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Tartana Resources eyeing near-term base metals production after August IPO

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Heap leach pads and solvent extraction plant at Tartana Resources' namesake project, in Queensland, Australia, in December 2017.
Source: Tartana Resources.

Tartana Resources Ltd. aims to list on the ASX on Aug. 13 believing it will have the edge over other similarly sized pure exploration plays due to its near-term production potential at its advanced Tartana copper-zinc property in north Queensland and a Tasmanian zinc slags project, both in Australia.

The company lodged its prospectus on June 24 to raise up to A$6 million at 20 Australian cents per share, with which it will look to define a resource at both the main Tartana copper-zinc project and the Queen Grade zinc project within the Tartana property leases.

The main Tartana project has defined an open pit conceptual exploration target of up to 47 million tonnes at up to 0.8% copper for up to 376,000 tonnes of contained copper.

It is situated near private company Auctus Minerals Pty. Ltd.'s King Vol high grade zinc skarn deposit and Mungana porphyry copper-gold-zinc-lead deposit. Auctus is believed to have spent over A$200 million developing the King Vol mine, refurbishing the Mungana concentrator and on the Mungana decline.

Tartana Executive Chairman Stephen Bartrop told S&P Global Market Intelligence that his company believes there is spare capacity at the Mungana plant which may present an opportunity. Tartana's prospectus says it is in discussions with Auctus over opportunities that may benefit both stakeholders.

The main Tartana project comprises four mining leases including an open pit which was the source of copper oxide ore for historical copper sulfate production using heap leach pads and a solvent extraction/crystallization plant.

While the mine was placed on care and maintenance in 2014 after operating for about a decade, the heap leach pads are still operational and Tartana's studies have shown the plant could be restarted for less than A$500,000.

That cost could be offset by the revenue generated from the sale of copper extracted from the ponds, which Bartrop said would also give the company sustainable cash flow to help fund ongoing exploration given copper sulfate currently sells at a 25% premium to the London Metal Exchange copper price.

Robin Morgan, Equity Analyst at financial advisory Taylor Collison which is the IPO's sponsoring broker, told S&P Global Market Intelligence that while the production will be low grade, the heap leach process will make it cheap.

While Tartana could extract the copper and "sell it quickly," Bartrop said there are also a number of areas in the leases, particularly in the base of the open pit and to the north of the open pit, which still have copper mineralization as defined by historical drilling.

However, while the "big target" at the main Tartana project is a copper porphyry with potential silver and cobalt credits, Bartrop said the most significant near-term cash flow could come from the Queen Grade zinc project.

Queen Grade has a defined exploration target of up to 3 million tonnes at up to 10% zinc for up to 290,000 tonnes of contained zinc.

Then there is the Zeehan zinc slags project in Tasmania, Australia, which Tartana bought from chemical technology developer SciDev Ltd., which acquired 19.9% of Tartana as part of the deal.

The project has an old smelter site with old slag heaps where Tartana recently estimated an indicated resource of 469,000 tonnes at 13.3% zinc, 1.7% lead, 53 g/t silver and potential indium credits.

While Tartana sold a 5,000 tonne sample to Nyrstar NV's Port Pirie smelting operations in South Australia in early 2018, Bartrop said his company is investigating other opportunities around either fuming or leaching the product.

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Tartana Executive Director Peter Rohner told S&P Global Market Intelligence that while some analysts criticized the company's move to focus on near-term production given they see it as an exploration play, the strategy makes sense given strong Australian-dollar copper prices.

Morgan said Tartana's near-term production is an attractive investment as there are limited base metals producers on the ASX.