Summary

Silver City Minerals Limited (SCI) controls fourteen mineral exploration tenements in the district immediately surrounding the “supergiant”, predominantly sediment-hosted Broken Hill deposit. This deposit is estimated to have contained in excess of 300 million tonnes of high grade lead-zinc-silver ore.

Given the nature of the Broken Hill deposit and marked similarities between its geological setting and that which occurs in SCI tenements, SCI envisages an exploration target of between 3 and 60 million tonnes of high grade ore in the order of 15 to 20% combined lead plus zinc and very high grade silver. A deposit that is only 1 to 2% of the size Broken Hill deposit is a highly attractive exploration target for SCI.

The potential quantity and grade of a target in SCI tenure is conceptual in nature and there is insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.

The tenements, totalling 1,170 square kilometres, host significant portions of the highly prospective Broken Hill Group rocks that are part of the early Proterozoic Curnamona Province deposited between 1710 and 1640 million years ago. The Broken Hill deposit hosted in these rocks has produced significant quantities of high grade ore (much in the order of +20% combined lead plus zinc, and high grade silver) from a series of stacked orebodies for over 130 years.

The underlying feature of the SCI exploration strategy lies in the recognition that the Broken Hill orebodies are largely conformable with the metamorphosed, predominantly sedimentary sequences which host them. Ore zones are recognised as stratiform bodies within specific rock formations.  These same sedimentary formations extend into in the district surrounding Broken Hill, where alteration and mineralisation in numerous small historic mines have been mapped. Understanding the geological setting in which Broken Hill ore was deposited is integral to the SCI approach to the exploration and discovery of other BHT deposits in the district.  Highest priority targets all lie with a 25 kilometres radius of town.

SCI has recently utilised a whole-of-mineral-system approach to targeting new areas for exploration. This has been used in conjunction with regional and detailed datasets to focus the Company on four areas with high prospectivity. A number of lesser known but recently acquired prospects also warrant follow-up work.

High priority targets identified to date are:

  • Stephens Trig Corridor including Stephens Trig and Trig South. These have returned intersections of 6 metres at 11.8% zinc, 3.8% lead and 13 g/t silver and 6 metres of 9.5% zinc, 0.7% lead and 14 g/t silver.  A poorly explored area to the east located within a high strain zone of structural thickening is considered prospective on the basis of mineral systems analysis (“Stephens Trig Target Zone”).

  • Razorback West Corridor. The Razorback West prospect located in the southern part of the corridor is a 5 kilometre by 500 metre wide zone of lead-zinc anomalism in RAB, a positive gravity anomaly and a well-defined IP chargeability anomaly. Rocks here represent the northern, fault-offset extension of the Broken Hill mine corridor. Sparse drilling to date has identified disseminated iron sulphides, galena in psammites and remobilised sphalerite.  Rocks are poorly exposed but are considered to be stratigraphic equivalent to those in the Stephens Trig corridor.

  • Native Dog. This prospect is well exposed compared to those above. It hosts abundant lode rocks including quartz-gahnite rocks and fine garnets. Large areas of manganese oxide occur from weathering of Mn-garnets.  The area is geochemically highly anomalous with elevated Pb-in-soil extending for over 3 kilometres.  IP surveys have outlined a number of chargeability anomalies that remain untested.  The prospect has been tested by 16 drill holes, including 4 by SCI.  Holes report patchy and disseminated sulphide and locally abundant lode rocks but no significant intersections.  The paucity of drilling is evident especially in areas of favourable geology identified by SCI mapping.

  • Balaclava.  Balaclava lies in a fault-bounded block which encloses the southern extension to the Broken Hill “line-of-lode”. All rocks identified to date are part of the Broken Hill Group.  Outcrop is poor but geological mapping suggests tightly folded northwest plunging sequences.  One drill hole has returned 10.1 metres of 6.8% zinc and 0.7% lead.  Similarly a recent RAB hole intersected near-surface gossan for 9 metres from 2 metres downhole returning 0.48% % zinc, 0.61% lead and 0.27% copper. Untested electromagnetic conductors and strong geochemical anomalies within folded lode rock sequences make this area an attractive target for massive sulphide mineralisation.

Introduction

Silver City Minerals Limited (SCI) was incorporated in 2008 specifically to acquire tenure and explore for mineral deposits in the Broken Hill district of western New South Wales, Australia.  The Company floated in an IPO in 2011 and embarked on a comprehensive exploration program which to date has included approximately 130 RC and diamond drill holes. The work has tested a number of targets including silver-lead veins, copper-gold veins and Broken Hill-type (BHT) silver-lead-zinc mineralisation. The high grade BHT style of mineralisation is considered to be most economically important and has received the largest portion of exploration expenditure.  The work by SCI is built on the back of extensive regional geological, geophysical and geochemical data sets provided by governments, in addition to a wealth of previous modern exploration data dating back to the 1960s.

Initial work by SCI focussed on near surface mineralisation which has the potential to be mined using open-pit methods and which could be trucked to one of the two beneficiation plants in Broken Hill. SCI’s joint venture relationship with CBH Resources (owner of one of the plants) provided impetus to this strategy.  More recently the Company has begun to look at the potential for much larger, potentially deeper targets within specific rock sequences.

In a recent study which combines field observations with extensive research by universities and government agencies on the Broken Hill deposit, SCI took a whole-of-mineral-system approach to targeting new areas for exploration. This information memorandum outlines the nature of geological setting of the Broken Hill deposit and projects this information into the surrounding district to assess new targets.  A number have been identified. The systems approach to the SCI assessment is built on the back of an extensive district-wide datasets; some made available by government through pre-competitive GIS data and others compiled by SCI as part of the ongoing exploration process. A data summary and brief review is outlined in Appendix 3.

The Company seeks expressions of interest from miners or explorers with the view to forming a farm-in and joint venture alliance and testing these targets in more detail.

Background

Silver City Minerals Limited (SCI) controls 1,170 square kilometres of exploration tenure in western New South Wales, Australia.  The tenure covers a large area of the Willyama Supergroup (1710-1570 Ma), part of the exposed Palaeoproterozoic rocks of the Curnamona Craton, in the Broken Hill Domain. More specifically the tenure largely surrounds the world class “supergiant” lead-zinc-silver deposit of Broken Hill with most of the ground lying within a 50 kilometres radius of the deposit. Broken Hill is the world’s largest and richest lead-zinc-silver deposit and has been mined continuously for over 130 years. 

At Broken Hill two mines remain in operation. These are owned by Perilya Mines Limited and CBH Resources Limited.  Perilya has been conducting sporadic exploration campaigns specifically around its mining tenements and locally within adjacent exploration tenements, whereas CBH Resources no longer conducts exploration outside of its mining leases.  Silver City Minerals Limited has a joint venture arrangement with CBH Resources on parts of the surrounding exploration tenure and over the last three years SCI has been the predominant explorer in the district.

The underlying feature of the SCI exploration strategy lies in the recognition that the Broken Hill orebodies are largely conformable with the metamorphosed, predominantly sedimentary sequences which host them. Ore zones are recognised as stratiform bodies within specific rock formations.  These same sedimentary formations extend into in the district surrounding Broken Hill, where alteration and mineralisation in numerous small historic mines similar to the main deposit have been mapped. The mapping and exploration of these “lode rock” sequences forms an important part of exploration in the district. Understanding the geological setting in which Broken Hill ore was deposited is integral to the SCI approach to the exploration and discovery of another BHT deposit in the surrounding district.

The Broken Hill orebody is estimated to have contained at least 300 million tonnes of high grade ore. Exploration in the district to date has identified another deposit of appreciable size (reported to be 14 million tonnes) at the Pinnacles to the southwest of Broken Hill.  Since incorporating in 2008 SCI has compiled and reviewed and extensive database of historic exploration has conducted a variety of geological, geochemical and geophysical surveys and drilled over 130 holes to test for a range of mineralisation types. It has formed the view that the district remains under-explored despite 40-50 years of modern exploration. The reasons for this relate to the size of the previous explorers, their geological understanding at the time and the techniques of exploration at the time. The view of the Company is that the district around Broken Hill remains prospective for potentially large and high grade base metal silver deposit.

Location

The SCI exploration tenure is located in western New South Wales, Australia in close proximity to the town of Broken Hill (Figure 1). The town has a population of approximately 20,000 and is a centre for mining, agriculture and tourism. The closest city is Adelaide some 500 kilometres to the southwest. The town is well served by roads and air with several flights per day from Adelaide, Melbourne and Sydney. The SCI tenements are easily accessed by both sealed and dirt road with abundant farm tracks throughout the area.

 Silver City Tenements

SCI explores fourteen Exploration Licences covering an area of 1,170 square kilometres (Figure 2). At the time of writing all tenements were in good standing. Annual expenditure commitments total $696,000 and tenure rentals $26,000.

Just less than 45% of the area under tenure is subject to a joint venture agreement between SCI and CBH Resources Limited (CBH). SCI owns between 75% and 85% of these licences. CBH contributes 25% to exploration on three licences to the south and southeast of Broken Hill and is carried to Definitive Feasibility on the remainder. CBH holds an offtake right to lead-zinc concentrates at standard benchmark rates for all of the joint venture tenure.

One licence (EL 7390) is subject to a farm-in and joint venture arrangement between SCI and Golden Cross Resources Limited.