District Metals (DMX.V) has released the assay results from the first three holes it drilled on the past producing Tomtebo polymetallic mine in Sweden. This is the first drill program in a few decades and while District Metals is still just scratching the surface, it’s encouraging to see the very high grade results in hole one, and the decent enough grades in holes 2 and 3 where the silver values are higher but the base metal values lower.

The high precious metals content doesn’t really come as a surprise as those are very important credits at the nearby Garpenberg mine, owned and operated by Boliden.

Someone reached out to us and said ‘but there isn’t any copper in the assay results, this doesn’t work’. The thing is, with this type of zinc, lead and silver grades with a good average gold grade as icing on the cake, you don’t need copper. While this clearly is a VMS system and while most VMS systems indeed contain a chunk of copper, the grades of the other metals clearly make up for the low copper value. In the table below, we have summarized the three headline results and provided the gross rock value per tonne.

While we would like to emphasize the ‘GROSS’ in gross rock value (as recovery rates and the different percentages of payable metal will have a major impact on the net rock value) even if you’d apply a 30-35% haircut to the gross metal value in the Tomtebo rocks, you are still ending up with high quality and high value rock.

Clearly hole 1 is the best hole of the batch of three that has just been released, that’s obvious. But it would be a major coincidence if the very first hole of the very first modern day drill program at Tomtebo would be the best interval on the property and while the assay results of holes 2 and 3 may be the main reason why the share price reaction was lukewarm, there’s obviously more to come and it remains important to understand District Metals has barely been scratching the surface at Tomtebo and the data from the first few holes will be a major driver to figure out where and how to drill next.

Disclosure: The author has a long position in District Metals. District is a sponsor of the website. Please read our disclaimer.

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