Compelling PEA for Cardiac Creek zinc mine

ZincX Resources Corp. June 20 released a preliminary economic assessment that provides the first look at the development of a mine at the company's Cardiac Creek zinc-lead deposit on the Akie property in northern British Columbia.

The PEA contemplates a 4,000-metric ton underground mine providing ore for a 3,000-metric-ton-per-day mill that is expected to produce 3.27 billion pounds of zinc and 362 million lb of lead over an initial 18-year mine life.

This is based on the current Cardiac Creek deposit, which hosts 22.7 million metric tons of indicated resource averaging 8.32 percent (4.16 billion lb) zinc, 1.61 percent (804 million lb) lead and 14.1 grams per metric ton (10.3 million ounces) silver; and 7.5 million metric tons of inferred resource averaging 7.04 percent (1.17 billion lb) zinc; 1.24 percent (205 million lb) lead and 12 g/t (2.9 million oz) silver.

The initial capital expenditures to develop this operation are estimated to run C$302.3 million, which includes C$45.7 million in contingency.

With a net present value (7 percent discount) of C$401 million, an internal rate of 27 percent and a 2.6-year payback period, all after-tax, the economics of this mine are compelling.

The on-site all-in operating costs are expected to average C$102.38 per metric ton of ore processed. The zinc and lead produced from this ore is expected to pay C$201 per metric ton, on average.

"The positive results outlined in the PEA demonstrate a robust, stand-alone base metal project with a large and potentially growing resource base; all-season access; good rail and road infrastructure; and amenable to conventional mining and milling practices common to similar projects," said ZincX President and CEO Peeyush Varshney.

Underground mine

The PEA is based on a conventional underground mine similar to other operations in Canada.

The Cardiac Creek deposit will be accessed via a main underground production haulage way with secondary access provided by another portal and a vent raise to surface.

Given the steep dip of the deposit, it is amenable to longitudinal longhole open stoping as the main method of underground mining.

The ore would be delivered to an on-site 3,000-metric-ton-per-day process plant that is anticipated to include a 3-stage crushing circuit that will produce the zinc and lead concentrates.

The silver contained in the Cardiac Creek deposit is not currently considered a payable metal in these concentrates due to relatively low head grade and anticipated smelter deductions. ZincX said future metallurgical work will continue to optimize the lead and zinc circuits to improve recoveries and potentially add silver as a payable metal.

Much of the waste rock mined from Cardiac Creek and most of the tailings from the mill will be placed back underground as cemented backfill. The remainder of filtered tailings will be stacked in a surface filtered tailings facility located near the mill.

Concentrates to Trail

The PEA considers delivering the zinc and lead concentrates produced at Cardiac Creek to the Trail smelter in southern British Columbia as the best option for the proposed mine.

The Akie property is accessible year-round by a network of all-weather logging roads leading north from Mackenzie.

It was determined that the most efficient transportation option for zinc is to truck haul the concentrate from site to Mackenzie and be loaded onto rail cars for delivery to the Trail.

The lead concentrate will be bagged and placed in 20-foot containers and hauled by truck directly from site to the Trail smelter.

Because CN Rail does not have the ability to cost effectively handle and manage the 20-foot containers, which is the limit for lead due to weight restrictions, rail is not a viable option for the lead concentrate.

It is expected that ZincX will share in costs to maintain the roads to MacKenzie, which are factored into the concentrate trucking costs from site.

The company will continue discussions with rail companies to further reduce transportation costs to Trail.

Next steps

With the PEA in-hand, ZincX will be working closely with its mining consultants and advisors to plot a course forward for the most cost effective and efficient development of the Cardiac Creek deposit. The company anticipates more detailed engineering assessments leading to a pre-feasibility study.

"We are delighted with the strong results of the PEA and intend to now move to advance the project through feasibility, permitting and towards production," said Varshney.

In order to upgrade the resource, the company is examining cost effective means to conduct a planned and permitted two-year underground drill program designed to carry out infill drilling at Cardiac Creek, which would enable year-round drilling and advancement of the project towards the pre-feasibility level.

ZincX is also looking at expanding the Cardiac Creek deposit and investigating the district-scale potential of its 79,870 hectares (197,359 acres) land package that blankets roughly 140 kilometers (85 miles) of the Kechika SEDEX (sedimentary exhalative) belt in northeastern B.C.

Exploration potential remains open at depth at the Cardiac Creek and ZincX said significant upside remains as higher grades seem to be improving with depth.

A 2,500-meter drill program being carried out this year will investigate the Sitka showing, an undrilled prospect east of Cardiac Creek, North Lead zone, which is located roughly 3,000 meters northwest of the current limits of the deposit, and the southeastern strike extents of Cardiac Creek beyond the current limits of the resource.

ZincX will also continue baseline environmental studies as it looks to advance Cardiac Creek through pre-feasibility, feasibility and into permitting.

The base case for the PEA used metal prices are calculated from the three-year trailing average coupled with two-year forward projection of the average price; and are: US$1.21/lb for zinc, US$1.00/lb for lead and US$16.95 for silver. A C$/US$ exchange rate of 0.77 was used for the PEA.

–SHANE LASLEY