By Peter Kennedy
Callinex Mines Inc. [CNX-TSXV; CLLXF-OTCQX] on Friday July 12 responded to a request by the British Columbia Securities Commission by issuing a news release to clarify its disclosure relating to a technical report on its Port Leamington zinc property in Newfoundland.
It said the report, dated August 15, 2016, was prepared by Tetra Tech Inc., an independent consulting and engineering service company.
In that report, Tetra Tech estimated that Port Leamington hosts a large VMS deposit that contains an inferred resource of 14.1 million tonne, grading 6.2% zinc equivalent, containing 1.9 billion pounds of zinc equivalent, including 484,000 ounces of gold at a grade of 1.1 g/t.
However, following a review of the report by the BCSC, Callinex said it has become aware that the report requires:
Further disclosure on the analogue deposits used to demonstrate â€œreasonable prospects for economic extractionâ€ for the Port Leamington property.
Additional information regarding the assumptions, parameters and methods used to determine the resource estimate.
Certain revisions to the metallurgical recovery section of the report.
Callinex said it is now in the process of amending the report as soon as reasonably possible in order to address all of the non-compliant disclosure issues identified by the BCSC. â€œOnce an amended report is available, the company will provide an update to [Fridayâ€™s news release] and file an amended report on SEDAR,â€ the company said in a press release.
Callinex shares reacted to this news by falling 5.45% or $0.03 to 52 cents on light volume. The shares trade in a 52-week range of 45 cents and $2.30.
Callinex is a zinc focused company with a portfolio that includes projects in the Bathurst Mining District of New Brunswick. In New Brunswick, they include the Nash Creek Project, which hosts a large, near-surface zinc-lead-silver deposit, and the Superjack Project, located about 50 km south of Nash Creek.
The Callinex portfolio also includes projects in the Flin Flon Mining District of Manitoba that are located 25 km from an operating processing facility that requires an additional ore.
Callinex owns a 100% interest in the Port Leamington mining lease subject to a 3.5% NSR, of which 1.5% can be repurchased for $2.0 million. The project is accessible by road and is approximately 37 km from the city of Grand-Falls Windsor and 20 km from the provincial power grid.
The Point Leamington deposit was discovered by Noranda during the 1970s and was advanced as a potential open pit operation. In 1997, Noranda sold the project to Rubicon Minerals Corp. [RMX-TSX; RBYCF-OTC], which subsequently entered into an option deal with BHP Billiton Ltd. [BHP-NYSE; BHPLF-OTC] in 1999 to earn up to a 70% interest in the project in exchange for financing the project to commercial production.
The project has not been subjected to any drilling since 2004 despite favourable results as it was largely held by within the portfolio of a small junior which was focused on other jurisdictions.
â€œRecent metallurgical testing completed by Newmarket Gold Inc. [NMI-TSX] in 2014 showed the potential to significantly increase gold recoveries from levels previously contemplated by Noranda. Callinex said additional metallurgical and preliminary engineering studies will be necessary to further evaluate the economic potential of the deposit.
Meanwhile, Callinex said the inferred mineral resource for the Port Leamington property contained in the report is not supported by a compliant NI 43-101 technical report. As a result, the current resource estimate should not be relied upon, the company said.
Also, Callinex said it will soon be providing an update on its exploration plans for its core assets, including the Nash Creek and Superjack projects in New Brunswick and the Pine Bay Project in Manitoba.
Back in May 2018, the company released the results of an independent initial Preliminary Economic Assessment for the Nash Creek and Superjack projects.
The initial PEA outlines a 10-year, 3,900 tonne-per-day open-pit mining operation with a dense media separation plant and 1,950 tonne-per-day conventional flotation process facility at the Nash Creek Project.
Highlights from the PEA include average annual production of 77 million pounds of zinc, 15 million pounds of lead, and 437,000 ounces of silver over a 10-year mine life. The PEA pegged total pre-production capital costs of $168 million (including 18% contingency).
The Superjack Project is located 90 km by highway from Nash Creek and 15 km southwest of the former Brunswick No. 12 Mine.
It consists of three separate VMS zones. The largest is the A Zone. It hosts a near-surface inferred mineral resource of 3.2 million tonnes, grading 4.6% zinc equivalent, containing 328 million pounds of zinc equivalent.