strategic projects in QLD that provide exposure to both silver and gold opportunities.
Chillagoe Gold Project
Located approximately 150km west of Cairns near the Mungana, Red Dome and King Vol mining operations, Chillagoe comprises six granted exploration permits across an approximate 593km² footprint.
The project provides counter seasonal opportunity to the Lachlan Fold Belt.
Cannington Silver Project
A highly-prospective, 111.5km² land package in North West QLD surrounding South32’s (ASX: S32) Cannington Silver Mine, one of the world’s largest silver-lead producers.
The project encompasses a series of magnetic and geological structures, and shares the same rock types as the Cannington deposit.
Experienced team drives development
Thomson Resources is led from the front by industry veteran David Williams, who brings over 20 years of experience in gold, copper, nickel, graphite and uranium exploration from former roles with Marmota Limited, Lithex Resources and Heathgate Resources. Since joining Thomson in a non-executive capacity in 2019, and then as Executive Chairman in April 2020, Williams has embarked on a transformation program that has seen the company fully develop its silver-focused New England Hub & Spoke strategy.
In 2020 Williams was joined by Stephen Nano, who assisted in the architecture of the Hub & Spoke strategy. Nano brings over 30 years of experience in the mining industry in both Australia and North America, and has been responsible for the discovery of a series of gold and silver deposits that have progressed to production.
The team is rounded-out by Technical Director Eoin Rothery, General Manager Exploration Martin Bennett, and General Manager Operations Graeme Skelton, who bring a combined 75 years of experience in exploration work.
“When we embarked on the transformation of Thomson back in 2020, we were a small tight team of just the 3 board members, each with quite different skill sets, but with a wealth of resources experience. That focus and drive enabled us to pull together the New England Fold Belt Hub and Spoke projects in a remarkably short time – 4 months. This then became the flagship project of the Company as we sought to realise our goal of becoming an Eastern Australia silver producer.
“These key Managers have been building their own teams to support them in their different areas, such that Thomson will be able to undertake the development of our projects internally”
If it were not for the strong support provided to us at the time by Global Ore Discovery, our geoscience consultants, we would have been floundering given the enormity of the task. Essentially with the upcoming publication of the Webbs Mineral Resource Estimate, we will have produced our own Mineral Resources Estimates, compliant with JORC 2012, for 5 different deposits, in less than 12 months.
However, we have also started building our own team with key Senior Management appointments of Graeme Skelton, General Manager Operations, and Martin Bennett, General Manager Exploration. Both highly experienced and credentialed in their respective areas of responsibility. These key Managers have been building their own teams to support them in their different areas, such that Thomson will be able to undertake the development of our projects internally.”
Moving forward across multiple fronts
Thomson shows no sign of slowing down as it progresses development work across its project portfolio.
Along with ongoing extensional exploration programs, the company is working on a centralised processing pathway study that will underpin its hub and spoke strategy, due in June 2022.
Work on updating mineral resource estimates is also underway, with a view to delivering a pre-feasibility study in early 2023.
“Whilst at times we may seem to go quiet, that is not because we have stopped working, it is because we are focused on delivering quality and sustainable outcomes. As I say we treat Tomson as “Mining as a Business” (MaaB). WE are serious about achieving our objective of delivering Thomson into being a long term commercially sustainable and profitable Australian silver focused producer.”