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The opportunity to unearth a resource nobody knew about is what gets mineral explorers up in the morning. What happens if they can’t do that — why even get up?

As investors in Australian mining would know, mining exploration companies can’t always do what they do best — beset by the vagaries of tropical weather.

During the dry season, miners can move drilling rigs and associated equipment all day long but during the wet season the ground becomes mud — meaning moving heavy drilling equipment becomes impossible.

So for large chunks of every year, a swathe of Australian miners are locked out of their exploration ground.

For example, PNX Metals (ASX:PNX) is one such company that feels that unique frustration.

It has a promising project at Hayes Creek in the Northern Territory, but the wet season there generally runs from November to April, meaning that it’s locked out for large periods of time.

While the project’s pre-feasibility study was built upon a project delivering:

  • 18,300 tonnes of zinc per year
  • 14,700 ounces of gold per year
  • 1.4 million ounces of silver per year

This gives the project a mine life of 6.5 years, but PNX wanted to make sure it could extend mine life beyond 10 years.

READ: PNX enhancing its NT mine prospects through exploration

So, from April last year it drilled furiously to prove up near-term resources to take the project’s mine life beyond 10 years.

It managed to drill for 7800 metres, with promising initial results from Fountain Head and Cookies Corner — but then, the rain came and PNX had to pull up stumps.

So, what’s it been doing in the meantime and how is it getting ready for a time when the clouds will part and the sun will shine?

1. Head to the lab

Armed with cores and rock chip samples, miners will often head to the lab to analyse those cores to get information such as grades and composition.

Quite often an exploration company would send off core samples to labs or have them analysed by an on-site qualified geologist, but the wet season can represent a good opportunity to get analysis done without the distraction of drilling.

For example, PNX received assays for drilling at Cookie’s Corner (less than 30 kilometres from its flagship Hayes Creek development) at the end of January — but it did the drilling in late 2018.

Results included:

  • 2m at 4.35 grams per tonne gold from 61 metres
  • 11m @ 1.13g/t Au from 75m
  • 6m @ 1.82 g/t Au from 133m
  • 4m @ 2.12 g/t Au from 44m

An exploration company such as PNX may also take rock chips and soil samples to the lab to gain a better understanding of what they’re looking at, and this will help inform upcoming drilling when it isn’t so wet.

2. Go on roadshows and look for new sources of capital

You can have all the geological understanding in the world, but if you don’t have money to drill, that resource will remain in the ground.

It’s why one of the chief things a company will do in the wet season will be to secure meetings with key investors and showcase the company in roadshows.

It’s even better if you have numbers fresh from the lab to discuss with potential funders as well.

It’s why having a bit of capital nous on the board can be very important, as well as having geologists who can explain geological results to bankers.

3. Work on mining studies, reports

One of the major pieces of work being done by PNX is to improve (the already pretty robust) economics of its Hayes Creek development by folding in results of drilling to improve the project’s resource.

To do that, it will need to do a whole bunch of calculations based on the drilling reports to come up with an updated figure which has been okayed by a ‘competent person’.

READ: A quick guide to resources and reserves

But in conjunction, it’s also preparing an Environmental Impact Statement based on feedback from the regulator on its initial application.

When it comes to getting a project up and running, the preparation of documents for government approval is just as important as mining studies or roadshow docs.

So, a mining company may also be neck-deep doing regulatory paperwork as it waits for the clouds to clear.

4. Pick their targets for the next drilling campaign

Exploratory drilling can be an expensive exercise, so having a bit of time off isn’t necessarily a bad thing.

It means that it can digest the results of its last batch of drilling, consult with crack geologists and come up with a plan of attack for the next round of drilling.

Taking PNX as an example again, while it managed to drill eight holes at Cookie’s Corner in 2018, it’s planning to drill another 12 in the upcoming dry season — and it won’t be doing this by chance.

READ: PNX back drilling in the NT after the wet season

While it had a fair idea of where it wanted to drill based on anomalies and a stack of geological data, the drilling done there is the most solid geological information it’s had to date.

It will get together with its geologists and fold the results into a general geological understanding of the area and tweak its upcoming program accordingly to give it the best shot of striking.

So while it may seem like a mining exploration company may be putting its feet up during a wet season, it’s actually busier than ever.

 

This content is produced by Star Investing in commercial partnership with PNX Metals.  This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.