Tinka Resources Ltd (CVE:TK) (OTCPK:TKRFF) has published its eagerly anticipated preliminary economic assessment (PEA) for the Ayawilca Zinc zone in Peru, which shows the project is "shaping up to be one of the best new zinc development projects in the Americas".
The report is based on an underground ramp-access mine development with a 5,000 tonnes per day (tpd) processing plant.
Initial capital expenditure for the mine is put at US$262 million with a pre-tax IRR (internal run rate) of 37.2%. The mine life is 21 years with average head grades of 6.05% zinc, 18.3 g/t (grams per ton) silver, 67.1 g/t indium, and 0.25% lead.
READ THE DEEP DIVE: Tinka Resources' preliminary economic assessment underlines Ayawilca zinc project's considerable potential
"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," CEO Dr Graham Carman said.
"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."
The pre-tax NPV (net present value) for the project is US$609 million using metal prices of US$1.20 per pound zinc, US$18 per ounce silver, and US$0.95 per pound lead on a 100% equity basis.
The average annual production was put at around 101,000 tonnes of zinc recovered in concentrate and around 906,000 ounces of silver in a silver-lead concentrate.
Processing will be through a standard crushing and grinding circuit followed by froth flotation, concentrate thickening and filtration. The operation will produce a zinc concentrate and a lead concentrate.
It is worth noting that the Ayawilca zinc zone has not been fully delineated and is open in several directions, including to the east and northeast and exploration drilling is ongoing.
Tin zone not included
Also, the tin zone was not included in the PEA because it requires additional metallurgical work but offers significant exploration potential.
Also, the Colquipucro silver oxide deposit is amenable to open pit methods, but was not included in the report because it is believed to require higher silver prices to be economical.
However, prospects may improve if a zinc mine is built.
There are also a number of untested exploration targets on Tinka's 170 sq km of mining concessions that comprise the Ayawilca property.
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