Gorno 2.0: Alta to reboot Italian zinc play

Shut down in the 1980's by previous owners ENI, Energia Minerals - now known as Alta Zinc - took the project over in 2014 to capture the upswing in the zinc price and began drilling out a resource while simultaneously carrying out a feasibility study. The mineral resource drilled was 3.7 million tonnes which Alta was later forced to downgrade to 3.3Mt in 2019 due to excessive reliance on the inferred resource - a development which the stock market "took a dim view [of]", Harris said. The regulator also prevented the company from releasing a scoping study and production target. Gorno's definitive feasibility study, guided for 2017, then failed to materialise, sending the share price into the doldrums, where it has remained since. Investors were unimpressed. So why should they back the project now in light of Gorno's rocky history? "A lot of groundwork has already been done in the metallurgy and infrastructure is still in place including 280km of [underground workings]" meaning a lot of the project is de-risked, said Harris. "We've got a drilling programme that is very much active - it's been running for 18 months with the sole intention to increase that resource and make what was marginally economic, strongly economic." But he acknowledges a "misunderstanding" in the market around the potential of the deposit following previous events. The zinc mining hopeful is aiming to release an updated MRE by mid-July with around 8km of mineralisation along strike already defined and only 15-20% of that explored, to date. "We know the mineralisation is much bigger", Harris said, with another 12 months of drilling yet to be completed. Reawakening the ‘sleeping giant' "I'm confident that [the MRE] will show that this is going to be a mine. Where we're at now, [investors] are not fully understanding the transition from a project which was marginal to one which is going to be built," he acknowledged. Recent drilling results from the Ponente West area of Gorno returned multiple intersections of high-grade zinc, lead and silver including: 1.8m at 13.7% Zn and 0.2% Pb and 2g/t Ag from 40.1m; 2.6m at 8.6% Zn and 1.4% Pb and 14g/t Ag from 53.0m; and 3.0m at 12.4% Zn; and 2.2% Pb and 39g/t Ag from 10.3m. Channel sampling at Pian Bracca South and Ponente Central also returned positive results. A definitive feasibility study on Gorno is also in the pipeline, which Alta hopes to have completed by mid-2022 with production pencilled in for Q1 2024. Gorno will be the first metal mine of the new generation built in Italy since the 1980's, a country not known its metal mining but home to 280 other mining operations. The beauty of Gorno's location in the northern industrial region of Lombardy is its proximity to European zinc smelters, including Glencore's operation south of the mine and Trafigura's to the north, Harris said. Harris also highlighted the project's strong ESG credentials. "We know we can supply the cleanest and highest-grade zinc and lead concentrate that is available globally." The proposed mine will be devoid of a tailings dam, with no nasty elements like mercury in its concentrate and ran by hydropower, he said. "The host rock is limestone and we're going to put all our tails back underground. There will also be very little surface expression since the mine will be underground and we're looking to sell or reuse the waste rock we produce as its limestone." Demand for zinc is on the rise as global economies enter a post-COVID recovery phase. Harris is bullish on the outlook for zinc, which he says is a "sleeping giant…no-one is really talking about it", with prices shooting up 50% since last year's COVID-induced slump to over 2,888/t currently. "Zinc is a fundamental commodity - it is the fourth most used metal on the planet after iron ore, aluminium and copper. It is used anywhere you don't want steel to rust, which is pretty much everywhere, including bridges, the frames of solar panels, wind turbines, road and rail," he added. "We have not even seen the start of the true infrastructure demand from Europe and the US." London calling Other assets in the Alta portfolio include a historic cobalt-copper-silver- nickel asset, Punta Corna, located in Piedmont - four hours away from Gorno plus two copper assets also in Italy. "Gorno is the first cab of the rank for us but it won't be the last," according to Harris who joined the Alta Zinc in 2019 after enjoying success as CEO of Bosnia-focused Adriatic Metals, which he helped float. Alta is still awaiting on permits for Punta Corna but is aiming to start drilling in the third or fourth quarter this year. It harbours high hopes that the project will contribute to Europe's transition to net zero; supplying cobalt and nickel to cathode manufacturers and EV car makers in Italy and across the continent. Bulk samples from veins taken in the 1930's indicated grades of 0.6-0.7% cobalt - "around three times the grade you would get from the DRC", Harris said. The company recently received a small grant from the European Union, the first of several, according to Harris. "The EU's financing of mining is catching up with their ambition but it's probably going to take a few more years before [the two] are completely aligned," he noted. Harris, who divides his time between London and the company's office in Italy, says it is a case of "not if but when" Alta heads for London's AIM. However, the timing will likely be closer to first production at Gorno, slated for 2024. The move makes sense now that the company has sold off all its Australian assets, he said.

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