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Canadian Zinc up-sizes Prairie Creek mine, feasibility confirms strong economics

29th September 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Development company Canadian Zinc has published the results of a feasibility study on its Prairie Creek project, in Canada’s Northwest Territories, demonstrating a significant increase in the mining rate and mill throughput that will enable production of more zinc, lead and silver, at lower operating cost compared with the 2016 prefeasibility study (PFS).

The positive metrics helped push the company’s TSX-listed stock up by almost 17% on Thursday, to an intraday high of C$0.21 apiece. 

The study was based on metal price assumptions of $1.10/lb zinc, $1/lb lead and $19/oz silver.

The pre-tax net present value (NPV), discounted at 8%, increased by 21% to C$344-million, with an internal rate of return (IRR) of 23.8%, while the NPV after tax and royalties increased by 22% to C$188-million, with an IRR of 18.4%, the company said.

"The positive results, showing many improvements from the 2016 PFS, demonstrate the potential of this world-class asset and confirm that the development of the Prairie Creek mine will provide material benefits to local communities and to the economy of the Northwest Territories for many years," stated chairperson and CEO John Kearney.

The feasibility study indicates several financial improvements from the 2016 PFS, including cumulative net revenue over the life of the mine increasing by C$325-million to C$3-billion and cumulative undiscounted cash flow, before tax, rising C$190-million to C$900-million, an increase of more than 30%.

Despite a capital cost increase of C$35-million, or 14%, to C$279-million, including contingency, mainly owing to the expansion in mine and mill throughput and accelerated mine development, the after-tax payback period was reduced by five months to 4.6 years from mill start-up.

The company has been hard at work optimising the project, and the feasibility study now outlines an operation with an 18.5% increase to the mining rate to 1 600 t/d; a 25% improvement in mill throughput after dense-heavy medium processing to 1 200 t/d; 2.6% lower operating cost at C$223/t mined, including transport; and a 6.2% increase in mineral reserve tonnage to 8.1-million tonnes.

The latest mine plan covers 15 years from mill start-up, with a particular focus on optimising the life-of-mine grade profile. During the first ten years of production, the expanded mill throughput results in higher average yearly metal output of 95-million pounds of zinc and 105-million pounds of lead.

The average expected production of lead concentrate increased by 30% to 71 600 t/y, while the grade of lead in the lead concentrates is also improved. The average annual total contained lead in both zinc and lead concentrates is forecast to total 105-million pounds a year, an increase of 23-million pounds, while the average production of silver also increased 25% to 2.1-million ounces a year.

The project’s average zinc content in both zinc and lead concentrates increased by about 7% from 82-million pounds to 88-million pounds a year.

The benchmark three-month zinc contract on the London Metals Exchange was trading at $3 124.00/t on Thursday, up more than 35% year-on-year and more than 21% since the start of the year.

Edited by Creamer Media Reporter

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