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Vendetta Mining pins hopes on Pegmont lead-zinc project in Australia

A recently published preliminary economic assessment shows an after-tax net present value of A$124 million and an internal rate of return of 24%
Map of Queensland, Australia
OVERVIEW: VTT The Big Picture
The Pegmont lead-zinc project is in Queensland’s Mount Isa-McArthur mineral area

Mining is a mainstay of the northwest corner of Queensland, Australia. In the arid Mount Isa region — 1,800 kilometers (1,100 miles) from the state’s capital city of Brisbane — sits a project that executives of Vendetta Mining Corp (CVE:VTT) (OTCMKTS:VDTAF) say can greatly bolster the company’s fortunes.

Vancouver-based Vendetta is betting that the open-pit Pegmont lead-zinc project in the Mount Isa-McArthur mineral area – with significant deposits of lead, zinc and silver – will become one of the world’s most productive base-metal mines. With the option payments and work commitments now completed, the company can now acquire or pick up options to acquire 100% ownership of the Pegmont project by completing the advance royalty payment due in November.

The project’s mineral resource increased in 2018 to 5.8 million tons indicated and 8.3 million tons inferred. Under industry standards, the three exploration categories in order of increasing knowledge and confidence are inferred, indicated and measured.

A key attraction of the Pegmont project, according to Vendetta, is infrastructure including public and mine-haul roads encircling the property as well as a pipeline for power generation. 

The project is 25 kilometers (15 miles) west of the Australian miner South32’s Cannington silver-lead-zinc operation, one of the world’s largest producers of silver and lead. It’s 28 kilometers (17 miles) north of the Australian miner Chinova Resources PTY Ltd’s Osborne copper-gold operations. Environmental baseline studies have been completed with “no red flags,” according to the company’s website. 

10-year inventory

Strategically, Vendetta is focusing on developing mineral resources that support a 10-year mining inventory.

Its recently published preliminary economic assessment (PEA) for the Pegmont project shows an after-tax net present value of A$124 million and an internal rate of return (IRR) of 24%. That’s assuming a long-term consensus for lead at A$0.94 per pound, zinc at A$1.09 per pound and silver at A$16.50 per ounce.

Based on spot pricing of A$0.91 per pound of lead, A$1.18 per pound of zinc, and silver at A$15.31 per ounce, the after-tax IRR jumps to 27% with a A$158 million net present value.

The average annual production at the mine is projected at 124 million pounds of lead, 50 million pounds of zinc and 298,000 ounces of silver. A 10-year mine life is expected at 3,000 tonnes per day as an open pit followed by an underground operation.

"The results outlined in the PEA demonstrate a robust, standalone project,” President and CEO Michael Williams said. “We wanted to demonstrate that Pegmont would work as a standalone operation using conservative parameters. I believe the PEA accomplishes this.”

Preproduction capital

The PEA projects preproduction capital of A$170 million and life-of mine sustaining capital of A$59 million.

The upcoming program will focus on drilling that could bring additional ore into the mine plan and a geostatistical review of the mineral resource that could increase the overall grade.

Meanwhile, Vendetta’s top executive has a background that could prove useful in the event of an offer to buy the company.

Williams is well-versed in mergers and acquisitions, having founded Underworld Resources Inc, a Vancouver company that was sold in 2010 to Kinross Gold Corp for C$140 million. He boasts significant contacts with retail and institutional investors and an extensive banking network.

He is credited with raising significant funds for advanced exploration and development projects.

Industry veteran

Serving as a director is Peter Voulgaris, a mining industry veteran whose operations and business-development skills complement Williams’ financing smarts. For the past 15 years, Voulgaris has focused on mine development, project management and business development. He worked with Ivanhoe Mines on the Oyu Tolgoi copper-gold project in Mongolia.  

Earlier in his career, he served as a geologist at the Mount Isa Mines Ltd lead-zinc-silver operation, the Placer Dome Osborne copper-gold mine, the Granny Smith gold mine and the Newmont Mining Corp (NYSE:NEM) Callie underground gold mine. Most recently, Voulgaris served as vice president of business development for Minco Silver Corp (TSE:MSV).

Now comes more work fior the team as Vendetta presses its quest to monetize Pegmont.

Contact Dennis Fitzgerald at [email protected]

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