Zazu Metals Files Positive PEA for Lik on SEDAR
April 24 2014 - 11:36AM
Marketwired
Zazu Metals Files Positive PEA for Lik on SEDAR
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 24, 2014) - Zazu
Metals Corporation (TSX:ZAZ) ("Zazu") is pleased to announce their
positive Preliminary Economic Assessment ("PEA") on the Lik
Property ("Lik") located in Northwest Alaska, has been filed on
SEDAR. Lik is located approximately 22kms from Teck's Red Dog
Mine.
The PEA considers the open pit potential of the Lik South
deposit. The PEA did not consider Lik North, the contiguous deposit
to Lik South, which would be mined using underground methods if
economics proved viable.
The production rate and production cost indicates Lik South will
be one of the largest and lowest cost producers of zinc concentrate
globally.
The economic analysis results are shown below in table 1.
Table 1: NPV /
IRR of the Lik South Deposit for a range of zinc prices as
indicated |
|
|
$0.80 |
$0.92* (PEA Zinc price) |
$1.00 |
$1.10 |
$1.20 |
|
|
|
|
|
|
Post
tax IRR |
2.6% |
9.7% |
13.4% |
17.9% |
22.1% |
Post
tax NPV @ 8% |
$(76 million) |
$25 million |
$83 million |
$158 million |
$233 million |
|
|
|
|
|
|
Pre
tax IRR |
3.7% |
12.5% |
17.3% |
23.1% |
28.4% |
Pre
tax NPV @ 8% |
$(60 million) |
$69 million |
$148 million |
$253 million |
$357 million |
|
|
|
|
|
|
* Lesser of November 3-year trailing average and spot
price as of 12/30/2013. For lead: US$1.01 /lb, silver US$19.43per
troy ounce |
The results above reflect Lik's sensitivity to zinc prices. Zazu
notes analysts' average forecast for zinc in 2015 is $1.00/lb
(Bloomberg 1/31/2014) with a range of $0.82 to $1.20/ lb. Zazu
maintains a constructive outlook on zinc prices based on expected
global demand growth and anticipated mine closures.
Model Expectations:
- Cash costs to mine gate: US$0.54 per pound.
- Average annual LOM production rate of 234,000 dry tonnes of
zinc concentrate and 55,800 dry tonnes of lead concentrate. This
would rank Lik South as one of the largest producers of zinc
concentrate globally.
- Initial capital expenditure of US$352mm. Average LOM sustaining
capital of US$3mm per year
- Average LOM concentrate grade of 53% zinc for zinc concentrate,
and 61% lead for lead concentrate
- In total, 17.1Mt tonnes of ore milled at an average grade of
7.7% zinc, 2.6% lead and 47 g/t silver is expected from the Lik
South open pit. This would rank Lik South as one of the largest
zinc mines globally
- Lik South mine life of 9 years. Lik North would be mined
subsequently if economics prove viable. Lik North remains open on
strike and depth and represents exploration opportunity for
Zazu
- The Lik Project resource estimate is shown in Table 2.
The PEA involves the construction of a 5,500 tonne-per-day mill
that will produce both a zinc and a lead concentrate using on-site
crushing/grinding and sequential flotation methods.
The PEA is preliminary in nature. Mineral resources that are not
mineral reserves do not have demonstrated economic viability. It
includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves. There is no certainty that the preliminary economic
assessment will be realized.
Lik benefits from the existing state-owned infrastructure,
consisting of a purpose built haul road and concentrate shipping
port. The state entity that owns both the existing road and port,
the Alaska Industrial Development and Export Authority ("AIDEA"),
is currently analyzing the construction of a 30km extension to the
road and any port modification requirements to accommodate Lik as
part of their pre-funding due-diligence.
JDS Energy and Mining, Inc. ("JDS") led the PEA with specialist
research and opinion provided by other consultants. Roscoe Postle
Associates Inc. (RPA) provided a resource estimate and block model
for both Lik South and Lik North dated December 31, 2013, as shown
in Table 2.
Table 2:
Mineral Resource Estimate |
|
Location |
Cut-off % Pb+Zn |
Indicated Resources |
Inferred Resources |
Mt |
Zn % |
Pb % |
Ag g/t |
Mt |
Zn % |
Pb % |
Ag g/t |
Open Pit |
|
|
|
|
|
|
|
|
|
Lik
South |
5% |
16.85 |
8.04 |
2.70 |
50.1 |
0.74 |
7.73 |
1.94 |
13.4 |
|
Lik North |
5% |
0.44 |
10.03 |
2.77 |
59.0 |
2.13 |
8.88 |
2.94 |
45.8 |
|
|
17.29 |
8.09 |
2.70 |
50.3 |
2.87 |
8.59 |
2.68 |
37.5 |
Underground |
|
|
|
|
|
|
|
|
|
Lik
South |
7% |
0.69 |
8.04 |
3.15 |
51.0 |
0.51 |
6.97 |
1.59 |
11.3 |
|
Lik North |
7% |
0.13 |
8.93 |
2.93 |
37.5 |
1.96 |
9.22 |
2.99 |
45.8 |
|
|
0.82 |
8.18 |
3.12 |
48.9 |
2.47 |
8.76 |
2.70 |
38.7 |
|
|
|
|
|
|
|
|
|
|
Total |
|
18.11 |
8.10 |
2.72 |
50.2 |
5.34 |
8.66 |
2.69 |
38.0 |
Notes: |
1 |
CIM
definitions were followed for Mineral Resources. |
2 |
Mineral Resources are estimated using average long-term prices of
$1.20/lb for zinc, $1.20/lb for lead and $27/oz for silver. |
3 |
A
density value of 3.5 g/cc (0.109 tons/ft.3) was used. |
The indicated and inferred resources that may be potentially
mined by open pit methods are predominately at Lik South and are
constrained by a preliminary Whittle pit shell. The resources that
may be potentially mined by underground methods are predominately
at Lik North.
The part of this news release pertaining to engineering and
financial estimates was reviewed by Robert Matter, P.E., Mining
Engineer at JDS, who is a qualified person as defined by National
Instrument 43-101. The part of this news release pertaining to the
Mineral Resource estimate was reviewed by Mr. Neil N. Gow, P.Geo.,
a Consulting Geologist with RPA, who is a qualified person as
defined by National Instrument 43-101. Messrs. Matter and Gow are
independent consultants to Zazu. JDS is currently in the process of
completing the National Instrument 43-101 technical report
supporting the PEA and an announcement will be made when the report
is filed on SEDAR.
About Zazu Metals:
Zazu is a Canadian-based exploration company focused on
acquiring and developing base metal properties in North America.
Zazu's principal asset is its 50% interest in the Lik
zinc-lead-silver deposit in North West Alaska. Teck is a 50% joint
venture partner in the Lik deposit. Zazu has the exclusive right to
obtain 80% of the property by meeting certain spending commitments
by 2018. Zazu is in the enviable position of having only 48 million
shares outstanding and no debt.
Additional information about Zazu including a company
presentation is available at www.zazumetals.com.
Additional information about the property is on the Teck website
(www.teck.com). Zazu is not responsible for the content, accuracy
or timeliness of material contained on the Teck website.
ON BEHALF OF THE BOARD OF DIRECTORS
Gil Atzmon, Chairman and CEO
Cautionary
statement:
The TSX does not accept responsibility for the adequacy or
accuracy of this news release. No stock exchange, securities
commission or other regulatory has approved or disapproved the
information herein.
Forward looking
statements:
This news release contains forward-looking statements. These
statements are based on information currently available to the
Company and the Company provides no assurance that actual results
will meet management's expectations. Forward-looking statements
include estimates and statements that describe the Company's future
plans, objectives or goals, including words to the effect that the
Company or management expects a stated condition or result to
occur. Forward-looking statements may be identified by such terms
as "believes", "anticipates", "expects", "estimates", "may",
"could", "would", "will", or "plan". Since forward-looking
statements are based on assumptions and address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. Actual results relating to, among other things,
obtaining Toronto Stock Exchange approval and the ratification of
the Plan by shareholders, could differ materially from those
currently anticipated in such statements for many reasons such as:
the Toronto Stock Exchange requiring amendments to the Plan
unsatisfactory to management or the Board, the shareholders of Zazu
not ratifying the Plan, or management or the Board determining not
to proceed with seeking approval from the Toronto Stock Exchange or
the shareholders of Zazu or other matters discussed in this news
release. This list is not exhaustive of the factors that may affect
any of the Company's forward-looking statements. These and other
factors should be considered carefully and readers should not place
undue reliance on the Company's forward-looking statements. The
Company does not undertake to update any forward-looking statement
that may be made from time to time by the Company or on its behalf,
except in accordance with applicable securities laws.
Zazu Metals CorporationMatthew FordPresident210
858-7512mford@zazumetals.comwww.zazumetals.com