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PEA reports healthy operating margins at Rathdowney Resources’ Polish project

23rd April 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – TSX-V-listed Rathdowney Resources has completed a preliminary economic assessment (PEA) of its 100%-owned Olza zinc/lead project, located in south-western Poland, which indicated healthy operating margins, a high internal rate of return (IRR) and a short payback period.

The PEA calculated the $227-million project, excluding $51-million for sustaining capital, to have a net present value at an 8% discount rate of $170-million and an IRR of 30%, with a capital payback period of 2.4 years.

The PEA, led by independent international engineering specialist SRK Consulting recommended a conventional underground mine using room-and-pillar mining methods and a mineral processing rate of 6 000 t/d, or 2.16-million tonnes a year.

The mine would be accessed by two declines from surface, which would enhance the construction timeline and provide for long-term operational efficiencies. The PEA incorporated building a processing facility, using semiautogenous grinding and ball milling, followed by standard flotation to produce marketable low iron zinc and lead concentrates that would be shipped to smelters. 

The Olza deposit comprised a compliant inferred mineral resource of 24.4-million tonnes, grading 7.02% zinc and lead at a 2% zinc cutoff, giving the mine an estimated eight-year mine life.

The project also had exploration upside, with extensive historical drilling conducted by the Polish government having documented widespread zinc/lead mineralisation outside of the current resource area. In the areas where Rathdowney carried out confirmatory drilling, there had been good correlation with historical drilling results.

"We are very pleased with the progress and results of the technical studies, which support our view that project Olza will become a profitable zinc producer. Project Olza's financial metrics, including estimated cash flow and net present value indicate that the project has significant potential value and warrants timely development towards production,” Rathdowney chairperson David Copeland said.

The company said it would now progress the project to a prefeasibility level of study, using this PEA as a basis for optimising its development. This study also identified several opportunities to further enhance the project that would be actively considered during the next phase.

These included following up on the high potential to expand the mineral resources and extend mine life, adding into the mineral resources silver values recorded during Rathdowney's drilling and metallurgical studies, and completing additional studies to improve the efficiency of the mine and processing plans.

President and CEO Robert Konski also noted that project Olza was located in the heart of Europe in a jurisdiction with a history and knowledge of mining, and well-established infrastructure.

“These key characteristics reduce project risk, adding further to the attractiveness of an important zinc mine development at project Olza. We look forward to advancing our work and our discussions with stakeholders in Poland about the project,” Konski said.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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