Tinka Resources Ltd. [TK-TSXV, Lima; TKRFF-OTC; TLF-FSE] shares were active Wednesday July 3 after the company announced positive results from a preliminary economic assessment (PEA) at its 100%-owned Ayawilca Zinc Zone Project in Peru.
The shares were down 18.18% or $0.05 to 22.5 cents on volume of 820,205. Tinka trades in a 52-week range of 56 cents and 21.5 cents.
The company said the NI 43-101-compliant PEA provides an initial economic assessment for an underground ramp access mine development with a 5,000 tonnes per day processing plant.
The PEA envisages initial capital expenditures of US$262 million with an after-tax IRR of 27.1% and a 21-year mine life with average head grades of 6.05% zinc, 18.3 g/t silver, 67.1 g/t indium and 0.25% lead.
The estimates are based on a base case zine price of US$1.20 a pound.
Average annual production is estimated at approximately 101,000 tonnes of zinc recovered in concentrate and approximately 906,000 ounces of silver in a silver-lead concentrate.
According to the PEA, a 20% rise in the price of zinc increases the after-tax net present value (NPV) to US$606 million.
“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,” said Tinka President and CEO Dr. Graham Carmen. “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,” Carmen said.
“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.”
Wednesday’s announcement follows the launch of a 10,000-metre drill program and the release of an updated mineral resource estimate for the project.
The 150 km2 Ayawilca project is located 40 km northwest of Cerro de Pasco in the richly mineralized silver-lead-zinc belt of central Peru. It ranks as one of the largest zinc discoveries made in Peru during the past 20 years.
Two types of mineralization occur at the Ayawilca, including tin-copper mineralization in the Tin Zone and zinc-indium-silver-lead mineralization in the Zinc Zone.
In a November 26, 2018, press release the company said indicated Zinc Zone mineral resources now stand at 11.7 million tonnes, grading 6.9% zinc, 0.16% lead, 84 g/t indium and 15 g/t silver (8.1% zinc equivalent), containing 1.8 billion pounds of zinc, 983 tonnes of indium, 5.8 million ounces of silver and 42 million pounds of lead.
On top of that is an inferred Zinc Zone mineral resource of 45.0 million tonnes, grading 5.6% zinc, 0.23% lead, 67 g/t indium and 17 g/t silver (6.7% zinc equivalent), containing 5.6 billion pounds of zinc, 3,003 tonnes if indium, 25.2 million ounces of silver, and 230 million pounds of lead.
In addition, Tinka has outlined an inferred tin mineral resource of 14.5 million tonnes, grading 0.63% tin, 0.21% copper, and 18 g/t silver (0.70% tin equivalent), containing 201 million pounds of tin, 67 million pounds of copper and 8.0 million ounces of silver.
The resource update follows a very successful drilling program, with the company completing 20,000 metres during 2018. The 10,000-metre program, launched in April 2019, was designed to target structural repeats of the mineralized limestone beneath the current high-grade zinc resource at West, South and Central Ayawilca, the company said.
Next steps for the project include the continuation of exploration drilling aimed at expanding the Zinc Zone resources, especially in high grade areas. The company is also working to obtain the required permits for infill drilling to support a prefeasibility study.