The Parys Mountain Project

The Parys Mountain property is the largest and the only undeveloped polymetallic mineral deposit in the United Kingdom. It contains an important identified geological resource of about 6.5 million tonnes with a grade of 5.3% zinc, 2.3% copper, 2.7% lead, 39 grams of silver and 0.32 grams of gold per tonne. A positive independent feasibility study was completed in 1990 and full planning permission obtained for a 1,000 tonne per day mine.

A complete geological reassessment of the entire property has been carried out and this has resulted in the development of a new geological model which indicates that there is potential for the discovery of substantial additional mineral resources at the property.

A new exploration programme launched in mid 1997 is expected to include diamond drilling in areas east of the known resource largely unexplored to date. The objective of the new exploration programme is to develop significantly larger mineral deposits at Parys Mountain.

Location

The Parys Mountain property is located in the northern part of the island of Anglesey in north Wales. The mineral property is about 3 kilometres in length and covers more than 2 square kilometres. The company owns the freehold, including the land and minerals, to about a half of this area and a leasehold of the other half and holds the mining lease of the entire property. The company also has a mining lease from the Crown for gold and silver over a wider area.

The property is located 2 miles south of the town of Amlwch. The port of Holyhead is 18 miles to the west. Access to the property is excellent by road, rail and sea. All necessary services and resources including power, engineering, maintenance facilities and a skilled labour force are located nearby.

History

Parys Mountain has been the site of intermittent mining activity since at least Roman times. During the 1780s Parys Mountain was the largest copper mine in the world. Open pit and underground mining were carried out over a strike length of more than 3 kilometres and to depths of about 200 metres, the deepest then achievable by known technologies. Almost all activities ceased by the beginning of the 20th century.

In the 1960s the search for a new mine at Parys Mountain recommenced. Exploration in the 1960s and 1970s was focused on the extension of the old open pit workings and was directed towards copper. This exploration utilised a variety of geological, geophysical and geochemical methods together with approximately 285 diamond drill holes totalling about 60,000 metres of drilling.

The modern phase of exploration of Parys Mountain began in the early 1980s when a new important polymetallic zinc, lead, copper, silver, gold area was identified about 1 kilometre west of the old workings. Drilling and underground development work in this area from 1988 to 1990 resulted in the identification of the Engine, White Rock and Chapel zones containing a resource of 6.5 million tonnes with a combined base metal grade (zinc, copper and lead) of 10.3%.

Between 1988 and 1990 a shaft was sunk on the Engine zone to a depth of 300 metres. About 1,000 metres of lateral development were completed on the 280 metre level to access and explore the Engine and White Rock zones. Approximately 2,000 tonnes of development ore were successfully hoisted and processed through a pilot plant constructed on the site for metallurgical testing and concentrate production of about 200 tonnes was sold to the smelter at Avonmouth.

Feasibility Study

In 1990 Kilborn Engineering completed an independent feasibility study of the project that confirmed the technical and economic viability of a 1,000 tonne per day (300,000 tonnes per year) mining and milling operation producing zinc, copper, lead and gold concentrates. Kilborn estimated the capital cost of the mine at £22 million. This study was based on a mineable reserve of 1,963,000 tonnes at a grade of 6.43% zinc, 1.30% copper, 3.32% lead, 75 grams of silver and 0.51 grams of gold per tonne and a mine life of seven years. This mineable reserve covered the shaft development area, being only a portion of the overall geological resource of 6.5 million tonnes. Detailed mine and plant designs were prepared and planning permission obtained. At the same time an environmental protection programme was devised also giving attention to historical and archaeological concerns. Declining metal prices and weakening stock markets in 1991 and 1992 resulted in development of the project being placed on hold. The property has been maintained on a care and maintenance basis since that time.

Reassessment

Over the past two years the company has carried out a reassessment of the geology and structural setting of the Parys Mountain deposit. This programme has included a compilation and reinterpretation of drilling results from the preceding three decades, as well as relogging of historic drill core and remapping of surface geology. At the same time lithogeochemical studies have been undertaken.

Work is continuing in conjunction with Cardiff University of Wales on lithogeochemical and stratigraphic studies involving the re-examination of existing drill core and outcrop. A separate project in collaboration with Leicester University, assisted by the British Geological Survey, involving an evaluation of palaeontological data and examination of shale sequences has been completed.

The results of the above work have led to the development of an exciting new stratigraphic model for the Parys Mountain deposits which has demonstrated that there is a potential for the identification of new mineral zones on the property which could add substantially to the existing mineral resource base.

New Geological Interpretation

The original open pit copper deposits at Parys Mountain were traditionally viewed as vein systems or lodes within volcanic rocks. However the zinc, copper, and lead massive sulphide mineralised zones, first discovered in the early 1980s, in the lower part of a thick sequence of volcanic rocks, near the contact with underlying shales, are typical volcanic massive sulphide deposits formed on the sea floor adjacent to submarine volcanoes. Until recently it was generally accepted that the rock layers had been folded into a large U or V shaped structure with an east west axis, the occurrence of shales flanked by older volcanic rocks being taken as evidence of this axis.

The work carried out by the company over the past two years has led to a new understanding of the importance of the relationship between volcanic rocks of differing characteristics and the massive sulphide mineralisation. It is now thought that large scale folding is not a factor governing the distribution of the various mineral bodies.

It is believed that the lenses of massive sulphide mineralisation at Parys Mountain are located next to a series of eruptive centres or volcanic domes, which can be defined and identified using chemical analysis of trace elements in the rocks (lithogeochemistry).

This relationship between massive sulphide deposits and volcanic centres explains the distribution of the already identified sulphide lenses and provides strong evidence for a prospective area at least twice as large as the area which contains the presently established resource of 6.5 million tonnes. It also provides the means to guide further exploration of this prospective area.

Geology

Anglesey lies within the Caledonide orogenic belt which extends north-east to Scotland and Scandinavia and south-west through southern Ireland and the maritime provinces of Canada. Massive sulphide deposits similar to Parys Mountain, with similar geology and associated with volcanic rocks of similar age, are being and have been successfully mined in Scandinavia, Ireland, Newfoundland and New Brunswick.

The Parys Mountain polymetallic deposits are located in a sequence of Ordovician to Lower Silurian volcanic rocks and shales. The massive sulphide lenses lie mainly at or close to the base of a thick felsic sequence, at or near the contact with underlying mudstones. These lenses appear to have accumulated around the flanks of a series of felsic volcanic centres or rhyolite domes at the base of the felsic volcanic sequence.

The new interpretation is that two north-easterly trending chains of rhyolite domes are present, distributed over a length of 3 km. Diamond drilling to date has focused almost entirely on the north-western flank of the western chain where the Engine zones have been delineated. Only a few widely spaced holes have been drilled on the south-eastern flanks of the western chain, where a new zone, the Central zone is believed to located. The flanks of the second chain of domes, which has been identified by surface mapping, are almost totally unexplored. There are also indications that larger lenses of massive sulphide may lie along the northern edge of the Parys Mountain system at depths of 400m to 600m below surface.

Development Program

The company considers that the property has the potential for a significant increase in its resource base. Only the western 1 kilometre of a 3 kilometre east-west strike length has been subject to any meaningful exploration and only the western fringe of this western 1 kilometre itself has been subject to detailed assessment. The company believes that there is considerable potential to identify and define new ore zones in the remaining 2 kilometres of the property.

The objective of the next phase of exploration is to increase the overall geological resource base at Parys Mountain and thus to enhance the viability of a new mining operation by increasing the production throughput from the 1,000 tonnes per day used in the 1990 feasibility study and lengthening the projected mine life. The immediate strategy will be to diamond drill to the east of the shaft development area with the objective of developing new resources in the Central zone and to explore the second range of rhyolite domes further to the east.

It is anticipated that this initial drilling programme will take about four months to complete. Ongoing chemostratigraphic and lithofacies studies will be continued as will the work with the Cardiff University of Wales and the British Geological Survey.