PNX Metals (ASX:PNX) has received results from its pre-feasibility study confirming a low cost, high-value zinc and precious metals mine at the Hayes Creek Project in the Northern Territory.
Results outline a robust zinc and precious metals project forecast to generate net smelter revenues of $628 million over a 6.5-year mine life.
The $266 million pre-tax net cash flow estimated over the life of mine (LoM) results in a net present value (NPV) of $133 million.
James Fox, managing director, commented: “The low upfront capital requirement of less than $60 million will enable the Project to produce in-demand, high-value zinc and precious metals concentrates over an initial 6.5 year period.
“The project is expected to yield a high rate of return resulting in rapid investment payback and a low level of risk appropriate to a junior developer.”
The proposed development is based on a steady state 450,000 tonnes per annum processing rate with ore sourced from initial open pit mining operations at Mt Bonnie and subsequent underground mining operations at Iron Blow.
In total, circa 3 million tonnes of ore is forecast to be processed over an initial 6.5 year LoM of which 98% is classified as Indicated Mineral Resources and only 2% classified as Inferred.
The study assumes construction of a purpose built processing plant with crushing, grinding, and flotation circuits to generate two valuable product streams, a zinc concentrate and a precious metals concentrate.
The concentrates will be trucked to the Port of Darwin and then shipped to international markets for sale and smelting and refining.
Estimated project financial returns include:
- Total net smelter revenue: $628 million;
- Pre-tax net cash flow: $266 million;
- Annual average pre-tax net cash flow: $41 million;
- Upfront capex cost: $58 million;
- Payback period: 15 months;
- Net present value (NPV): $133 million; and
- Internal rate of return (IRR): 73%.
Taking it to the next level
Given these outcomes, the PNX board has resolved to proceed immediately with a definitive feasibility study.
The baseline studies relating to long lead-time items such as the approvals process already underway.
Completion of the definitive feasibility study will require and is subject to further funding and the Company is evaluating a number of options in this regard.
The study results confirm the project to be a high value, relatively low risk and technically strong development opportunity for PNX.
The project contains an attractive mix of commodities with a strong outlook, and significant project upside if prices are higher than forecast.
Significant near-mine exploration potential exists where discovery and delineation of any additional economic resources would further enhance the value of the project.
The Mt Bonnie and Iron Blow zinc-gold-silver deposits form part of the Hayes Creek Project and are located less than 3 kilometres apart on granted mineral leases.
An updated JORC Resource was reported for Mt Bonnie in February 2017 and for Iron Blow in May 2017.
Collectively the Hayes Creek Project hosts a total Indicated (84.7%) and Inferred (15.3%) JORC Resources of 4.1 million tonnes containing 177,200 tonnes of zinc, 238,000 ounces of gold, 16.2 million ounces of silver, 37,000 tonnes of lead, and 10,050 tonnes of copper.
The PFS expands on the scoping study completed in March 2016.
The Hayes Creek Project is located in a favourable mining jurisdiction in the Pine Creek region of Northern Territory, less than two hours by road from Darwin.