VANCOUVER, July 2, 2019 /CNW/ - Tinka Resources
Limited ("Tinka" or the "Company") (TSXV &
BVL: TK) (OTCPK: TKRFF) is pleased to announce positive
results from the Preliminary Economic Assessment ("PEA") prepared
for its 100%-owned Ayawilca Zinc Zone project in central
Peru. The PEA was prepared in
accordance with National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101") by Amec Foster
Wheeler Peru S.A. (Wood) as principal consultant, Transmin
Metallurgical Consultants, and RPA Inc. The PEA provides the
initial economic assessment for an underground ramp-access mine
development with a 5,000 tonnes per day processing plant.
View PDF version.
PEA Highlights
- After-tax NPV8% of US$363
million and pre-tax NPV8% of US$609 million using metal prices of US$1.20/lb zinc, US$18/oz silver, and US$0.95/lb lead on a 100% equity basis;
- Initial Capex of US$262 million
with after-tax IRR of 27.1% and pre-tax IRR of 37.2%;
- 21-year mine life with average head grades of 6.05% zinc, 18.3
g/t silver, 67.1 g/t indium, and 0.25% lead;
- Average annual production of approximately 101,000 tonnes of
zinc recovered in concentrate and approximately 906,000 ounces of
silver in a silver-lead concentrate;
- Leverage to zinc price: 20% increase in zinc price increases
after-tax NPV8% to US$606
million;
- Numerous opportunities identified for potential economic
improvement & exploration upside.
Note: The PEA is preliminary in nature and includes inferred
mineral resources that are considered too speculative geologically
to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves, and there is no
certainty that the preliminary economic assessment will be
realized. Mineral resources are not mineral reserves and do
not have demonstrated economic viability.
Tinka's President and CEO, Dr. Graham
Carman, stated: "We are very pleased with the results of
the PEA, which is based on a mid-sized underground mining case of
5,000 tonnes per day and relatively modest initial capital. The PEA
shows that the Ayawilca Zinc project, which is located in one of
the world´s most prolific polymetallic belts, is shaping up to be
one of the best new zinc development projects in the Americas with
strong economics and a long mine life of over 20 years. The
excellent PEA results are a major milestone and justify the
continued advancement of Ayawilca towards production while
exploration drilling is continuing with the aim of discovering
additional high grade zinc resources."
Financial Summary
|
Pre-tax
|
After-tax
|
NPV (8% discount
rate)
IRR
Payback
period
|
US$609
million
37.2%
2.2 years
|
US$363
million
27.1%
3.1 years
|
Pre-production
capital expenditure (Capex)1
Sustaining
Capex
Life of Mine (LOM)
Capex
Closure Cost (5.0% of
LOM Capex)
|
US$261.9
million
US$144.6
million
US$406.5
million
US$20.3
million
|
Notes:
|
1 Includes
contingencies of US$45 million.
|
Operating
Summary
|
|
Processing plant
throughput
Average annual zinc
concentrate production
Average annual
lead-silver concentrate production
Average annual silver
in lead concentrate
Net Smelter Return
from zinc and lead concentrates
|
5,000
t/day
201,500
dmt/year
7,570
dmt/year
905,700
oz/year
US$4,002
million
|
Mining
costs
Processing
costs
G&A
costs
Total Operating Costs
(Opex)
|
US$36.66/t
US$6.44/t
US$5.48/t
US$48.57/t
|
Notes:
|
dmt = dry metric
tonne
|
Metal Prices &
Exchange Rate Assumptions
|
Input
value
|
Zinc Price
Lead Price
Silver
Price
NSR Cut-off
value
Exchange Rate -
Peruvian SOL/USD
|
US$1.20/lb
US$0.95/lb
US$18/oz
US$65/t
3.3
|
Total material
processed (LOM)
|
38.2 million
tonnes
|
Mine Life
|
21.1 years
|
PEA Mine Plan – 5,000 Tonnes per Day Underground
Mining Operation
The PEA for the Ayawilca Zinc Zone is based on an underground
mine operating at a mining rate of 5,000 tonnes per day for a mine
life of 21.1 years. For the purposes of the PEA, production
is assumed to commence in 2023 following 18 months of construction
and commissioning. This initial mine plan is based on mining
a total of 8.4 million tonnes Indicated Resources (grading 6.95%
Zn, 0.18% Pb and 15.8 g/t Ag) plus 29.8 million tonnes Inferred
Resources (grading 5.79% Zn, 0.27% Pb, and 19.0 g/t Ag) over the
life of mine ("LOM") using an NSR cut-off value of US$65/t (of the 11.7 Mt Indicated and 45.0 Mt
Inferred Resources at a US$55/t NSR
cut-off value). The zinc-rich mill feed will be trucked to
the surface via a one-way-traffic ramp system connecting two mine
portals to the underground infrastructure and accessing production
areas starting at West and South Ayawilca.
Processing of the zinc mineralization will be through a standard
crushing and grinding circuit followed by froth flotation,
concentrate thickening and filtration. The mine operation
will produce two concentrates: a zinc concentrate which is
anticipated to assay 50% zinc based on metallurgical test work; and
a lead concentrate which is anticipated to assay 50% lead and
between 2,750 and 5,930 g/t silver (calculated on assays and based
on similar base metal operations). About half of the tailings
will be thickened and sent to a surface tailings storage facility,
while the remainder will be mixed with cement and used as
structural backfill in the underground operations.
Based on preliminary mine plan analysis including resource
geometry, the scale of the deposit and grade distribution, room and
pillar ("R&P") and post-pillar mining ("P&P") methods were
selected.
The estimated operating costs, over the life of the Project, are
as follows:
Operating Costs per Mining Method (Opex)
Description
|
Cost per Tonne
Processed
|
Mining – Room &
Pillar
Mining – Post &
Pillar
|
US$38.06
US$35.29
|
Average Mining
Cost
Process
Plant
G&A
(US$10M/yr)
Total Operating
Cost
|
US$36.66
US$6.44
US$5.48
US$48.58
|
The major components of the initial capital expenditures of
US$261.9 million include US$76.3 million for the processing plant,
US$34.3 million for on-site
infrastructure, US$43.1 million for
mine equipment and underground pre-production development,
US$14.7 million for off-site
infrastructure, and US$6.7 million
for a starter tailings storage facility direct costs.
Contingencies in the capital costs total US$44.5 million. The major components of
sustaining capital are US$109.7
million for mining equipment and underground development,
and US$34.9 million for tailings
management over the 21.1 year mine life.
Capital Cost
Item
|
Initial (US$
M)
|
Sustaining (US$
M)
|
Total (US$
M)
|
Mining & mine
development
Process
plant
On-site
infrastructure
Off-site
infrastructure
Tailings storage
facility
Indirect + Owner
costs
Contingencies
|
43.1
76.3
34.3
14.7
6.7
42.3
44.5
|
109.7
-
-
-
34.9
-
-
|
152.8
76.3
34.3
14.7
41.6
42.3
44.5
|
TOTAL
PROJECT
|
261.9
|
144.6
|
406.5
|
CLOSURE
COSTS
|
|
|
20.3
|
Metallurgical Recoveries and Off-Site Charges
As reported in the Company's news release on June 5th 2019, metallurgical testing
of samples from Ayawilca indicate that a zinc concentrate grading
50% zinc can be produced with 92% of the zinc recovered to the
concentrate. The lead metallurgy has been assumed based on
similar operations. The lead concentrate is expected to assay
50% lead and between 2,750-5,930 g/t silver. Most of the silver is
expected to report to the lead concentrate and be payable, while
silver is not expected to be payable in the zinc concentrate.
The zinc concentrate is expected to be a marketable concentrate
with no deleterious elements other than an iron penalty.
Concentrate grade assumptions and recoveries for the principal
metals are provided in the table below.
Composite Head Grade, Metallurgical Results and Recoveries
Product
|
Average Grade
LOM
|
Metallurgical
Recoveries (%)
|
Zinc
(%)
|
Indium
(g/t)
|
Lead
(%)
|
Silver
(g/t)
|
Zinc Equiv.
(%)
|
Zinc
|
Indium
|
Lead
|
Silver
|
Feed grade
Zinc
Concentrate
Lead
Concentrate
|
6.05
50.0
4.0
|
67.1
555
|
0.25
0 to 0.1
50.0
|
18.3
0-100
3,721**
|
6.77*
|
100
92
0
|
100
92
0
|
100
0
85
|
100
0
85
|
*
|
Zinc Equivalent (%) =
NSR/15.39. See NSR Calculation below
|
**
|
Silver grades were
calculated for the PEA and range from 2,750 to 5,930 g/t
|
Off-site charges include road transport of concentrates either
to the local port of Callao, Peru,
or a local smelter. For the purposes of the PEA, 75,000
tonnes per year of the zinc concentrates are assumed to be
delivered directly to a local smelter and the remainder of the
concentrates (averaging 126,750 tonnes per year) are assumed to be
shipped to overseas smelters. All of the lead concentrates are
assumed to be shipped overseas. Off-site charges include treatment
charges, refining charges, and iron penalties at smelter.
Off-site Charges
Description
|
Zinc
Concentrate
|
Lead-Silver
Concentrate
|
Transport to
Port/Local Smelter
Port
Charges
Shipping to overseas
smelter (FOB)
Local smelter
Treatment Charge (TC)
Overseas smelter*
Treatment Charge (TC)
Smelter Refining
Charge (RC)
Iron
Penalty
|
US$35/wmt
US$17.5/wmt
US$45/wmt
US$190/dmt
US$170/dmt
-
US$7.50/dmt
|
US$35/wmt
US$17.5/wmt
US$45/wmt
-
US$150/dmt
US$1.50/oz
-
|
Notes:
|
wmt = wet metric
tonne. dmt = dry metric tonne
|
*
|
Assumes a US$20/t
credit for high indium values in the zinc concentrate, expected to
be around 550 g/t In
|
NSR Calculation
The mine plan for the PEA was based on a Net Smelter Return
(NSR) cut-off value of US$65 per
tonne, which is higher than the NSR cut-off value used for previous
resource estimates and higher than the US$48.58 operating cost per tonne assumed in the
PEA.
The prices and NSR factors for each metal utilized in the NSR
calculation are presented in the table below.
Metal Prices and NSR Factors
Metal
|
2019
PEA
|
Nov. 26 2018
Resource Estimate
|
Metal Price
Assumptions
|
NSR
Factor
|
Metal
Price
Assumptions
|
NSR
Factor
|
Zinc (Zn)
Lead (Pb)
Silver
(Ag)
Indium
(In)
|
US$1.20/lb
US$0.95/lb
US$18.00/oz
-
|
US$15.39
US$12.25
US$0.44
-
|
US$1.15/lb
US$1.00/lb
US$15.00/oz
US$0.30/g
|
US$15.34
US$4.70
US$0.22
US$0.18
|
NSR for the PEA was calculated using the following formula:
NSR (US$) = [Zn(%)*US$15.39+Pb(%)*US$12.25+Ag(g/t)*US$0.44].
NSR factors are different to those used for the Nov. 26, 2018 mineral resource estimation, as
shown in the above table. Metal price assumptions are
marginally different, while indium was not considered as payable
for the PEA due to low current indium prices. However, a
US$20/dmt credit is assumed for high
indium zinc concentrates sent to overseas smelters. The difference
in the NSR factor for lead is the result of higher recovery of lead
and higher lead grade in the concentrate.
Sensitivities
The Ayawilca Zinc Project is highly leveraged to zinc
price. A 20% increase to the price of zinc results in an
after-tax NPV8% of US$606M, an increase of US$243M over the base case PEA scenario.
Opportunities and Exploration Potential
The Ayawilca Zinc Zone has not been fully delineated and is open
in several directions, including to the east and northeast.
Exploration drilling is currently ongoing.
Opportunities for additional value on the Ayawilca property not
captured in the PEA include:
- Potential for expansion of Zinc Zone resources at Central,
South, East, Zone 3, and Camp areas through additional
drilling;
- The Tin Zone, which was not included in the PEA because it
requires additional metallurgical work, offers significant
exploration potential as the resource remains open in several
directions;
- The Colquipucro silver oxide deposit is amenable to open pit
mining methods, but was not included in the PEA because it is
believed to require higher silver prices to potentially be
economic. However, the prospects of economic extraction may
improve if a zinc mine is built on the property;
- A number of untested exploration targets on the Company's 170
km2 area of mining concessions that comprise the
Ayawilca property.
Next Steps
Based on the positive initial PEA, the Company intends to
continue to advance the Ayawilca Zinc Project towards
production. Next steps will include:
- Continuing exploration drilling with the aim of expanding the
Zinc Zone resources, especially in high grade areas;
- Obtain the required permits for infill drilling to support a
Prefeasibility Study. This process has already begun and is
expected to take the remainder of 2019. Further expansion of
the drill permits will be required in 2020 in order to test
exploration targets outside of the current drill permitted
areas;
- Optimization studies will be completed to evaluate potential
economic improvements, including higher metallurgical recoveries
(for both Zn and Pb) and a reduction in the iron content in the
zinc concentrate;
- Additional geotechnical data is required to evaluate more
advanced mine planning studies, including potentially higher mine
throughput options than contemplated in the PEA;
- High indium grades in the zinc concentrate represent a
potential value-add, although limited value was applied in the PEA
for indium. Further technical and marketing studies will be
carried out to evaluate how additional value may be derived from
indium as part of a future mining operation;
- Conduct mineralogical and metallurgical studies on the Tin Zone
resources in order to evaluate the economic potential of these
resources.
A National Instrument 43-101 Technical Report will be filed
on SEDAR within 45 days.
Mineral Resources
The table below outlines the Indicated and Inferred Mineral
Resources estimates (Nov. 26, 2018)
used in the PEA, including those that are not included in the mine
plan. The Base Case resource is highlighted in
bold, which assumes a cut-off value of US$55/t NSR. As noted above, the metal prices and
cut-off used in the mine plan are slightly modified from the
resource estimation.
Sensitivity Analysis - Ayawilca Zinc Zone Tonnage and Grade
Report by NSR Cut-off Value – November 26,
2018
Class
|
NSR US$/t
Cut-off
|
Tonnage
(Mt)
|
ZnEq%
|
Zinc %
|
Lead %
|
Indium g/t
|
Silver g/t
|
Indicated
|
40
|
13.6
|
7.4
|
6.3
|
0.16
|
75
|
15
|
50
|
12.4
|
7.9
|
6.7
|
0.17
|
80
|
15
|
55
|
11.7
|
8.1
|
6.9
|
0.16
|
84
|
15
|
60
|
10.8
|
8.5
|
7.2
|
0.16
|
89
|
16
|
70
|
9.4
|
9.2
|
7.7
|
0.15
|
99
|
16
|
|
80
|
7.9
|
10.0
|
8.4
|
0.15
|
111
|
17
|
Class
|
NSR US$/t
Cut-off
|
Tonnage
(Mt)
|
ZnEq%
|
Zinc %
|
Lead %
|
Indium g/t
|
Silver g/t
|
Inferred
|
40
|
52.7
|
6.2
|
5.2
|
0.24
|
60
|
17
|
50
|
48.1
|
6.5
|
5.4
|
0.24
|
64
|
17
|
55
|
45.0
|
6.7
|
5.6
|
0.23
|
67
|
17
|
60
|
41.5
|
7.0
|
5.8
|
0.23
|
70
|
18
|
|
70
|
33.9
|
7.6
|
6.4
|
0.22
|
78
|
18
|
|
80
|
26.9
|
8.3
|
6.9
|
0.22
|
86
|
20
|
Notes:
|
|
1.
|
CIM (2014)
definitions were followed for Mineral Resources.
|
2.
|
Mineral Resources are
reported above a cut-off NSR value of US$55/t. The Base Case
resource is highlighted in bold.
|
3.
|
The NSR value was
based on estimated metallurgical recoveries, assumed metal prices
and smelter terms, which include payable factors, treatment
charges, penalties, and refining charges. Metal price assumptions
were: US$1.15/lb Zn, US$300/kg In, US$15/oz Ag, and US$1.0/lb Pb.
Metal recovery assumptions were: 90% Zn, 75% In, 60% Ag, and 75%
Pb. The NSR value for each block was calculated using the following
NSR factors: US$15.34 per % Zn, US$4.70 per % Pb, US$0.18 per gram
In, and US$0.22 per gram Ag.
|
4.
|
The NSR value was
calculated using the following formula:
NSR =
[Zn(%)*US$15.34+Pb(%)*US$4.70+In(g/t)*US$0.18+Ag(g/t)*US$0.22].
|
5.
|
The ZnEq value was
calculated using the following formula: ZnEq =
NSR/US$15.34.
|
6.
|
Numbers may not add
due to rounding.
|
7.
|
Mineral Resources are
not Mineral Reserves and do not have demonstrated economic
viability.
|
Qualified Person Statements
Technical information related to the PEA contained in this news
release has been reviewed and approved by William Colquhoun, FSAIMM, Principal
Metallurgical Consultant with Amec Foster Wheeler (Perú) S.A., a
Wood company (Wood). Mr. Colquhoun is a Fellow of the South
African Institute of Metallurgy and a registered Professional
Engineer of the Engineering Council of South Africa with 32 years' experience. Edwin
Peralta, P.E., SME Registered Member and a Qualified Person as
defined in National Instrument 43-101 – Standards of Disclosure
for Mineral Projects, is a Senior Engineer with Wood Mining and
Metals USA with 23 years of
experience.
The Mineral Resources disclosed in this press release were
estimated by Ms. Dorota El Rassi,
P.Eng., and Mr. David Ross, P.Geo.,
both employees of RPA and independent of Tinka. By virtue of
their education and relevant experience, Ms. El Rassi and Mr.
David Ross are "Qualified Persons"
for the purpose of National Instrument 43-101. The Mineral
Resources were classified in accordance with CIM Definition
Standards for Mineral Resources and Mineral Reserves (May,
2014). Both Ms. El Rassi, P.Eng. and Mr. David Ross, P.Geo. have read and approved the
contents of this press release as it pertains to the disclosed
Mineral Resource estimates.
The metallurgical and recovery inputs have been reviewed and
verified by Mr. Adam Johnston,
FAusIMM, CP (Metallurgy) of Transmin Metallurgical Consultants,
Lima, a Qualified Person as
defined by National Instrument 43-101. Mr Johnston has 25 years of
mineral processing experience and is a Fellow of the Australasian
Institute of Mining and Metallurgy.
Dr. Graham Carman, Tinka's
President and CEO, reviewed, verified and compiled the technical
contents of this release. Dr Carman is a Fellow of the Australasian
Institute of Mining and Metallurgy, and is a Qualified Person as
defined by National Instrument 43-101.
Data verification and quality control and assurance
RPA visited the Ayawilca property, reviewed the sampling and
preparation methods, QA/QC methods and results, and sample chain of
custody procedures; and performed independent resource database
verification tests. Details on the database verification work
are provided in a RPA Technical Report dated January 9, 2019. RPA is of the opinion that
the procedures are appropriate and the resource database is
suitable to estimate Mineral Resources.
About Tinka Resources Limited
Tinka is an exploration and development company with its
flagship property being the 100%-owned Ayawilca carbonate
replacement deposit (CRD) in the zinc-lead-silver belt of central
Peru, 200 kilometres northeast of
Lima. The Ayawilca Zinc Zone
contains 11.7 Mt of Indicated Resources grading 6.9% zinc, 0.2%
lead, 15 g/t silver and 84 g/t indium, and 45.0 Mt Inferred
Resources grading 5.6% zinc, 0.2% lead, 17 g/t silver and 67 g/t
indium. The Ayawilca Tin Zone contains an Inferred Mineral
Resource of 14.5 Mt at 0.63% tin, 0.21% copper and 18 g/t silver.
The Colquipucro silver oxide deposit contains 2.9 Mt of Indicated
Resources grading 112 g/t silver (for 10.4 Moz Ag) and 2.2 Mt Inferred Resources grading
105 g/t silver (for 7.5 Moz Ag) in
high grade lenses within a preliminary open pit shell using a
$46/t NSR cut off (November 26, 2018 release).
On behalf of the Board,
"Graham Carman"
Dr. Graham Carman, President &
CEO
Forward Looking Statements: Certain information in
this news release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws (collectively "forward-looking
statements"). All statements, other than statements of
historical fact are forward-looking statements. Forward-looking
statements are based on the beliefs and expectations of Tinka as
well as assumptions made by and information currently available to
Tinka's management. Such statements reflect the current
risks, uncertainties and assumptions related to certain factors
including, without limitations, statements about strategic plans,
including timing, extend and success of future operations and work
programs, capital expenditures, discovery and production of
minerals, price of metals and currency exchange rates, community
relations, government regulation of mining operations, environment
and permitting, timing of geological reports and the preliminary
nature of the PEA and the Company's ability to realize the results
of the PEA. Should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those
described herein. Forward-looking statements are based on the
reasonable assumptions, estimates, analysis and opinions of
management made in light of its experience and perception of
trends, current conditions and expected developments, and other
factors that management believes are relevant and reasonable in the
circumstances at the date such statements are made. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated. There can be no assurance that
such information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such information. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company does not
undertake to update any forward-looking statements, except in
accordance with applicable securities laws.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release
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SOURCE Tinka Resources Limited