PERTH (miningweekly.com) – ASX-listed Consolidated Zinc will immediately start mining at its Plomosas zinc/lead/silver project, in Mexico, after inking a processing and offtake agreement with Grupo Mexico.
Under the terms of the agreement, Grupo Mexico will process Plomosas ore through its plant at Santa Eulalia, and sell the resulting concentrate to its Potosi smelter.
The Plomosas feed will be batched through the plant for a few days each month in batches of 2 500 t, and the agreement will be reviewed each year after the first trial month batch.
Consolidated Zinc said on Tuesday that the agreement with Grupo Mexico would allow the company to start production for a minimal start-up capital expenditure, and fast-track first revenues from the Plomosas mine.
“The board’s decision to commence mining, having secured toll treatment and concentrate offtake agreements is a low-risk, fast return option that will see mining re-established for a low capital cost,” said CEO Brad Marwood.
“Toll treatment through a proven process plant provides benefits from the efficiencies of scale and eliminates permitting and construction delays and costs. We expect to bed down the operations quickly to enable ongoing exploration that will support production for the coming years.”
Mexican mining contractor Sevimin Sara will initially mine 3 000 t of high-grade mineralisation in the first month at Plomosas, ramping up to 7 500 t/m by the end of December. October will be the first full month of high-grade feed delivered to Santa Eulalia.
Consolidated Zinc has secured a finance package by way of convertible notes that will enable the company to start mining and meet its capital requirements, until the operations deliver cash flow.
Convertible notes will be issued to the company’s chairperson and existing major shareholders worth A$1-million and A$250 000 respectively. The notes will be convertible subject to shareholder approval, at a share price of between 1c and 1.5c, depending on the timing of the conversion.