This issue uses some of the concepts that were covered in that previous October issue. Also as before, it should be noted that this column has been based on observations which may not conform to some geological theories.

Lanfranchi Nickel Mines are based on the old Lanfranchi/Tramways underground nickel operations about 52km south of Kambalda in WA, that were owned and operated by WMC between 1976 to 1979 and 1986 to 2001. LNM was one of the last of WMC’s “Kambalda underground nickel mines” in operation being placed on care and maintenance as Mincor bought Miitel and started production.

LNM appears to have a reputation in the industry as being a “difficult” mine, and while it is true that its namesake Lanfranchi orebody has been historically relatively complicated, the Lanfranchi orebody is still a classic Kambalda-style orebody lying in a broad north/south striking embayment that has been post depositionally folded, and faulted both east/west across the embayment and step-faulted north/south inside the embayment (or lava channel).

However, LNM also has spectacularly thick high grade nickel sulphide, such as 6 to 8m at 10%Ni to 12%Ni historically at Schmitz. In the year 2000, 370,000t of ore at an average grade of 4.45%Ni were mined mainly from Skinner in the Skinner/Schmitz orebodies (being 260,000t at 5.3%Ni) and Helmut to realise almost 16,500t Ni. The Skinner/Schmitz orebody was the third highest annual producing orebody in the Kambalda nickel mines. The highest was Long (now owned by the Independence Group [IGO]) with 17,300t Ni in 1987, followed by Otter/Juan (now privately owned) at 14,900t Ni in 1978.

The nickel mineralisation at Lanfranchi (LNM) is the same style as at Kambalda and Widgiemooltha with the lava channels still having essentially flowed from north to south (often NNW to SSE) and forming embayments. However, whereas both Kambalda and Widgiemooltha were disrupted by domes with a N/S long axis pushing up from depth resulting in embayments appearing to have flowed around the domes, LNM appears to have been disrupted by a dome with an E/W long axis pushing up from depth, which results in a series of parallel N/S striking 30º dipping embayments along the southern flank of the “dome” shown in Figure 1.

Interestingly, there does appear to be a north-south dome like axis between the Lanfranchi and Schmitz orebodies, with the Lanfranchi side striking as if in a position on the western side of a dome and the Skinner/Schmitz side striking as if in a position on the eastern side of a dome. Also coincidentally, just like Kambalda and Widgiemooltha the better orebodies have been those on the perceived eastern side, namely Skinner, Schmitz and Helmut.

Skinner was found as a “lucky-break” in development while Schmitz was being developed, and resulting drillhole intersections included 24.7m at 7.45%Ni (comprised of massive and matrix sulphide nickel) with 10.8m at 9.6%Ni essentially true width just through the massive sulphide on the basalt contact. Other Skinners could exist, with the faulted component of the embayment only 25m across (east-west). SMY expect to start exploration drilling in 2006.

It can be observed that Skinner was associated with a porphyry. I am not aware of what studies have been undertaken of the relationship between the porphyries and nickel mineralisation amongst the Kambalda nickel mines, however, one of WMC’s richest high grade nickel mines at Kambalda was Long, and Long is riddled with porphyries. The porphyries have not been mapped at Lanfranchi, but they could influence nickel mineralisation grades.

Schmitz consisted of reputedly 6m to 8m thick high tenor massive (10% to 12%Ni) ore overlain by matrix ore and was apparently mined by room and pillar and then backfilled. SMY was considering methods to extract the pillars.

When we (ERA) visited LNM in mid-September 2005, SMY had recently exposed the Helmut South orebody. Helmut South is a deeper extension of the essentially mined out Helmut orebody. It had been exposed earlier than expected, at a thicker width and with a perceived faulted offset of mineralisation in the footwall with follow up drilling encountering similar results to the visual expectation of 2m@4.5%Ni in the footwall zone and 13m @4.1%Ni in the main zone. (The original Helmut orebody was also noted for having relatively thick widths).

The overall 16m true width (35m intersected) @ 4.1%Ni in drillhole HS115 appeared to be fairly consistently mineralised with a number of 1m intersections at >5%Ni, and included a higher grade 8m true width (17m intersected) at 5.4%Ni zone.

When viewed looking west in cross section, it was originally thought that the northern edge of the east-west striking dome that brought the lava channels/embayments to surface was truncated by the broadly east-west striking Tramways thrust fault along the north edge of the dome. However, recent drilling in 2005 has shown that the underlying basalt is overturned (like an overturned anticline) along the northern edge, with the full komatiite thickness and sequence repeated. Potentially a complete Lanfranchi lies on the hidden overturned northern side of the dome.

At this stage, simply the contact between the basalt and komatiite ultramafic has been identified, however just where the embayments lie has yet to be discovered. Fortunately, there are more exploration techniques than the grid drilling that WMC used to focus on locating the embayments at Lanfranchi. SMY plan to try BHPB’s Geoferret along the northern edge of the dome.

Average grades were often >3% at LNM. There are a number of smaller satellite embayments that are gradually being interpreted for their economic mineability starting with Edwin, which still has the remains of its vintage rail underlay (decline) shaft on surface, that was responsible for the initial mining of Lanfranchi/Tramways between 1976 and 1979 at an average grade of 4.5%Ni.

The Lanfranchi namesake orebody remnants like a number of similar orebodies, are currently being mined using air-legs, although the deeper extension may be more amenable to mechanisation.

Lanfranchi Nickel Mines clearly appears to have hidden potential that has been overlooked by the market – perhaps it is a “sleeping giant”.

Disclosure and Disclaimer : This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, (an independent research company) who is an Authorised Representative with Taylor Collison Ltd, and with his associates, holds interests in some of the stocks mentioned in this article. The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

Figure 1. Geological plan and locations of the individual nickel orebodies at Lanfranchi