Canadian Zinc Corporation (TSX:CZN) is pleased to announce the results of the Preliminary Feasibility Study on the Company’s 100% owned Prairie Creek Mine in the Northwest Territories and new independent Mineral Resource and Mineral Reserve estimates.
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Highlights of the Prairie Creek Project Pre-Feasibility Study
- Pre-tax Net Present Value (“NPV”), using an 8% discount, of $253M, with an internal rate of return (“IRR”) of 40.4% and payback period of three years, based on base case metal price forecasts of $1.20/lb for both zinc and lead and $28.00/oz silver, for the first two years of mine production during 2014/15, then reducing to long-term prices of $1.00/lb zinc, $1.00/lb lead and $26.00/oz silver in 2016 and thereafter.
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- 11 year mine life based exclusively on a defined mineral reserve of 5.2 million tonnes, grading 9.4% zinc and 9.5% lead, with 151 g/t silver.
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- Pre-production capital costs, excluding contingency, is estimated to be $160M of which $42M will be incurred in year 1 and $118M in year 2 with an additional contingency of $33M.
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- Average life-of-mine (“LOM”) cash operating costs of ore mined (before transportation costs) are estimated at $144/t and a LOM sustaining capital of $11M.
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Mine and Mill Parameters: Mine type Underground Total mined 5.2Mt Average grade Zinc 9.4% Lead 9.5% Silver 151 g/t Mining rate 1,350 tpd Milling rate 1,000 tpd Project life 11 years Estimated recoveries Zinc 75% Lead 88% Silver 92% Average annual metal production Production of zinc concentrate 60,000t Production of lead concentrate 60,000t Zinc 76M lbs Lead 90M lbs Silver 2.2M oz Operating Costs (Year 5, $/t ore mined) Mining $72 Milling $37 G&A $11 Surface $24 Trucking & rail $60 Total Operating Costs $204 Capital Pre-production capital (including $33M contingency) $193M Initial working capital (including $7M contingency) $41M Financial Analysis: Average annual EBITDA $66M Pre-tax NPV using a 8% discount rate $253M Pre-tax IRR 40.4% Pre-tax payback period 3 years …
Mineral Resource Estimate for Prairie Creek Mine
Zone Class Tonnes
(Mt)Zn
(%)Pb
(%)Ag
(g/t)Cu
(%)Main Quartz Vein Measured 1.055 13.2 11.5 209 0.45 Indicated 2.680 10.5 12.7 200 0.43 Measured + Indicated 3.736 11.3 12.4 202 0.43 Inferred 6.236 14.5 11.5 229 0.57 Stockwork Indicated 0.410 7.7 3.7 69 0.15 Stratabound Measured 0.640 10.5 6.8 67 0.00 Indicated 0.641 10.6 5.4 63 0.00 Measured + Indicated 1.281 10.5 6.1 65 0.00 Inferred 0.003 12.4 5.1 46 0.00 Totals Measured 1.700 12.1 9.7 155 0.28 Indicated 3.731 10.2 10.5 162 0.32 Measured + Indicated 5.431 10.8 10.2 160 0.31 Inferred 6.239 14.5 11.5 229 0.57
Notes: 1. Mineral Resources are stated as of May 31, 2012. 2. Mineral Resources include Mineral Reserves. 3. Stated at a cut-off grade of 8% Zn-Eq based prices of $1.30/lb for both zinc and lead, and $35/oz for silver. 4. Average processing recovery factors of 78% for Zn, 89% for Pb and 93% for Ag. 5. Average payables of 85% for Zn, 95% for Pb and 81% for Ag. 6. $ Exchange rate = 1 CD/USD. AMC also confirms that the Prairie Creek deposit contains a significant amount of Inferred Resources which, upon further delineation, has the potential to double the life of the mine. Furthermore, on-going drill exploration programs are indicating the potential continuation of the primary mineralized structure a further 1.5 km along strike, with the potential to further enhance the size of the resource.
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Mineral Reserve Estimate for Prairie Creek Mine
Zone Class Tonnes
(Mt)Zn
(%)Pb
(%)Ag
(g/t)Main Quartz Vein Proven 1.278 10.8 9.4 172 Probable 3.140 8.7 10.5 165 Proven and Probable 4.418 9.4 10.2 167 Stratabound Probable 0.803 9.5 5.7 62 Total Mineral Reserves 5.222 9.4 9.5 151
Notes: 1. Mineral Reserves are stated as of May 31, 2012. 2. Mining cut-off grade of 10% Zn-Eq based upon total variable operating cost of $162/t including mining, processing and transportation. 3. Metal prices assumed are Zn = $1.10/lb, Pb = $1.10/lb and Ag = $28/oz. 4. Average processing recovery factors of 75% for Zn, 88% for Pb and 92% for Ag. 5. Average payables of 85% for Zn, 95% for Pb and 81% for Ag. 6. $ Exchange rate = 1 CD/USD. …
Total average transport costs including trucking and rail of $245/t concentrate. Formal smelter arrangements have not been agreed to at the present time; however, normal course treatment charges and penalties for deleterious elements have been applied. Off-take agreements can now be pursued by the Company over the course of this year.
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Financial Analysis
A financial analysis with a +/- 10% sensitivity factor centering on the Base Case outlines the average annual EBITDA, NPV, IRR payback period and are shown on a pre-tax basis.
Low
CaseBase
CaseHigh
CaseMetal Price Scenario 90 % 100 % 110 % Average Annual EBITDA* $M $ 47 $ 66 $ 84 Pre-Tax NPV (undiscounted) $M $ 303 $ 493 $ 683 Pre-Tax NPV @ 8% discount $M $ 140 $ 253 $ 366 Pre-Tax IRR 27.4 % 40.4 % 52.8 % Pre-Tax Payback Period (years) 3.8 3.0 2.5
* Annual average EBITDA does not include year 1 of production Within the cash flow model, revenue is recognized as the concentrate is generated and does not account for any time delay between shipment and payment for concentrate.
Proposed Prairie Creek Mine Development Schedule
2012. Completion of geotechnical assessments and engineering details of various surface facilities, including the Winter Road, in order to prepare for construction. Financial negotiations to secure funds for capital development and off-take. Enter into an EPCM contract for site planning, detailed engineering and procurement of long-lead items. Continue permitting activities with the Mackenzie Valley Land and Water Board (“MVLWB”). 2013. Consideration to be given to open the road for supplies and equipment. Issue of Type ‘A’ Water Licence and Land Use Permit required for operation of the Project. Pre-mine development, site preparation and further optimization. Completion of procurement of equipment and supplies for delivery in Q4 2013. Pre-construction site preparation and early works programs to expedite construction completion in 2014. 2014. Open winter road in Q1 2014 and mobilize all supplies and equipment into site. During the course of the year, construction activities at the Project would prepare the site for operations including underground development. Commissioning of the mine and mill would take place in Q4. 2015. First shipment of concentrate out on the Winter Road and intake of supplies and equipment to maintain operations for the entire ensuing year. …
[emphasis ours]
@test
Hello Test !! I’m typing in testland !!! If the numbers don’t add up, then I’d say that Prairie Creek is drying up fast and we best stay away from Canadian Zinc. Good point about them using $1.20 Zinc prices with spot around $0.80, that definitely raised a red flag.