NorZinc (TSX: NZC; US-OTC: NORZF) has released a new preliminary economic assessment (PEA) for its 100%-owned Prairie Creek zinc-lead-silver project 200 km west of Fort Simpson in the Northwest Territories. The PEA uses an updated resource estimate, a higher mining rate of 2,400 tonnes per day, and a mine plan with a mine life of 20.3 years.
Resources were calculated for the Main Quartz zone, stockwork and stratabound massive sulphides. Together they have measured and indicated resources of 9.8 million tonnes grading 139 parts per million silver, 8.8% lead and 9.7% zinc (22.7% zinc-equivalent) - -. The inferred resource is 6.4 million tonnes grading 150 parts per million silver, 6.7% lead and 12.9% zinc (24.1% zinc-equivalent).
The PEA outlines a significantly de-risked project with world-class potential, says NorZinc. The after-tax net present value at an 8% discount rate is US$299 million and an after-tax internal rate of return of 17.7%.
With an initial capex of US$368 million (including a US$35 million contingency), the study outlines total direct costs of US$251 million (mining US$51 million, site preparation US$1 million, processing plant US$41 million, paste tailings plant US$28 million, surface infrastructure US$41 million, and all-season road US$89 million). There are also indirect costs and owner's costs totalling US$82 million.
The Prairie Creek mine would have a life of 20.3 years with a payback of 4.8 years. Average annual payable production would be 2.6 million oz. of silver, 122 million lb of zinc, and 101 million lb of lead. Sustaining and closure costs are pegged at US$332 million.
The PEA was prepared based on a silver price of US$24 per oz., a zinc price of US$1.20 per lb, and a lead price of US$1.05 per pound.
NorZinc said it is beginning work immediately on the feasibility study to examine ways to improve capital and operating costs. Talks are underway for concentrate offtake agreements.
Mine operating permits were received from the MacKenzie Valley Land and Water Board in 2013 and renewed in 2020. Modifications have been made to the application to reflect the higher mining rate, but the final permits are expected by the end of March 2022.