VANCOUVER — Vancouver-based explorer Tirex Resources (TXX-V) is set to make history in the small Balkan nation of Albania. On Oct. 29, Tirex succeeded in acquiring 25-year mining licenses that encompass six past-producing deposits in the Mirdita volcanogenic massive sulphide (VMS) district — marking the first time the country has seen the graduation of exploration permits to full-blown mining licenses under modern legislation.
As first movers in Albania, Tirex initially scored a prime, 344-sq.km land position that included nine past-producing VMS deposits where state-run enterprises operated underground copper mines through the early 1990s. Over the past eighteen months, Tirex has prioritized its targets and trimmed down its holdings into two separate packages, with a specific strategy in mind.
Promising greenfield exploration targets were funneled into a wholly-owned, 75-sq.km concession. Meanwhile, in a bid to provide short-term cash flow, Tirex transferred six historic mineral deposits into a 50-50 operational partnership with Ekin Maden, Turkey's leading non-ferrous metals and minerals trading company.
Under terms of the agreement, Tirex will provide the deposits, while Ekin Maden will supply the upfront capital needed to refurbish the underground workings, as well as its 700,000-tonnes-per-annum Fushe Arres processing plant.
“Our focus from the start has been a concurrent blend of target-and-discovery exploration and advancing the known areas of mineralization into production to get that cash flow going,” explained director and CEO Bryan Slusarchuk during an interview, citing his geological team’s belief that the company is operating in a potentially world-class mineral setting. “Our move into production was always centred on coming up with the money to realize the exploration potential in the district play, while experiencing the least amount of equity dilution possible.”
According to Slusarchuk, it wasn’t a hard sell when it came to signing the deal with Ekin Maden. The Turkish company has been operating in the area for roughly ten years and had experienced a number of exploration successes at its own deposits during underground drilling. The six deposits Tirex offered up in the deal include: Tuci, Paluce, Fushe Arres, Qaf Bari, Central Gurthi-Koshaj and South Gurthi-Letitna.
“Now what's interesting about our deposits is that none of these have ever been drilled from underground setups,” Slusarchuk continued, explaining that the Albanian state-run programs tended to drill vertical holes from surface to maximum depths of just over 200 metres. “[Our partners] were comfortable with that form of agreement and capital commitment based on their own experiences. Their belief is these deposits don't just make sense today, but also have that potential to pay off down the road.”
Slusarhuck said the capital expenses to bring the dormant underground infrastructure into production will not be too costly, since the mines operated up until the 1990s. The real cost for Ekin Maden will come in the form of mill upgrades.
The Turkish company has already committed US$40 million to its processing facilities. Tirex will have access to 500 tonnes per day of throughput capacity during initial operations, with that number jumping to 1,000-tonnes-per-day during year two, and 2,000 tonnes per day during year three. Ekin Maden will also be tacking on a zinc circuit to its mill in order to tap into sphalerite-rich zones that host the bulk of Tirex’s unrealized precious metal content.
Tirex cut precious metal grades during earlier drilling at its Gurthi South target typical of copper-and-zinc VMS mineralization. In 2010, the company intersected 19.3 metres grading 3.66% copper, 1.13% zinc, 8.3 grams per tonne silver and 1.3 grams per tonne gold in hole 65 from 102 metres depth. According to Slusarhuck the Albanian state-run programs were very copper focused, only sporadically assaying for gold and never for silver.
“Our partners have done a whole lot of metallurgical work,” Slusarhuck explained, stating that preliminary recovery figures he has received indicate an 84% copper recovery. “We haven't fully audited those recoveries so I'm always cautious when talking about them. The gold recoveries are low right now, but we've sent over a metallurgist and a mining engineer from our side to work with the mill setup.”
Tirex is in a unique situation regarding its production profile. Since the company is in a partnership with a private Turkish operator, it will be going into production without an economic assessment or a 43-101 compliant resource on the project.
First up on the production line is the Tuci deposit, which sits next to Ekin Madin’s operational Lak Roshi mine. Tuci has a non-compliant resource totalling 2.4 million tonnes at an average grade of 1.46% copper — including the higher-grade East Tuci zone, which carries 1.2 million non-compliant tonnes grading 2.1% copper.
“When we start mining the individual deposits we're going to drill these things to define and expand them all at depth,” Slusarhuck said. “The Turkish group has agreed to drill them at spacing and specifications that are conducive to compliant resource standards. Our hope is not only do we define the historic resources, but improve them and account for that precious metal content.”
Tirex is aiming to start garnering cash flow from the operation in the next sixth months, though Slusarchuk is quick to point out that milestone could be reached a lot quicker pending results from an underground mine survey. Ekin Madin’s Lak Roshi mine extension is currently approaching Tirex’s property boundaries, and the operation could effectively line up and continue on into that portion of the Lak Roshi ore body.
On the exploration side, Tirex has spent the last year running extensive geological mapping and target generation activities on its wholly-owned, 75-sq.km land package. Work has included airborne induced polarization surveys followed by vectoring through electromagnetic (EM) programs. Slusarchuk mentions that bore-hole EM work has never been used in Albania before and has proven effective in zeroing in on massive sulphide bodies.
“Our exploration will be very centred on drilling going forward,” Slusarchuk said, while looking over a map of the company’s exploration package and indicating around 40 prospective targets. “I think that's a big plus for investors entering the story at this point because we've done a lot of the tough regional work and established our priorities. We want to get the drills spinning and systematically test them.”
Tirex has roughly US$2.1 million available under a loan facility from the European Bank for Reconstruction and Development (EBRD), which the company plans to draw down in the next three months. Slusarchuk said that capital should give Tirex the luxury of approaching any financing negotiation from a position of strength in an attempt to limit further dilution, though the company would like to have drills turning on its exploration targets by year end.
Tirex has 68 million shares outstanding and has traded in a 52-week range of 33¢ and 92¢. The company has been on a serious run over the past five months, as shares have jumped 123% or 44¢ since early July en route to a 74¢ press-time close.
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