Nexa set to start construction at Brazilian zinc mine

Nexa Resources S.A. [NEXA-TSX, NYSE] says it plans to start construction at the Aripuana zinc project in Brazil, which ranks as one of the 10 largest undeveloped zinc projects in the world.

The announcement comes after the Environmental Authority of the State of Mato Grosso, Brazil granted the installation license for the project.

The Aripuana Project is owned by Mineracao Dardanelos Ltda, a joint venture between Nexa, which holds 62.3%, Nexa Resources Peru S.A.A., which holds 7.7%, and a subsidiary of Karmin Exploration Inc.  [KAR-TSXV], which holds the remaining 30% interest.

Aripuana is an underground polymetallic project containing zinc, lead and copper, silver and gold. The average zinc equivalent production at the Aripuana Project is estimated at 120,000 tonnes per year for 13 years, a projection that is based only on the proven and probable mineral reserves which are estimated at 26.2 million tonnes. The Aripuana deposits are typical Volcanogenic Massive Sulphide (VMS) are expected to support a production rate of 2.3 million tonnes of ore per year. The treatment plant can treat up to 6,300 tonnes of ore per day.

According to an October, 2018 technical report, it is estimated that Aripuana could produce an annual average  of approximately 66,700 tonnes of zinc in concentrate, 23,000 tonnes of lead in concentrate, 3,700 tonnes of copper in concentrate, 1.87 million ounces of silver, and 13,0000 ounces of gold contained in lead and copper concentrates.

The mineral reserve grades are 3.7% zinc, 1.4% lead, 0.2% copper, 0.3 g/t gold and 34 g/t silver.

The Aripuana project is expected to be operational by the beginning of 2021, with the total investment estimated at US$392 million.

“The approval of the construction of the Aripuana Project reinforces Nexa’s commitment to develop our pipeline of greenfield projects,” said Nexa CEO Tito Martins. “We are proud to develop a world class project which incorporates high level safety standards, cutting edge-environmental practises including the use of dry stacking for waste material and close to 100% recirculation of water, and which utilizes high levels of automation, among several other innovative initiatives,” he said.

Karmin Exploration is focused on gold and zinc exploration in Brazil and Peru, where it has interests in several properties. However, Karmin is not required to contribute financially to the project until the completion of a bankability study. As of October 15, 2018, with the completion of the feasibility study, Karmin has one year to decide whether it will contribute to financing the Aripuana Project on a pro-rata basis.

On Friday, Nexa shares rose 1.01% or 16 cents to $16.03. The 52-week range is $26.70 and $13.90.

Nexa says there is excellent potential to extend the life by up to six years at higher grades, based on the significant current inferred mineral resources and Nexa’s track record of conversion to indicated resources.