ZincX Announces Positive Preliminary Economic Assessment for the Cardiac Creek (Akie Property) Zinc-Lead-Silver Deposit
Vancouver, British Columbia, Canada – Wednesday, June 20, 2018 – 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.
Economic Highlights:
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
PEA Results
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) 3,000 tpd
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
DMS upgrade) 10.0% Zn; 1.9% Pb; 17.17 g/t Ag
Total Payable Metal (LOM) $3,960M $4,888M
Total Operating Expenses
(LOM) $2,014M§$2,014M
Net (Pre-tax) Operating
Income (LOM) $1,946M $2,874M
Net Pre-tax Cash Flow (LOM) $1,328M
$74M/year§$2,257M
$125M/year
Net After-tax Cash Flow (LOM) $870M
$48M/year§$1,459M
$81M/year
Pre-Tax NPV7%
Pre-Tax IRR
Pre-Tax Payback $649M
35%
2.6 years $1,160M
52%
1.8 years
After-Tax NPV7%
After-Tax IRR
After-Tax Payback $401M
27%
3.2 years $401M
27%
3.2 years
1. 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)
Mining 58.2 260.0§318.2
Site Development 7.5 0.7 8.2
Mineral Processing 78.8 11.8 90.6
Tailings Management 5.0 8.3 13.3
On-Site Infrastructure 55.1 6.3 61.4
Off-Site Infrastructure 1.0 0.2 1.2
Project Indirects 28.0 5.1 33.2
Engineering and Project Management 17.4 1.5 18.8
Owner Costs 5.6 - 5.6
Closure - 8.9 8.9§
Total 256.7 302.7 559.4§
Contingency 45.7 12.9§58.5
Total 302.3 315.6 617.9
$/Tonne mined 11.71 12.22 23.92
Table 3: Summary of Operating Costs
Average Operating Costs Per tonne milled LOM
Mining $50.05* $984.7M§
Processing $33.13§$651.7M
Tailings & DMS Rejects $2.87 $56.5M
G&A $16.33§$321.3M
All-in Total OPEX $102.38 $2,014.1M
*38.13/tonne mined
Table 4: Summary of Payable Metal Production
Metal§Per annum (avg M lbs/yr) LOM (M lbs)
Zinc 178 3,268§
Lead 20§362
Total Payable
Metal§$ LOM $/tonne milled
$3,960 $201
Table 5: Sensitivity Analysis
-$0.10 Base Case +$0.10
Zinc (US$/lb.) US$1.11 US$1.21 US$1.31
Lead (US$/lb.) US$0.90 US$1.00 US$1.10
Pre-tax§
NPV7% $389M $649M $908M§
IRR 25% 35% 44%§
Payback§3.5 years 2.6 years 2.1 years
Post-tax§
NPV7% $234M $401M $567M§
IRR 20% 27% 34%§
Payback§4.1 years 3.2 years 2.7 years
Table 6: Exchange Rate Sensitivity Analysis
-0.02 Base Case +0.02
CDN$:US$ 0.75 0.77 0.79§
Pre-tax§
NPV7% $718M $649M $583M§
IRR 37% 35% 33%§
Payback§2.5 years 2.6 years 2.8 years
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