Drilling results are the first of what the company hopes will be a string of good news

July 21, 2021 / www.mining-journal.com / Article Link

The Australian-listed explorer has three 100%-owned projects, mainly covering copper, zinc and gold, as well as two partner-managed projects covering zinc, lead and gold.

A recent zinc-lead discovery at the Earaheedy project in Western Australia, in which Zenith holds a 25% interest, was the catalyst for a doubling of Zenith's market cap to its current level of around A$80 million ($60 million).

Assay results from the first two drill holes of a 26-hole programme demonstrated near-surface, high-grade zinc-lead mineralisation extending over a 500m strike and remaining open in all directions, according to an April announcement by Zenith and joint-venture partner Rumble Resources, which owns the remaining 75% and is overseeing exploration.

Results from the Chinook discovery included 34m at 4.22% Zn + Pb from 66m depth, and 21m at 4.3% Zn + Pb from 61m depth.

On July 8, the partners announced that initial follow-up drilling had expanded the mineralised envelope to 3km x 1.8km, more than double what was previously known. New results included 49m at 2.45% Zn + Pb from 18m and 52m of 1.78% Zn + Pb from 126m.

These results represent only about 8% of a 30,000m drill campaign that will see Rumble continue to drill for the next few months, according to Zenith's executive chairman Peter Bird.

"There's a long way to go, but at this early stage what we see in front of us could potentially be a tier-one-sized zinc-lead deposit," Bird said.

One of the reasons for Bird's confidence is that the Chinook discovery has been found to be a sedimentary exhalative deposit (SEDEX), something it has in common with six of the 10 largest zinc mines in the world.

"They [SEDEX deposits] are very material, they're big in scale, and obviously have a lot of inherent value," he said. "We've had a good jump in our share price, as has Rumble, but I would stress that this is very early in the journey and to keep watching this space."

The objective of the drilling campaign is now to understand the limits of the mineralisation along strike and down dip at the Chinook prospect.

A gravity survey is being planned along strike between Chinook and the Magazine deposits (which lies 12km away) to aid in targeting prospective Zn-Pb-Mn-Ag mineralisation.

"To date the boundary constraints [of Chinook] have not been found," Bird said. "The objective of the Rumble guys on the ground is to identify the ultimate extent of this thing.

"Once that has been defined, the goal will be to find out how big it is and what is its tonnage and grade. And then, once that's done, [the goal will be] to get inside that envelope and do some more intensive drilling."

Zenith's 25% share in Earaheedy is free carried until the completion of a bankable feasibility study, so for now the company is providing ongoing support as Rumble continues the exploration work.

This has enabled Zenith to focus its energies on its three 100%-owned projects: the Split Rocks gold project in Western Australia and the Red Mountain gold project and Develin Creek copper-zinc project in Queensland.

Split Rocks is located within the Southern Cross region in the Forrestania greenstone belt, between Wesfarmers' and SQM's A$1.8 billion Mount Holland lithium project and the Marvel Loch and Yilgarn Star gold mines, which hold 3Moz and 2Moz in resources respectively.

Zenith has defined a mineralised zone near surface extending over around 3km. It is currently in the middle of a 100-hole air core drilling programme and is aiming to define a resource by the end of the calendar year, Bird said.

Red Mountain, a breccia deposit, was a virgin discovery made by the Zenith team in early 2020.

"If people are looking for an analogy for that project, the most obvious is a project called Mt Wright that Resolute Mining exploited in the same area of Queensland some years ago.

The company ended up defining approximately 1Moz in resources. It was mined underground, it had quite a good grade and was highly profitable. That's our objective with Red Mountain. It will perhaps take a little longer to drill out compared to Split Rocks, but it is no less significant."

The third fully owned project, Develin Creek, is a VMS system with a previous JORC-compliant resource of 2.57m at 1.76% Cu, 2.01% Zn, 0.24g/t Au and 9.6g/t Ag. Zenith has defined eight key target areas over a 50km-long zone, all of which will see follow-up drilling supported by drone-based magnetics and soil geochemistry.

"The ultimate objective is to move the resource base there from a couple of million tonnes to in excess of 10Mt, either in one individual deposit or a whole swarm of deposits in the one area," Bird said.

With so many projects on its plate, it is worth mentioning that Zenith had an even larger portfolio before its board - led by Bird, an industry veteran who served on the management teams of Newmont and Normandy Mining, and chief executive Mick Clifford, a geologist with more than 30 years' experience at major mining companies including Billiton Australia and AngloGold Ashanti - made the difficult decision to focus only on base and precious metals.

"Zenith had been blessed with an exceptional portfolio of assets in a range of commodities, whether that be lithium, rare earths, or precious and base metals," Bird said.

"The issue the company was faced with was we could not do justice to all of those asset classes given our limitation in resources. There was a decision made in the early part of last calendar year - it wasn't an easy decision - to be much more focused in the base and precious metals space."

The decision saw Zenith sell its Laramie rare earths project in Wyoming, US to ASX-listed American Rare Earths Ltd in exchange for A$50,000 cash and 2.5 million ARR ordinary shares (currently valued at more than A$200,000). Zenith also cancelled a joint venture agreement with soon-to-be AIM-listed lithium explorer Bradda Head Holdings in exchange for $250,000 and a 15% interest in Bradda.

Selling these projects "doesn't mean we think any less of them, we just can't do justice to all of them with the resources we have," Bird said.

"We're very happy to have that equity position. Again it comes down to what we can manage with the budget and personnel available."

Despite having only a small team that often finds itself "multitasking with a lot of things", Bird said Zenith had no issue moving its three fully owned projects from exploration through to evaluation, funding and eventually development and operation.

"Given their relative size, all three assets are within our capabilities and skillsets," Bird said.

"With respect to the Earaheedy project, which is a very large project, we have a free carry to the end of the BFS and the Rumble team recently raised A$40m, of which I think they're allocating about half of that to the Earaheedy project. We're quite fortunate in relation to the big gorilla in our portfolio, that we're being helped along there with some funding."

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