By Greg Peel

Copper mining first began near Ravensthorpe, half way between Albany and Esperance in Western Australia, in the early 1900s. Since that time, some 20,000 tonnes of copper has been extracted and in its heyday the area boasted no less than five copper smelters. But early mining technology had its limitations, and it wasn't long before Ravensthorpe lost its premier copper mining status in WA to the Nifty resource in the Pilbara, now owned by Aditya Birla ((ABY)).

Where there is copper there is almost always gold, and similarly gold prospecting also began in the Phillips River area near Ravensthorpe in the early 1900s. Again, primitive workings were soon abandoned once new discoveries were made elsewhere.

Indeed, across the globe the history of both the mining and energy sectors has been one of exploiting a particular area to extract what is readily available and then moving on rapidly to the next exciting prospect. It has now been several decades since the last globally significant gold resource was discovered, and a similar period since the last major, easily accessible oil reserves were found. In oil's case, the answer has been to exploit newer, more sophisticated technologies to drill ever deeper as one alternative, which -as we have seen- can have disastrous consequences. At the same time, new technologies (and a strong oil price) have sent prospectors back to revisit old well sites which were abandoned long before all the oil was extracted.

The same is true for minerals. Whereas the miners of yesteryear may have extracted all that was readily available, it does not mean they extracted all of what was there. Indeed, their antiquated technology meant that in many cases all they managed to do was to literally scrape the surface. Moreover, mining is not just about digging ore out of the ground, but about metallurgical processes of separating that ore into its valuable elements. Again, metallurgical technology has made great strides since the early 1900s.

It is surprising to thus note, particularly given the well-known nickel reserve at Ravensthorpe, that the area in general has remained largely unexplored – not in terms of holes in the ground, for they are many, but in terms of twenty-first century technological capacity for mineral resource discovery and exploitation in an area that clearly boasts potential for sizable reserves lying beneath. However, in recent years, spurred on by significant moves in the prices of copper and gold, that has been changing.

Tectonic Resources ((TTR)) listed on the ASX in 1993 and has since boasted success in two gold mining and one nickel mining venture. Today Tectonic has a singular focus, and that is on its Phillips River gold and copper reserves near Ravensthorpe, which lie sufficiently adjacent to the existing bitumen road to the port of Esperance (157km).

Within Tectonic's Phillips River tenements are several prospective sites, but to date the major focus has been on the gold-copper resource beneath the old abandoned sites and Kundip, and the extensive gold-copper-silver-lead-zinc resource at nearby Trilogy, discovered in 1997. It is the Trilogy project which has specifically proven the beneficiary of twenty-first century technology.

While the gold and silver at Trilogy pose little extraction problem, the “jewel in the crown” of this particular resource is its main copper orebody. Some copper can be readily extracted, but the bulk exists as a conglomeration of copper, zinc and lead ores. The copper and zinc exist as sulphides, meaning they can be separated at low cost using floatation processing, but the lead does not exist as a sulphide and permeates the entire core. For this reason, Trilogy laid dormant from 1997 to 2007.

In 2007 new reagent technology developed elsewhere allowed Tectonic to revisit Trilogy and by 2009 the company was able to declare that value could now be “liberated” from the entire orebody. In other words, the new reagents allowed for all of the copper, zinc and lead to be fully separated at a viable cost.

The significance of this milestone “cannot be underestimated,” suggested Tectonic MD Steve Norregaard at a lunch presentation attended by FNArena earlier this month. Alongside the proving up of the gold reserves at Trilogy and particularly Kundip, the technological breakthrough provided the company with the confidence to move forward into a definitive feasibility study of Phillips River. That study is now well progressed, and at the time of the presentation Tectonic announced an increase in its gold resource base to 880,000 ounces.

Tectonic believes this is only the beginning given highly prospective results from other drill sites within its 408sqkm of tenements (and another 186sqkm of joint venture tenements). In particular, the May series of drill sites at Kundip has hit 12.9g/t of gold at 6 metres. The use of modern induced polarisation (IP) survey technology has proven effective in targeting such strikes and defining wider orebodies.

Tectonic expects its feasibility study to complete by August, and funding to be secured by December (interested parties have already been identified). Construction is then slated to begin in 2011 leading to first production in 2012.

Applying current metal spot prices to each of Tectonic's gold, copper, silver, zinc and lead reserves renders an in situ resource value of $195/t or 4.3g/t of gold equivalent according to the company's calculations. Today's TTR share price of six cents implies a market capitalisation of $22m, or 0.9% of that in situ resource value.

As an adjunct to the “new technology” focus of this story, it should be noted that the Ravensthorpe area is noted for its high winds. To that end, Tectonic intends initially to power its operations with diesel but assessment of the construction of a combined wind/diesel power base has shown definite potential. Not only would such a power source lower the cost of Tectonic's operations, it would mean the possibility of carbon certificates and, perhaps one day, a positive emissions trading offset.

FN Arena is building the future of financial news reporting at www.fnarena.com . Our daily news reports can be trialed at no cost and with no obligations. Simply sign up and get a feel for what we are trying to achieve.

Subscribers and trialists should read our terms and conditions, available on the website.

All material published by FN Arena is the copyright of the publisher, unless otherwise stated. Reproduction in whole or in part is not permitted without written permission of the publisher.