VANCOUVER (miningweekly.com) – Canadian mineral exploration and development company Arizona Mining has published robust economics from a preliminary economic assessment (PEA) for its Taylor zinc/lead/silver sulphide deposit, located on the 100%-owned Hermosa project, in Arizona.
The PEA, published Monday and prepared by Canada-based AMC Mining Consultants, has calculated an after-tax net present value, using an 8% discount rate, of $1.26-billion, with a robust internal rate of return (IRR) of 42%.
"The project has been approved to progress to the feasibility stage and we expect to complete this work, initiate state permitting for operations on our patented land and break ground on the tailings facility by the end of 2017.
“With relatively low capital expenditure (capex) and a very robust IRR, our goal will be to fund the project with little to no equity. In light of the project's strong cash flow, we should be able to attract significant conventional debt ($250-million to $300-million), offtake financing ($75-million to $150-million) and a silver stream ($200-million to $350-million). We will minimise equity dilution wherever we can to benefit all shareholders,” stated president and CEO Jim Gowans.
Payback of the $457.17-million preproduction capex is estimated to take 1.7 years, leveraging forecast stronger zinc prices. Life-of-mine capex has been estimated at $957.37-million, including $500-million in sustaining capex.
The Taylor mine will produce on average 287-million pounds of zinc a year, as well as 286-million pounds of lead and 5.5-million ounces of silver a year.
The PEA was based on long-term prices of $1.10/lb for zinc, $1/lb for lead and $20/oz of silver.
The PEA for the Taylor sulphide deposit is based on an underground mine plan with initial production starting in 2020 and ramping up to 10 000 t/d in 2023. The zinc/lead/silver ores will be hoisted to the surface by a vertical shaft and processed through a 10 000 t/d concentrator located on the Trench patented property. The initial mine plan is based on a conservative subset of 60.8-million tons (of the 72.5-million tons of measured and indicated resources) grading 4.4% zinc, 4.3% lead and 1.7 oz/t silver.
The deposit now comprises 8.6-million tons in the measured category grading 9.7% zinc-equivalent, plus 63.8-million tons in the indicated category grading 10.6% zinc-equivalent and 38.6-million tons in the inferred category grading 11.6% zinc-equivalent.
Arizona Mining intends to initiate permitting with the Arizona state government in the current half of 2017, with the expectation, based on extensive discussions with regulators, that the full state permitting process on the company's patented properties should take about 12 to 18 months.
"We are extremely pleased by the robust economics shown in the PEA for the Taylor deposit. In addition, the resource has been significantly upgraded and has tremendous potential to expand further, recoveries have improved, and we continue to see keen, ongoing interest in our future concentrate from smelters and other potential offtake groups,” Gowans said.