ZincX Resources Corp. (“ZincX” or “the Company”, TSX Venture Exchange: ZNX) is pleased to announce it has received positive and robust results from the recently commissioned independent Preliminary Economic Assessment (“PEA”) for the 100% owned zinc-lead-silver Cardiac Creek deposit located on the Akie property in northeast British Columbia, Canada.
- Estimated pre-tax NPV7% of $649M ($401M after-tax)
- Estimated pre-tax 35% IRR (27% after-tax)
- Estimated pre-tax 2.6 year payback (3.2 year payback after-tax)
- PEA contemplates a 4,000 tonne per day underground mine and 3,000 tonne per day concentrator with an 18-year mine life
- Total mine production of 25.8 million tonnes of which 19.7 million tonnes are processed
- Initial CAPEX (excluding contingency) estimated at $256.7M; total of $302.3M including $45.7M in contingency
- Payable metal production over life-of-mine is 3,268M lbs of zinc & 362M lbs of lead
- Average annual production of 178M lbs of payable zinc and 20M lbs of payable lead at an all-in operating cost of $102.38/tonne milled
- Total payable metal LOM is $3,960M; or $201/tonne milled
- Saleable zinc and lead concentrates with no penalty elements (clean concentrate)
- There are no net smelter royalties owed (0% NSR)
- Opportunities for continued refinement through additional studies including upgrading lead and silver recoveries and reducing operating costs
- The Cardiac Creek deposit remains open at depth with potential to increase mine life
- Akie and Kechika Regional combined offer district-scale potential for new discoveries
The PEA is considered preliminary in nature and includes mineral resources, including 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. Mineral resources that are not mineral reserves have not yet demonstrated economic viability. Due to the uncertainty that may be attached to mineral resources, it cannot be assumed that all or any part of a mineral resource will be upgraded to mineral reserves. Therefore, there is no certainty that the results concluded in the PEA will be realized.
“The positive results outlined in the PEA demonstrate a robust, stand-alone base metal project with a large and potentially growing resource base, all-season access; good rail and road infrastructure and amenable to conventional mining and milling practices common to similar projects. We are delighted with the strong results of the PEA and intend to now move to advance the project through feasibility, permitting and towards production. This project has significant exposure to zinc given the almost 10 to 1 zinc to lead ratio in payable metal production over life-of-mine.
We have a strong competitive advantage that will appeal to mining and investment partners, including 100% ownership, 0% NSR, long-term mineral tenure security, good stable jurisdiction, and strong First Nation community support. The PEA demonstrates low risk economics and well-established mining and milling techniques,” stated Mr. Peeyush Varshney, President and CEO.
Additional optimization studies are anticipated to improve the overall economics. Specific areas of advancement include:
- Additional metallurgical variability testing to optimize metal recoveries and include silver as a payable
- Optimize dense media separation (DMS) circuit by using a coarser grind in future testing
- Investigate optimal grinding size to improve lead liberation
- Reduce reagent and collector dosages to reduce mill OPEX
- Continue discussions with rail companies to further reduce transportation costs to Trail smelter
- Exploration potential remains open at depth at the Cardiac Creek deposit and significant upside remains as higher grades seem to be improving with depth. Further drill testing is required to delineate the down-dip potential
- District-scale exploration potential exists over the 800 square kilometre highly prospective land package. Additional focused exploration is planned
The PEA was completed by JDS Energy & Mining Inc. (JDS) of Vancouver, British Columbia. JDS is widely known in the mining space for fit-for-purpose design and fundamentally sound technical engineering studies. All inputs are based on budget quotations, peer comparisons and JDS’ recent experience in projects of similar scope. All figures are quoted in CDN$ unless otherwise noted.
The PEA envisages a conventional underground mine and concentrator operation with a small environmental footprint measuring approximately 20 hectares in size upon startup, growing to approximately 35 hectares at closure. The mine will produce an average production rate of 4,000 tonnes per day (tpd) principally from longhole stoping. Much of the waste rock and the majority of the volume of mill tailings will be placed back underground as cemented backfill. The remainder of filtered tailings will be stacked in a surface filtered tailings facility located near the mill.
The mine will have an 18-year life with potential to extend the life-of-mine (LOM) through resource expansion at depth. Key parameters for the PEA are summarized in the tables below.
The estimated pre-tax NPV7% is $649M, with a 35% IRR and 2.6 year payback; post-tax NPV7% is $401M, with a 27% IRR and 3.2 year payback.
Total payable LOM metal production is expected to be 3,268 million pounds of zinc and 362 million pounds of lead. Silver is not expected to be a payable due to relatively low head grade and anticipated smelter deductions. Future metallurgical work will continue to optimize the lead and zinc circuits to improve recoveries and potentially add silver as a payable metal.
The pre-production capital cost (CAPEX) is estimated at $256.7M, for a total of $302.3M including $45.7M contingency. Sustaining capital is estimated at $302.7M, for a total of $315.6M including $12.9M contingency.
The total estimated capital cost over LOM, including closure costs but net of salvage value, is estimated at $559.4M; for a total of $617.9M including $58.5M contingency. The majority of mine construction is expected to take approximately 24 months.
The average on-site all-in operating costs (OPEX) total $102.38 per tonne processed, which includes $38.13 per tonne mined for mining, $33.13 per tonne milled for milling, $2.87 per tonne milled for tailings and DMS rejects, and $16.33 per tonne milled for general and administrative (G&A).
The base case used metal prices are calculated from the 3 year trailing average coupled with two year forward projection of the average price; and are: US$1.21/lb for zinc, US$1.00/lb for lead and US$16.95 for silver. A CDN$/US$ exchange rate of 0.77 was used. The NPV discount rate is 7%.
Table 1: Summary of Key Parameters
|Parameter||Base Case||Spot Price1|
|Mine Life||18 years|
|Mine Production Rate||4,000 tpd|
|Plant Throughput (LOM
average; after DMS)
|Tonnes Mined||25.8 Mt|
|Mined Head Grades||7.6% Zn; 1.5% Pb; 13.08 g/t Ag|
|Tonnes Milled||19.7 Mt|
|Milled Head Grades (after
|10.0% Zn; 1.9% Pb; 17.17 g/t Ag|
|Total Payable Metal (LOM)||$3,960M||$4,888M|
|Total Operating Expenses
|Net (Pre-tax) Operating
|Net Pre-tax Cash Flow (LOM)||$1,328M
|Net After-tax Cash Flow (LOM)||$870M
- Spot prices at close of London Metal Exchange on June 15, 2018: US$1.42/lb Zn; US$1.08/lb Pb; US$16.95/oz Ag
Table 2: Summary of Capital Expenditures
|Capital Costs||Initial ($M)||Sustaining ($M)||LOM Total ($M)|
|Engineering and Project Management||17.4||1.5||18.8|
Table 3: Summary of Operating Costs
|Average Operating Costs||Per tonne milled||LOM|
|Tailings & DMS Rejects||$2.87||$56.5M|
|All-in Total OPEX||$102.38||$2,014.1M|
Table 4: Summary of Payable Metal Production
|Metal||Per annum (avg M lbs/yr)||LOM (M lbs)|
|$ LOM||$/tonne milled|
Table 5: Sensitivity Analysis
|Payback||3.5 years||2.6 years||2.1 years|
|Payback||4.1 years||3.2 years||2.7 years|
Table 6: Exchange Rate Sensitivity Analysis
|Payback||2.5 years||2.6 years||2.8 years|
The Akie property is accessible year-round by a network of all-weather logging roads leading north from Mackenzie, BC. It is expected that the Company will share in road maintenance expenses with other resource users including local forestry licensees and mining companies. Mackenzie is connected to the BC provincial highway network via Highway 39 that branches off of Highway 97. No road or bridge upgrades are anticipated and road maintenance costs are factored into the concentrate trucking costs from site to Mackenzie.
Power will be generated onsite using liquefied natural gas (LNG) powered portable generators each with a 2,500 kW capacity. The connected load is estimated to be less than 18 megawatts.
A modular 250 person all-weather camp will be constructed and installed during the pre-production period, and will serve both the construction and lifetime operation phases of the project.
JDS evaluated several concentration transportation options to deliver concentrate from the Akie project to either the Port of Prince Rupert (for shipment overseas to an Asian smelter) or to the Trail Smelter located in southeastern BC and owned by Teck Resources. Two options for each destination were evaluated for transporting zinc concentrate; these included trucking the entire distance from site to the final destination; or trucking from site to Mackenzie, BC, and then via rail from Mackenzie to the final destination. It is assumed that a rail load out facility at Mackenzie BC will be available for use.
After a careful assessment of cost it was determined that the most efficient transportation option for zinc is to truck haul the concentrate from site to Mackenzie and load onto rail cars for delivery to the Trail smelter. Zinc concentrate will be initially shipped bulk in covered ore hauler trailers and then by covered gondola rail cars. The lead concentrate will be truck hauled direct from site to the Trail smelter. Lead concentrate will be shipped in sealed bags or totes, inside 20’ shipping containers, which act as double containment as a safety precaution. The containers are limited to 20’ length due to weight restrictions and because CN Rail does not have the ability to cost effectively handle and manage the 20’ containers, rail is not a viable option for the lead concentrate.
Mining & Processing
The PEA is based on a conventional underground mine similar to other operations in Canada. The deposit will be accessed via a main underground production haulage way with secondary ingress/egress provided by a secondary portal and a vent raise to surface. Stope spacing is estimated at 20 metres. Mining dilution is estimated at 15% with 95% recovery predicted.
Given the steep dip of the deposit (-75 degrees) the deposit is amenable to longitudinal longhole open stoping as the main method of underground mining. Underground mining equipment will include twin boom jumbos, longhole drills, LHD scoop trams, haul trucks and support mobile equipment.
A concentrator with conventional milling and flotation is envisaged to be built on-site. The process plant contemplates 3,000 tonnes per day throughput and will include 3-stage crushing circuit, a DMS circuit and a grinding circuit using ball mills. Sequential zinc and lead flotation circuits will incorporate cleaning stages. The concentrate dewatering will use thickeners and pressure filters.
Recent metallurgical testwork conducted in 2017 and announced on the 9th of April, 2018 was utilized by the PEA. This work indicates that marketable zinc and lead concentrates could be produced from the deposit with no deleterious substances or penalty elements.
Knight Piésold Ltd. (KP), a consultant to JDS, developed the tailings, waste and water management plan for the PEA. KP assessed tailings management technologies and potential storage locations to support the study. KP and JDS concluded that the preferred waste management strategy is to store Potentially Acid Generating (PAG) waste rock and the bulk of the tailings (approx. 70%) in mined-out underground stopes, based on the geochemical characteristics of the waste materials and the need for structural backfill. The remaining waste materials, including Non-Potentially Acid Generating (NPAG) waste rock, DMS rejects and the balance of tailings not used for backfill (approx. 30%), will be stored on surface in a filtered tailings management facility (TMF), which allows the DMS reject and filtered tailings to be co-mingled into a single facility. A separate water management pond is included for managing process water and storm water runoff from the surface of the TMF.
Next Planned Steps:
The Company will be working closely with its mining consultants and advisors to plot a course forward for the most cost effective and efficient development of the Cardiac Creek deposit. The Company anticipates more detailed engineering assessments leading to a Pre-feasibility Study.
- Recently announced diamond drill program on the Akie property including drill targets on other known mineralised occurrences, including the Sitka showing and the North Lead Zone
- A satellite structural analysis will be completed on the northern portion of the Kechika Regional properties providing the Company with seamless detailed structural analysis over its entire Akie and Kechika Regional claims holdings; representing 140 kilometres of highly prospective and thrust-repeated Gunsteel Formation, the known host rock for SEDEX mineral occurrences and deposits in the Kechika Trough. Complete coverage will aid in target definition for future drill programs
- Continue examining cost effective means to conduct the planned and permitted 2-year underground drill program which has been designed to carry out infill drilling on the Cardiac Creek deposit from close-spaced drill centres from an underground platform, enabling year-round drilling and advancement of the project towards a PFS level
- Continue baseline environmental studies to facilitate further permitting and advancement of the project
The PEA was led by JDS, an independent consulting firm, and will be incorporated into a National Instrument 43-101 (“NI 43-101”) technical report to be filed on SEDAR and the Company’s website within 45 days of this release.
Various personnel at JDS or their sub-consultants are Qualified Persons and responsible for portions of this news release; and are identified as follows: Michael Makarenko (P.Eng.) mining; Richard Goodwin (P.Eng.) mining; Richard Boehnke (P.Eng.) infrastructure/transportation; Kelly McLeod (P.Eng.) mill processing; and Jim Fogarty (P.Eng. – Knight Piésold) tailings disposal. A full list of Qualified Persons contributing to the PEA will be summarized in the NI 43-101 technical report.
The Akie Zn-Pb-Ag Project
The 100% owned Akie property is situated within the Kechika Trough, the southernmost area of the regionally extensive Paleozoic Selwyn Basin and one of the most prolific sedimentary basins in the world for the occurrence of SEDEX zinc-lead-silver and stratiform barite deposits.
Drilling on the Akie property by ZincX Resources (formerly Canada Zinc Metals Corp) since 2005 has identified a significant body of baritic-zinc-lead SEDEX mineralization known as the Cardiac Creek deposit. The deposit is hosted by siliceous, carbonaceous, fine grained clastic rocks of the Middle to Late Devonian Gunsteel Formation.
With additional drilling completed in 2017, the Company has updated the estimate of mineral resources at Cardiac Creek, as follows:
|5% Zinc Cut-Off Grade||Contained Metal:|
|Zn (%)||Pb (%)||Ag (g/t)||Zn (Blbs)||Pb (Blbs)||Ag (Moz)|
In addition to the Akie Project, the Company owns 100% of eight of eleven large, contiguous property blocks that comprise the Kechika Regional Project including the advanced Mt. Alcock prospect. The Kechika Regional Project also includes the Pie, Yuen and Cirque East properties within which the Company maintains a significant 49% interest with partners Teck Resources Limited (TSX: TECK.B) and Korea Zinc Co. Ltd. These properties collectively extend northwest from the Akie property for approximately 140 kilometres covering the highly prospective Gunsteel Formation shale; the main host rock for known SEDEX zinc-lead-silver deposits in the Kechika Trough of northeastern British Columbia. These projects are located approximately 260 kilometres north northwest of the town of Mackenzie, British Columbia, Canada.