Category Archives: Metals Exploration

Hungarian Government Announces Public Tender for the Recsk Cu-Au Deposits & Assets

Hungarian National Asset Management Inc., (“MNV”) has announced the public tender for the Recsk Deposit and assets in Hungary.

The Recsk Cu-Au-Pb-Zn-Ag-Mo property in Hungary hosts arguably one of the largest and highest-grade undeveloped copper-gold porphyry and skarn systems in Europe.  With 240,000 metres of drilling, two 8 metre internal diameter, 1,200-metre-deep, concrete lined shafts and 9 kilometres of underground development, the Recsk deposit is estimated to contain 5.6 million tonnes (12 billion pounds) of copper and 4 million ounces of gold. 

Distribution of Copper and Molybdenum on the 700mRL, showing surface drillholes (black), development (blue) over intrusion thickness and thickness of volcanics. Copper grades of greater than 0.2% have been mapped over a strike of 2 kilometres and a width of 800

Cmi Capital Limited

Cmi Capital is available to assist a suitable party to participate in the tender.  Cmi Capital held extended discussions with the Government of Hungary prior to the announcement of the tender and as such has a unique understanding of the deposit and the political and economic environment.  Cmi Capital or an associated corporation seeks a long-term concentrate offtake agreement on commercial terms and may at its sole discretion provide up to US$250 million in an offtake pre-payment repaid from production with the usual customary terms and conditions following completion of an advanced economic & technical study.


Free Carried Interests in Mining Projects, States Need to Rethink the Strategy

Natural Resource Governance Institute has issued a report on revenues received from listed mining companies in Ghana.  As many who have done the cashflow analysis have long known that a free carried interest, funded out of cashflow is a less than effective tool for garnering rent from resource projects. Projects can often take many years to repay capital and if this period corresponds with low or stagnant commodity prices then dividend payments may be low.  In effect the state is fully exposed to commodity price and operational risks.  A better solution is a competitive royalty, fee and taxation environment which is adequately regulated. 

One of the issues with a carried interest is that this often involves representation on the board of the operating entity and as such creates immediate conflicts of interest for directors and heated domestic competition for these positions.   That said, there are often political arguments for a carried interest, arguments about national interest.  In addition it has been argued that being represented on the board of the operating entity allows governments to “keep an eye on” the operator.  A better solution is robust oversight by a suitably trained and funded Department of Mines.


In Ghana the majority of international mining companies, including Asanko Gold, Golden Star Resources, Endeavour Mining, Kinross Gold, Perseus Mining and Xtra-Gold Resources, have disclosed payments-to-governments reports under the Extractive Sector Transparency Measures Act (ESTMA) in Canada. In addition Gold Fields, AngloGold Ashanti and Newmont Mining have made voluntary disclosures regarding the payments they make to the Ghanaian government.

Data were sourced from companies complying with the Canadian, Extractive Sector Transparency Measures Act (ESTMA).

In 2017 nearly three quarters of the payments to Ghanaian government entities by ESTMA companies in the gold sector arose from royalties, with five companies paying a total of USD 57 million. A further 22 percent of the payments from these ESTMA companies were in the form of corporate income tax. While six operating companies paid royalties in 2017, only two, Kinross Gold Corporation and Endeavour Mining paid corporate taxes.

2017 gold mining payments to governments by payment type from ESTMA companies (USD in millions)

Ghana’s Vice President Mahamudu Bawumia has questioned the utility of the government’s 10 percent equity interest in mining operations, stating at the IMF’s Regional Economic Outlook for sub-Saharan Africa, that the lack of revenue generated from the government’s equity share was because “many of the mining companies say they are not making profits to pay dividends but they keep mining, notwithstanding the fact that they are unprofitable.”3

The government of Ghana holds these shares and the non-tax revenue unit of the Ministry of Finance collects the revenues. The government is provided this equity interest without having to make financial contributions to the development or operations of the project. The government has equity share interests in every gold mining operation in the country bar those owned by Newmont Mining or AngloGold Ashanti following the signing of updated mining development agreements. In the case of AngloGold Ashanti, the government has a stake of 1.55 percent in the global company AngloGold Ashanti Limited.

The NRGI report concludes that “the payments-to-governments disclosures made by international mining companies operating in the country suggest that if revenue generation is the primary purpose of this state equity participation, then the government may want to reconsider this approach”.  This has been evident to many in the industry for a very long time.  


Morgan Stanley predicting lithium carbonate prices to fall by 45% to 2020

Morgan Stanley report today that they expect lithium carbonate prices to drop from the current level of US$ 13,375/t to US$ 7,030/t by 2020.  This is far lower than the consensus view after lithium prices surged 100% in the last 2 years.

Substantial supply increases are driving their forecast, with Morgan Stanley reporting that the largest producers in Chile are planning on adding 500,000 tonnes per year in new mine supply by 2025.  This supply would swamp the anticipated growth in demand from battery production.  Indeed Morgan Stanley predict that the lithium market will go into surplus in 2019… and stay there.

The firm has downgraded two of the largest producers, Albemarle Corporation (NYSE: ALB) and Sociedad Quimica y Minera S.A. (SQM: NYSE SQM)  which are planning to bring an additional 200,000 tonnes of lithium on stream by 2025.  This will cement the position of Chile as the largest global producer with a  >30% share.

Most of the lithium hopefuls listed on western stock-exchanges have used lithium carbonate prices in the range of US$11,000 and 13,500/t in economic studies and the majority of these projects would struggle if prices were to tumble.  Given the rush to lithium of recent times and the nature of commodity markets we suspect that Morgan Stanley are likely correct.  Even a dramatic increase in market penetration for electric cars (which now seems increasingly unlikely given the growing trend away from government subsidies) would do little to change the supply demand dynamic in the coming few years unless the fall in price is sufficiently steep as to stop or delay some of the larger projects now being contemplated.  Now that is always a possibility.

An exception may be spodumene producers like Pilbara Minerals Limited (ASX: PLS) which showed a >50% return on investment in a planned expansion at a spodumene price of US$550/t, a 60% discount to the current spot.

Drillhole cross-section Pilgangoora lithium mine



3D Animations – Recsk Cu-Au Deposits, Hungary

Following the publication of the paper (noted below) on the epithermal portion of the Recsk metallogenic system in Hungary here are 3D models from the entirely concealed Cu-Au mineralized intrusive bodies and related Cu-Au skarns and outbound Zn-Pb replacement bodies.

Ore Mineralogy and Fluid Inclusion Constraints on the Temporal and Spatial Evolution of a High-Sulfidation Epithermal Cu-Au-Ag Deposit in the Recsk Ore Complex, Hungary

A 3D fly-though of the Recsk Cu-Au deposit showing the drilling, channel samples and interpolated copper grade shells.  A full set of 100 metre spaced section steps through the deposit from north to south over several kilometres.

A section through the Recsk deposit with drilling and copper grade shells.  The section is 200 metres thick and the 0.3% grade shell is 800 metres high and 1,000 metres wide.  The Cu-Au skarn mineralisation can be seen dipping gently away from the large intrusive body.  The intrusion is open at depth below 1,200 metres. The top of the 10.3% copper grade shell is approximately 400 metres below the surface.

This 3D Model is based upon 156,000 metres of surface drilling over 35 square kilometres, 9km of underground development and 90,000 metres of underground drilling.

The Recsk metallogenic centre consists of a deep and entirely preserved mineralised intrusive and intermediate and high sulphidation epithermal deposits exposed at surface.  The epithermal deposits are located close to the apex of the intrusion.  The diorite intrusion is hosted by a thick sequence of Eocene carbonates unconformably overlain by a volcanic edifice.  Adjacent to the intrusion the carbonates host thick Cu-Au skarns.  Outbound of the Cu-Au skarns, Zn-Pb replacement bodies have been intersected in wide spaced drillholes.  In this video we present a section through the deposit.  The 3D model is based upon 156,000 metres of drilling from surface, 9 km of underground sampling on the 700 and 900 metre levels and 89,000 metres of underground diamond drilling.  Underground access was provided by two 1,200 metre deep shafts, 2,000 metres apart.  The shafts have an 8 metre internal diameter and are concrete lined.  No mining has been undertaken at the deeper Recsk mineralisation aside from bulk metallurgical sampling.



The Evolution of the High-Sulfidation Epithermal Cu-Au-Ag Recsk Deposit in Hungary

This paper in the latest edition of Economic Geology by Ágnes Takács,  Ferenc Molnár,  Judit Turi,  Aberra Mogessie,
 John C. Menzies examines the evolution of the outcropping epithermal mineralisation at Recsk in Hungary.  The epithermal deposit sits close to the apex of a large intrusive body which does not outcrop but was defined by systematic diamond drilling to 1,200 metres over a 35km2 area.  While the outcropping HS epithermal mineralisation was sporadically mined, the unexposed porphyry and related skarns and replacement bodies was not exploited.  The deeper mineralisation has been evaluated with 156,000 metres of drilling from surface and 90,000 metres of diamond drilling from underground development on two levels accessible via two 1200 metre deep, 8 metre internal diameter concrete lined shafts.  There is considerable potential for the discovery of both additional mineralised bodies (this paper suggests an as yet undiscovered intrusive to the north of the known body) and extensive skarn mineralisation around the periphery of the intrusion.


  • Largely uneroded porphyry-skarn-epithermal metallogenic system of Paleogene age in a subduction-related magmatic hydrothermal environment within the Alpine-Carpathian region
  • Paleogene diorite intrusions and Mesozoic carbonate and silicic shale host rocks contain Cu(-Mo-Au)-porphyry, Cu-Zn(-Fe) skarn, and metasomatic Pb-Zn (carbonate replacement) mineralization from ~400- to at least 1,200-m depth below the surface.
  • Three stages of ore formation
  • Stage 1:  Ore deposition in the porphyry-epithermal transition zone (pyrite, chalcopyrite, tennantite-tetrahedrite, galena, sphalerite; 260°–230°C; logfs2~–11 to –9; logfTe2~ –19 to –14)
  • Stage 2: High- and very high sulfidation state mineralization from tellurium-saturated fluids (e.g., enargite, luzonite, pyrite, native gold, calaverite, hessite, aikinite-bismuthinite; 240°–170°C; logfS2~–7 to –11; logfTe2~–14.8 to –10.5)
  • Stage 3: Late-stage mineralization from tellurium-oversaturated, locally oxidized fluids of an intermediate-sulfidation state (e.g., tennantite-goldfieldite, pyrite, hessite, petzite, native tellurium, kawa-zulite; logfs2~–11 to –15.5; logfTe2 ≥ –10.5)
Geology and mineralization of the Recsk ore complex. (A) Combined geological and topographical map of the studied area. The geology is modified after Pantó (1952) and the tectonics are modified after Rozlozsnik (1939) and Molnár et al. (2008). (B) Topographical map with contoured thickness of the subvolcanic diorite intrusion, mineralized bodies, and historical adits. The locations of high-sulfidation epithermal orebodies are based on the map from Földessy et al. (2008a), and the thicknesses of diorite intrusive stocks intercepted in the 1,200-m-deep drill holes completed in the area are from Baksa (1975). Abbreviations: HS = high-sulfidation, IS = intermediate-sulfidation.


Estimated Ore Resources for the Recsk Ore Complex (data from Fodor et al., 1998; Kontsek et al., 2006)


The Recsk ore complex is an example of a largely uneroded porphyry-skarn-epithermal metallogenic system in a subduction-related magmatic hydrothermal environment within the Alpine-Carpathian region. Paleogene diorite intrusions and Mesozoic carbonate and silicic shale host rocks contain Cu(-Mo-Au)-porphyry, Cu-Zn(-Fe) skarn, and metasomatic Pb-Zn (carbonate replacement) mineralization from ~400- to at least 1,200-m depth below the surface. The Mesozoic sedimentary rocks are unconformably overlain by a stratovolcanic sequence of andesitic to dacitic composition that hosts epithermal Cu-Au-Ag and Au-Ag-Pb-Zn mineralization. This study focuses on the shallow high-sulfidation epithermal Cu-Au-Ag mineralization exposed and exploited on Lahóca Hill. The ore mineralogy combined with the microthermometry of quartz- and enargite-hosted fluid inclusions suggest three stages of the ore formation: (1) early-stage ore deposition in the porphyry-epithermal transition zone (pyrite, chalcopyrite, tennantite-tetrahedrite, galena, sphalerite; 260°–230°C; logfs2~–11 to –9; logfTe2~ –19 to –14); (2) high- and very high sulfidation state mineralization from tellurium-saturated fluids (e.g., enargite, luzonite, pyrite, native gold, calaverite, hessite, aikinite-bismuthinite; 240°–170°C; logfS2~–7 to –11; logfTe2~–14.8 to –10.5); and (3) late-stage mineralization from tellurium-oversaturated, locally oxidized fluids of an intermediate-sulfidation state (e.g., tennantite-goldfieldite, pyrite, hessite, petzite, native tellurium, kawa-zulite; logfs2~–11 to –15.5; logfTe2 ≥ –10.5). The observed differences in ore mineral assemblages and trace element compositions of sulfides reflect the temporal and spatial evolution of the ore-forming hydrothermal system. Results of fluid inclusion microthermometry performed by conventional and infrared-light microscopy and Raman spectroscopic studies support a model with lateral flow of shallow hydrothermal fluids. The spatial distribution of paleotemperature data within the high-sulfidation portion of the ore deposit suggests that the fluid flow system is offset from the closest apex of the related mineralized porphyry stock. This could be due to structural complexity related to syn- to postmineralization tectonism and/or due to the presence of an undiscovered intrusion to the north of the known mineralized stock.

Original Research here

Ore minerals and textures of the Lejtakna high-sulfidation epithermal mineralization. (A) Stage 1 assemblage sphalerite within enargite. (B) Intergrowth of stage 2 enargite and luzonite (crossed polars). (C) Resorbed textured and partially replaced enargite crystal fragments in a tennantite-tetrahedrite matrix. (D) Stage 3 assemblage from the central part of the Lejtakna deposit with textures not observed at Lahóca Hill. (E) Framboidal pyrite cemented by galena. (F) Collomorphic pyrite-chalcopyrite assemblage with tennantite-tetrahedrite and sphalerite. (G) Collomorphic pyrite-chalcopyrite-galena assemblage in barite. (H) Intergrowth of pyrite and galena crystals. (I) Planar and cross-laminated layers consisting of pyrite and quartz. Note: Samples E through I are from the shallowest parts of the Lejtanka deposit.



Milin Kamak intermediate sulfidation epithermal Au-Ag deposit in Western Srednogorie, Bulgaria

Here is a brief paper, by Ralica Sabeva Vassilka Mladenova and Aberra Mogessie on the gold deposits around the small western Bulgarian town of Breznik.  I acquired this project for Euromax Resources Limited back in 2003 and we explored this until my departure in 2010.  A rather nice intermediate sulphidation gold deposit which has now had the necessary fluid inclusion and sulphur isotope work conducted by Bulgarian and Austrian researchers.

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John C. Menzies and Greg Hall at Breznik in beautiful western Bulgaria

Our intention while I was CEO was to devleop this deposit using adits and an internal winze.  .

Pillow Lavas of Late Cretaceous Age, west of the town of Breznik, Bulgaria


  • Situated in the Late Cretaceous 80-100km wide Apuseni-Banat-Timok-Srednogorie (ABTS) magmatic and metallogenic belt;
  • The deposit is hosted by altered trachybasalt to andesitic trachybasalt volcanic and volcanoclastic rocks;
  • 2.4 Mt at 5.91 g/t Au and of 26.78 g/t Ag, the probable reserves and resources are 13.1 tonnes of gold and 59.5 tonnes of silver;
  • Strike of 400-1000 metres and widths of cms up to 15 metres;
  • Temperature of formation ~238 to 273°C, salinity of 3.7-6.6% and  δ34S average of 1.350/00 suggestive of a magmatic sulphur source;
  • Fluid evolution from a low sulphidation through later intermediate (precious metals) stage.
Simplified geological map of Western Srednogorie zone in Bulgaria with the main paleovolcanic centres (after Dabovski et al. (2009) modified by Velev et al. (2012)). (B) Simplified geological map of Milin Kamak area.


The Milin Kamak gold-silver deposit is located in Western Srednogorie zone, 50 km west of Sofia, Bulgaria. This zone belongs to the Late Cretaceous Apuseni-Banat-Timok-Srednogorie magmatic and metallogenic belt. The deposit is hosted by altered trachybasalt to andesitic trachybasalt volcanic and volcanoclastic rocks with Upper Cretaceous age, which are considered to be products of the Breznik paleovolcano. Milin Kamak is the first gold-silver intermediate sulfidation type epithermal deposit recognized in Srednogorie zone in Bulgaria. It consists of eight ore zones with lengths ranging from 400 to 1000 m, widths from several cm to 3–4 m, rarely to 10–15 m, an average of 80–90 m depth (a maximum of 200 m) and dip steeply to the south. The average content of gold is 5.04 g/t and silver – 13.01 g/t. The styles of alteration are propylitic, sericite, argillic, and advanced argillic. Ore mineralization consists of three stages. Quartz-pyrite stage I is dominated by quartz, euhedral to subhedral pyrite, trace pyrrhotite and hematite in the upper levels of the deposit. Quartz-polymetallic stage II is represented by major anhedral pyrite, galena, Fe-poor sphalerite; minor chalcopyrite, tennantite, bournonite, tellurides and electrum; and trace pyrrhotite, arsenopyrite, marcasite. Gangue minerals are quartz and carbonates. The carbonate-gold stage III is defined by deposition of carbonate minerals and barite with native gold and stibnite.

Fluid inclusions in quartz are liquid H2O-rich with homogenization temperature (Th) ranging from 238 to 345 °C as the majority of the measurements are in the range 238–273 °C. Ice-melting temperatures (Tm) range from −2.2 to −4.1 °C, salinity – from 3.7 to 6.6 wt.% NaCl equiv. These measurements imply an epithermal environment and low- to moderate salinity of the ore-forming fluids.

δ34S values of pyrite range from −0.49 to +2.44‰. The average calculated δ34S values are 1.35‰. The total range of δ34S values for pyrite are close to zero suggesting a magmatic source for the sulfur.

Read the Full Text Here

Late stage intermediate sulphidation mineralization at Breznik.
Quartz-pyrite stage I is dominated by quartz, euhedral to subhedral pyrite, trace pyrrhotite and hematite in the upper levels of the deposit. Quartz-polymetallic stage II is represented by major anhedral pyrite, galena, Fe-poor sphalerite; minor chalcopyrite, tennantite, bournonite, tellurides and electrum; and trace pyrrhotite, arsenopyrite, marcasite. Gangue minerals are quartz and carbonates. The carbonate-gold stage III is defined by deposition of carbonate minerals and barite with native gold and stibnite.

Breznik a Centre of Local Culture & Spectacular Kukeri Festival

Breznik is a delightful small town in western Bulgaria and well worth a visit.

In the middle of winter across the Balkans, Kukeri festivals allow for mid-winter celebrations.

Kukeri are elaborately costumed Bulgarian men (and some wonen) who perform traditional rituals intended to scare away evil spirits. Closely related traditions are found throughout the Balkans and Greece (including Romania and the Pontus). The costumes cover most of the body and include decorated wooden masks of animals (sometimes double-faced) and large bells attached to the belt. Around New Year and before Lent, the kukeri walk and dance through villages to scare away evil spirits with their costumes and the sound of their bells. They are also believed to provide a good harvest, health, and happiness to the village during the year. The custom is generally thought to be related to the Thracian Dionysos cult in the wider area of Thracia. (after Wikipedia)

Ivanhoe Mines Releases PlatReef DFS with a 14% IRR

Ivanhoe Mines has released its much anticipated DFS on its US$1.544 billion Platreef 4 Elements (4E-platinum, palladium gold and rhodium) project in South Africa (DFS yet to be released on Sedar).

Ivanhoe #2 shaft sink in progress

Key features of the Platreef DFS include:

  • Indicated Mineral Resources at a  2 g/t 4E COG are 346 million tonnes at 1.7 g/t Pt, 1.7 g/t Pd, 0.1 g/t Rh and 0.3 g/t Au for 42 million ounces of Pt, Pd, Rh and Au with an additional 53 million ounces in Inferred Resources;
  • Mineral Reserve containing 17.6 million ounces of platinum, palladium, rhodium and gold;
  • Development of a large, mechanized, underground mine with an initial 4 Mtpa concentrator and associated infrastructure with plans to increase production incrementally to 12 MTPA;
  • Planned initial average annual production rate of 476,000 ounces  of Pt, Pd, Rhand Au(3PE+Au), plus 9,500 tonnes of nickel and 5,900 tonnes of copper in concentrates;
  • 174 kt of concentrate will be produced at 38 g/t Pt, 39.1 g/t Pd, 2.4 g/t Rh, 5.3 g/t Au, 3.35 Ni and 5.5% Ni;
  • Estimated pre-production capital requirement of approximately US$1.544 billion, at a ZAR:USD exchange rate of 13 to 1.
  • After-tax Net Present Value (NPV) of US$916 million, at an 8% discount rate.
  • After-tax Internal Rate of Return (IRR) of 14.2%.

The 14% IRR is less than appealing and they only got there by using some snappy metal prices:  US$1,250 per ounce (current price $945) for Pt, $815/Oz ($835) for Pd, $1,300/ozs ($1,270) for Au and $1,000/oz ($900-990) for Rh.

Net total cash cost + SIB capital (2017 mines in production and selected projects), US$/3PE+Au oz.

So how to finance this project.  Ivanhoe owns 64%, their Black Economic Empowerment (BEE) partner 26% and a Japanese consortium 10%.  New legislation would see the BEE percentage increase to 30% and that has to be financed.  Given the evolving political uncertainty in SA there might be some investor hesitation for a project in that country and which has a 14% IRR.  We will watch with the usual interest. 

ICSID Issues Decision in Favor of Antofagasta plc and Barrick in Reko Diq Arbitration Proceedings

The arid Reko Diq region

Exciting news for Barrick and Antofagasta, after years of frustration. B&A reportedly spent US$500 million on this project and were refused a mining lease and licence to operate by the Government of Baluchistan. Compensation for loss is going to be a most interesting hearing. This is a remarkably robust project and a very long lived mine. This is why we offered B&A US$200 million a few years ago in an attempt to resolve the matter – Good for them they they stuck out the challenge of arbitration.

TORONTO, March 21, 2017 — Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or the “Company”) announced that an arbitration tribunal of the World Bank’s International Center for Settlement of Investment Disputes (“ICSID”) yesterday issued a decision on the arbitration claims that Tethyan Copper Company Pty Limited (“TCC”), a joint venture between Antofagasta plc and Barrick, filed against the Islamic Republic of Pakistan, in relation to the unlawful denial of a mining lease for the Reko Diq project in 2011.

Yesterday’s decision by the ICSID tribunal rejected Pakistan’s final defense against liability, and confirmed that Pakistan had violated several provisions of its bilateral investment treaty with Australia, where TCC is incorporated.

The damages phase of the proceedings will begin on March 22, during which the tribunal will consider submissions from the parties to determine the amount that Pakistan must pay TCC. A ruling on the quantum of damages is expected in 2018.

The Reko Diq project, located in the Balochistan province of Pakistan, was expected to require an initial capital investment of more than $3 billion. It is one of the world’s largest undeveloped copper and gold deposits, with a potential mine life of more than 50 years.


Mineralisation in the Reko Diq area


Reko Diq is a large (10×10 km) volcano-magmatic complex located in the western Chagai magmatic belt in Pakistan. Over 48 porphyry Cu-Au centres are recognized in the Chagai belt. Twenty of them, including the world-class H14-H15 cluster, are located in the Reko Diq district. These deposits are largely associated with four consecutive episodes of magmatism during the Miocene. The porphyry centres are characterized by stocks and dyke swarms of diorite, quartz diorite and granodiorite composition. The deposits offer no technological development challenges. Reko Diq is located 50 kilometres to the east of the 300 million tonne Saindak porphyry copper gold deposit being operated by Metallurgical Corporation of China since 2002 under a lease agreement with the Government of Pakistan.

Deposit Geology

The Reko Diq porphyry district hosts a cluster of 20 Cu-Au porphyry centres in an area approximately 10×10 km bounded by the NW trending fault systems of Drana Koh in the north and Tuzgi Koh in the south.

The underlying volcano-sedimentary rocks at Reko Diq consist of thin-bedded shale, siltstone, shallow marine to fluviatile sandstone and minor discontinuous conglomerate and lava flow of the late Oligocene Dalbandin and Eocene Saindak Formations. The porphyry Cu-Au centres at Reko Diq are spatially and genetically associated with early to late Miocene calc-alkaline diorite, quartz diorite and granodiorite intrusions.

Hydrothermal alteration at Reko Diq is typical of porphyry Cu deposits. The porphyry centres at H14-H15 are characterized by a central potassic zone surrounded by phyllic (quartz-sericite-pyrite) and outer propylitic (chlorite-epidote) alteration. The main ore stage (chalcopyrite±bornite) mineralization is generally disseminated in host the porphyries and occurs in veinlets with a total sulphide content of 2-3 vol. percent. The chalcopyrite to pyrite ratio decreases at shallow levels. A distinct late stage pyrite+chacopyrite±molybdenite assemblage associated with D-veins is common in most of the porphyry systems at Reko Diq. The bornite to chalcopyrite ratio increases with the intensity of potassic alteration and magnetite content, which gives rise to higher Cu-Au grades (0.8% Cu; 0.6 g/t Au) in the deep central part of the deposits. A high sulfidation type assemblage of covellite+bornite+pyrite in association with quartz+sericite±kaolinite alteration is identified mainly in the sandstone and conglomerate units of the H15 system. Overall, a metal zoning from Cu-Au at the center and depth with potassic alteration and increasing Mo in the margins and upper parts of the porphyry system at H14-H15, can be defined.

The supergene oxidation is commonly very weak in the district with leached zone of less than a few meters. The only supergene enriched Cu blanket at Reko Diq is preserved in the central Tanjeel porphyry Cu deposit in which an irregular, 50 to 100m-thick chalcocite blanket, is developed beneath a 40-50m-thick leached cap dominated by jarosite and local hematite. The chalcocite blanket (0.5-1.0% Cu) has a gradational lower contact with low grade hypogene Cu-Fe-sulfide mineralization at depth.

Exploration History

Regional exploration for porphyry copper mineralization was initiated in 1993, when BHP Minerals signed a joint venture mineral exploration agreement with the Baluchistan Development Authority, over an area of 13,000 km2. Following an orientation survey over the Saindak deposit, regional geochemical exploration using −80 mesh and the bulk leachable gold (BLEG) method was conducted from 1993 to 1995, with the collection of approximately 5,000 samples. Sixteen anomalous areas were defined and follow-up work, including geologic mapping and standard rock geochemistry, was carried out over them. This work delineated 14 prospective areas, of which Reko Diq, Ziarat Pir Sultan, Ting-Dargun, Kirtaka, Machi, Dasht-e-Kain, Koh-i-Sultan, Durban Chah, and Ganshero were judged to be the most promising. Additional mapping, rock geochemistry, and ground magnetics were completed from 1996 to 1998, followed by 20,000 m of reverse circulation and core drilling. This program resulted in the discovery of the Reko Diq porphyry copper cluster, including the supergene enrichment blanket at Tanjeel (originally named H4) and the nearby hypogene copper-gold deposits at H14-H15 (also referred to as Western Porphyries), H8, and H13.

Geophysical surveys, both induced polarization and magnetics, were completed over them. These and other targets were drilled in several short programs during 2003 to 2006, for a total of approximately 48,000 m, including 24,000 m of infill drilling at Tanjeel. The new resource for Tanjeel, announced in late 2006, was 126 million metric tons (Mt) at 0.7 percent Cu, all leachable supergene-enriched sulfides. In 2006, a joint venture between Antofagasta Minerals S.A. and Barrick Gold Corp. acquired 100 percent of Tethyan Copper Company and its 75 percent interest in the Reko Diq and regional licenses and initiated an aggressive infill drilling program and scoping study at H14-H15. Resource drilling during 2006 to 2009 at Reko Diq totaled approximately 136,000 m resulting in completion of a feasibility study during 2010 for a 110,000 tonne per day operation producing copper-gold concentrate for export.

Reserves and Resources

Reko Diq is one of the largest known undeveloped copper-gold porphyries with resources of 5.9 billion tonnes at 0.41% copper and 0.22 g/t gold for 54 billion pounds of copper and 42 million ounces of gold. Within this resource is a high grade zone with 400 million tonnes at 0.9% copper and 0.6 g/t gold and a supergene resource at Tanjeel of 214 million tonnes at 0.6% copper. Significant potential exists within the Reko Diq porphyry cluster for expansion of this resource and a number of targets remain only lightly explored.

Reko diq resources – a very significant deposit


Planned Development

The planned development included a conventional open pit mining operation utilizing hydraulic face shovels and trucks feeding a conventional concentrator utilizing industry standard crushing, grinding and flotation. Tailings will be deposited in a engineered TMF.

Location of the Reko diq deposit and infrastructure – or lack therof


Power will be provided by a purpose-built 190 MW power station adjacent to the mill faculty.

The Reko Diq deposit produces a clean high grade concentrate with 28-31% copper and 7-22 g/t gold. Concentrate at a 52% pulp density will be pumped via a 682 km buried slurry pipeline to the port of Gwadar presently being redeveloped by a Chinese company.

At Gwadar Port a de-watering facility using high pressure filters will produce a concentrate with 7.5% water, which will be conveyed to a portside warehouse. A conveyor and ship loader will also be constructed.

Project Cashflow Analysis

Cmi Capital constructed a cashflow model based upon available information with costs from comparable recent projects. Two models were evaluated, a base case model with an open pit mine and conventional mill treating 120,000 tonnes per day (TPD) and an expanded model with a production rate of 200,000 TPD after year 5. These models with mine lives of 30 years consume only 21% to 33% respectively of the existing resource. In addition there is potential for the exploitation of higher grades in the early years, the discovery of additional reserves and the addition of a dump leach SXEW facility to treat the large Tanjeel supergene copper deposit (240 Mt at 0.6% leachable copper).

This analysis (with the cashflow models limited to 30 years) indicates that Reko Diq is an economically robust, long life project as can be seen below (metal prices used were a few years ago).

  • Copper Production: 162,000 to 257,000 TPY
  • Gold Production: 260KOz to 408kOz PA
  • NPV (08): US$2 to 3.4 billion (at long term metal pricing)
  • IRR: 15% to 17%

An outstanding project that has potential to significantly improve the outcomes for the peoples of Baluchistan and bring much needed development to a very challenging part of the country.