Scozinc Announces Improved Results of Its Scotia MINE 2021 Pre-Feasibility Study: Pre-Tax NPV of C$174M and IRR of 69%
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SCOZINC ANNOUNCES IMPROVED RESULTS OF ITS SCOTIA MINE
2021 PRE-FEASIBILITY STUDY: PRE-TAX NPV OF C$174M AND IRR OF 69%
Halifax, Nova Scotia, November 16, 2021 – ScoZinc Mining Ltd. (TSX-V: SZM) (“ScoZinc” or the “Company”) is
pleased to announce the results of its updated Pre-Feasibility Study (the “2021 PFS”) including its new Gypsum NI 43-
101 Mineral Reserve Estimate (“2020 Mineral Reserve Estimate”) for its wholly-owned and permitted Scotia Mine
(“Scotia Mine” or the “Project”), located in Nova Scotia, Canada. The 2021 PFS was prepared in collaboration with
the independent engineering firm MineTech International Limited, adopting the 2020 Pre-Feasibility Study completed
by Ausenco Engineering Canada Inc., MineTech International Limited , SRK Consulting (U.S.), Inc ., and Terrane
Geoscience Inc.
Highlights of the 2021 PFS are tabled below, with additional details of the NI 43-101 Technical Report (“2021 PFS”)
to be filed on www.sedar.com under ScoZinc’s profile within the next 45 days.
Table 1: Pre-Feasibility Study Highlights
Pre-Tax Net Present Value (Discount Rate 8%) $174M
Pre-Tax Internal Rate of Return 69%
After-Tax Net Present Value (Discount Rate 8%) $128M
After-Tax Internal Rate of Return 65%
EBITDA (Annual Average) $18M
Payback Period (Years) 1.3
Free Cash Flow (Cumulative First 3 Years) $55M
Pre-Production CAPEX (incl $2.7M Contingency) $30.6M
Metal Production Zinc (5 Year Annual Average) 35M lbs
Metal Production Lead (5 Year Annual Average) 15M lbs
Zinc Concentrate Grade (LOM Average) 57%
Lead Concentrate Grade (LOM Average) 71%
Processing Throughput Rate (Tonnes Per Day) 2,700
Life of Mine ("LOM") Duration 14.3 Years
Base Metal Ore Reserves Mined (LOM Total) 13.66Mt
Zinc Ore Grade (LOM Average) 2.03% Zn
Lead Ore Grade (LOM Average) 1.10% Pb
Gypsum Reserves Mined (LOM Total) 5.18Mt
Gypsum Grade (LOM Average) 91.8%
Net Revenue After Royalty & Treatment Charges $875M
Operating Cash Flow Before Taxes $357M
C1 Costs Over LOM 1 US$0.50/lb
Total Operating Cost (Per tonne Milled LOM) $52.56/t
All-In-Sustaining-Cost (ZnEq)1, 2 US$0.52/lb
Zinc Price (LOM Average) US$1.22/lb
Lead Price (LOM Average) US$1.04/lb
NEWS RELEASE NOVEMBER 16, 2021
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Gypsum Crude Price (LOM Average) US$8.60/t
Foreign Exchange Rate (CAD:USD) 0.80
All dollar amounts are expressed in Canadian Dollars unless otherwise noted
1 After Lead credits deducted
2 All-In-Sustaining-Costs (“AISC”) are C1 Costs plus Sustaining Capital and Financing Costs
The President and CEO, Mr. Mark Haywood, commented: “We are very excited to deliver the results of our updated
Scotia Mine PFS which includes updated commodity prices , treatment charges, exchange rates and the compelling
addition to the Project’s economics of the Gypsum by-product revenue stream. The Project’s economics are 12% more
robust than determined by the 2020 PFS, with cumulative free cash flow of $5 5 million in the first 3 years alone , and
low capital requirements of approximately $30M.
The Project is set to produce high quality Zinc and Lead concentrates for over 14 years , at low operating costs , via
conventional open pit mining methods , with a steady ore processing rate of 2,700 tonnes per day. Through detailed
planning and analyses, we believe the technical team have resolved many of the mine’s historical bottlenecks, perceived
water issues, and poor performance issues to develop a n effective, low-risk development and life of mine production
plan.
Importantly, the PFS shows that commercial Zinc and Lead concentrate and Gypsum production can be achieved within
9 to 12 months of project financing of approximately $30M, with a resulting average annual cash flow of $ 18M. The
extensive facilities already in place on site, combined with the short pre -stripping period, enable the Scotia Mine to
potentially demonstrate a free cash flow of $19M in the first year of commercial production.
ScoZinc is also of the view that there are additional opportunities to further improve the Project’s economics and extend
the operation’s 14 -year mine life including on-strike mineral development and nearby regional targets for potential
future mill feed.”
A summary of the updated Pre-Feasibility Study is provided below. The complete NI 43-101 Technical Report will be
provided on the Company’s website at www.ScoZinc.com once the report has been filed on SEDAR.
Location, Ownership & History
The Scotia Mine consists of a fully permitted mine and mill which are 100% owned by ScoZinc. The Scotia Mine is
located at approximately 45°02′ North, 63°21′ West, or 62 kilometres northeast of Halifax, Nova Scotia, in the Halifax
Regional Municipality. Year-round access to the Project is by paved highway roads and is approximately 15 kilometres
off the Nova Scotia provincial highway along Route #224. The Halifax International Airport is located 33 kilometres
southwest of the mine site. The Project consists of 648 hectares of mineral rights in the form of three contiguous mineral
leases, including land with exploration potential for zinc and lead mineralization. ScoZinc also owns real estate property
of 712.5 hectares, which includes the mineral leases and adjoining areas.
In February 2011, Selwyn Resources Limited (“Selwyn”) purchased ScoZinc Limited and all of its assets, including the
Scotia Mine and ScoZinc’s exploration claims, for $10 million less a deduction relating to increased reclamation bonding
requirements that were being determined at the time of the acquisition. Selwyn changed its name to ScoZinc Mining
Ltd., and owns 100% of the ScoZinc Limited subsidiary, which in turn holds the mineral rights to the Main and Getty
Zones, the mining rights a nd surface rights (real property rights) for the Scotia Mine deposit and an environmental
assessment (environmental registration) for the Scotia Mine.
ScoZinc also currently holds five exploration licenses covering 41 claims in the immediate vicinity of the Scotia Mine
Deposit. Each individual claim covers an area of approximately forty acres (16.2 hectares). In total, the 41 claims cover
approximately 664 hectares (1,641 acres). These licenses are located along strike from the Scotia Mine Deposit and
include favourable host rocks similar to that at the mine site.
Geology and Mineralization
The Scotia Mine Deposit consists of three main zones of mineralization referred to as the Main (formerly Gays River
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deposit), Getty and Northeast Zones. The Main zone lies along the southside of the Gays River main branch, immediately
east of the confluence with the Gays River south branch. The Getty zone lies just northwest of the Main and North-East
zones on the western side of Gays River. The two zones are separated by less than one kilometre.
The Gays River Formation mineralization has long been considered a Mississippi Valley -type lead-zinc deposit. This
type of deposit is carbonate-hosted, classified as a typical open space filling type, and hosted in a dolomitized limestone.
The limestone developed as a carbonate build -upon an irregular pre -Carboniferous basement topographic high where
conditions allowed for growth of reef-building organisms.
The zinc/lead-bearing Gays River Formation trends in an east -north east direction across the Property. Locally, the
mineralisation dips up to 45º on average, and up to vertical in places, to the north -northwest which is the depositional
slope of the front of the Gays River reef unit. The dip tends to be horizontal i n the back reef area (south of the main
trend). The mineralisation is present as sphalerite and galena and grades from massive Pb -Zn mineralized material in
the fore reef to finely disseminated, lower grade material in the back reef. In the mine area, the Gays River Formation
is overlain either by the evaporites of the Carroll’s Corner Formation and/or overburden.
Exploration and Data Management
The Scotia Mine has extensive diamond drilling and blast -hole drilling on a large portion of its mining leases an d
associated exploration licences. A total of 1,831 holes or 121,870 metres has been drilled to date. All of the data from
these holes has been included in this updated Pre-Feasibility Study and the 2020 mineral resource estimation (the “2021
MRE”).
Royalties
For the Scotia Deposit, ScoZinc owns the real property covering all the defined mineral resources on the mining leases,
so no royalty to any landowner is applicable. However, there is a small 25-acre portion on ScoZinc’s real property that
is subject to a sand, gravel and fill royalty of $1.00 per metric tonne to Gallant Aggregates. This royalty does not impact
the Scotia Mine’s Pre-Feasibility Study.
For the Getty deposit, ScoZinc has a 1% royalty with Globex Resources Ltd (“Globex”), which provides Globex with a
1% Gross Metal Royalty (“GMR”) interest in the associated claims. Agreement terms also allows ScoZinc to purchase
50% of the GMR for $300,000. ScoZinc’s Life of Mine plan indicates that such a royalty would only be applicable in
the last few years of the 14-year mine life.
Nova Scotia provincial royalty of 2% also applies on all net revenue generated from the Project.
Mineral Resource Estimate
A Mineral Resource estimation update was completed in March 2021 for the Scotia Mine Deposit, including the Main,
Getty and Northeast Zones (“2021 MRE”). The purpose was to add a Gypsum resource to the already existing base
metal (Lead & Zinc) resource calculated in the 2019 Mineral Resource Estimate (“2019 MRE”). No changes were made
to the base metal resource from the 2019 MRE and remain the same for the 2021 MRE.
The mineral resources for the Scotia Mine Deposit have been classified as Measured, Indicated and Inferred categories
based on CIM Definition Standards in accordance with NI 43-101 reporting guidelines, and are reported with respect to
cut-off values calculated using th e assumed processing costs and recoveries, and metal prices. The resource is also
constrained by an optimized (WhittleTM) pit shell, which is based on optimistic metal prices, in order to demonstrate that
the defined resources have reasonable prospects of eventual economic extraction, which is a CIM Definition Standards
criterion. All classification categories (Measured, Indicated and Inferred) were considered in the resource pit
optimization.
Gypsum mineral resources were estimated using the outlined gypsum/anhydrite geology constrained by the Life of Mine
(LOM) design pit outlined for the base metal mining. Drill holes were chosen to be representative of the Gypsum over
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the geographic area planned for open pit mining.
Gypsum waste rock constrained inside the LOM pit was considered for conversion to Gypsum mineral resources. No
Gypsum outside the LOM pit was included or considered in the calculation of the Gypsum resource, nor did it have any
influence on the size and shape of the LOM pit.
The Scotia Mine Deposit mineral resource summary statement in provided in Table 2, with an effective date of 22 March
2021.
Table 2: Scotia Mine Resource Statement, 22 March 2021 – MineTech International Ltd.
Classification Zone Tonnage Zinc Lead ZnEq
Gypsum
Tonnage Gypsum
(kt) (%) (%) (%) kt) (%)
Getty 60 1.38 1.25 2.58 0 0
Measured Main 4,130 2.57 1.30 3.81 1,310 93.0
(M) North East 130 3.18 1.88 4.98 220 91.9
Total 4,320 2.57 1.32 3.83 1,530 92.8
Getty 8,090 1.24 0.81 2.02 0 0
Getty South 840 1.58 0.25 1.82 0 0
Indicated Main 9,870 1.92 1.01 2.89 2,500 92.7
(I) North East 2,330 2.88 1.15 3.98 1,150 88.7
Total 21,130 1.75 0.92 2.64 3,650 91.4
Getty 8,150 1.24 0.82 2.03 0 0
Getty South 840 1.58 0.25 1.82 0 0
M & I Main 14,000 2.11 1.09 3.16 3,810 92.8
North East 2,460 2.89 1.19 4.04 1,370 89.2
Total 25,450 1.89 0.99 2.84 5,180 91.8
Getty 950 1.35 0.54 1.87 0 0
Getty South 770 1.53 0.25 1.77 0 0
Inferred Main 2,980 1.49 0.79 2.25 250 92.2
North East 310 2.01 0.74 2.72 540 90.7
Total 5,010 1.50 0.66 2.13 790 91.2
• Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that any part of the
Mineral Resources estimated will be converted into Mineral Reserves;
• Determination of reasonable prospects of eventual economic extraction was based on assumed prices for Zinc of US$1.35/lb, and for
Lead of US$1.14/lb, a Zinc recovery of 86% and a Lead recovery of 93%, mining and processing costs varying by zone, and pit slopes
of 45 degrees in rock and 22 degrees in overburden;
• Near surface resources are reported based on a Zinc equivalent (ZnEq) grade of 0 .90% and a Gypsum grade of 80%. The ZnEq grade
incorporates Zinc and Lead sales costs of US$0.19/lb and US$0.11/lb respectively, and a 2% royalty fee; and
• Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding.
Base Metal Mineral Reserve Estimate
The Scotia Mine Base Metal Mineral Reserve Estimates are classified as either Proven Reserves or Probable Reserves
and are provided in Table 3. Total Mineral Reserves are 13 .66 million tonnes with a Zinc Equivalent grade of 3.09
percent. The Base Metal Reserve Estimate remains unchanged from the 2020 PFS.
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Table 3: Scotia Mine Base Metal Mineral Reserve Estimates
Mineral
Zone Classification Tonnage
(t)
Zinc Grade
(%)
Lead Grade
(%)
Zinc
Equivalent
Grade (%)
Scotia
Mine Proven 3,370,000 2.46 1.21 3.62
Scotia
Mine Probable 10,290,000 1.88 1.07 2.91
Scotia
Mine Total 13,660,000 2.03 1.10 3.09
Notes: The Base Metal Mineral Reserves are as of 6 July 2020 and based on a design cut -off grade of 1.5% ZnEq grade. Cut -off grades
are based on a Zinc metal price of US$1.10/lb, recovery of 89%, a Lead metal price of US$0.95/lb, and mining recovery of 92%. Average
unplanned dilution and mining recovery factors of 12% and 92%, respectively, are assumed.
Gypsum Mineral Reserve Estimate
The Scotia Mine Gypsum Mineral Reserve Estimates are classified as either Proven Reserves or Probable Reserves and
are provided in Table 4. Total Mineral Reserves are 5,180,000 tonnes with a Gypsum grade of 91.8 percent.
Table 4: Scotia Mine Gypsum Mineral Reserve Estimates
Mineral Zone Classification Gypsum Tonnage
(t)
Gypsum Grade
(%)
Scotia Mine Proven 1,530,000 92.8
Scotia Mine Probable 3,650,000 91.4
Scotia Mine Total 5,180,000 91.8
Notes: 2021 Gypsum Mineral Reserves are as of 16 November 2021 and based on a non-binding offtake agreement.
The LOI has be reviewed and approved by Minetech International to satisfy the requirements for converting Gypsum
resources into Gypsum reserves.
Mining
The Scotia Mine deposit covers a total strike length of approximately 4 kilomet res, with some surface constraints in
between, and a vertical distance of approximately 120 metres. All mining is from open-pit operations with an expected
mine life of approximately 14 years. Mining operations will be conducted utilizing 4 shifts, 12 hours each shift, covering
24 hours per day. The 4 shifts will be on a 4-days on, 4-days off, 4-nights on, 4-nights off rotation.
The Scotia Mine mineral resources will be extracted using conventional load and haul (truck & shovel) mining methods
as determined by optimized pit designs and life -of-mine schedules. Mining operations w ill be completed using an
owner/operator of excavators, loaders, haul trucks and ancillary support equipment as well as some rental equipment.
Equipment requirements have been determined based upon required production rates and haulage cycles using
equipment specifications provided by local authorized equipment suppliers and manufacturers.
The open-pits will be mined on 5-metre-high benches with double benching being utilized on the lower benches which
are primarily comprised of hard rock. Drilling and blasting are only required for 40 percent of the total material mined
over the life of mine plan, which accounts for all of the hard rock to be mined from the pits. The remaining 60 percent
is largely comprised of overburden and has been proved to be free digging material based on past operations and will
not require blasting. Drilling and blasting will be performed using contract services.
Figure 1 overleaf illustrates the ultimate open-pit and waste dump design.
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Figure 1: Ultimate Pit and Waste Dump Design
The Ultimate Pit Design was divided into 6 phases to optimize development sequences and production requirements.
Waste has been subdivided into overburden, gypsum, and carbonate waste rock. Inferred resource material inside the
Ultimate Pit Design has been included as carbonate waste rock a nd totals approximately 1,450,000 tonnes at 1.5% Zn
and 0.7% Pb. Waste storage will consist of a combination of backfilling the mined pits and stockpiling in the waste
dump. Using the Ultimate Pit Design and the pit phase sequencing, a Life -Of-Mine (“LOM”) mining schedule was
developed by month and is based on operating 24 hours/day, 365 days/year. The LOM production schedule is based on
providing a mill feed of approximately 1 million tonnes per annum at an average grade of 2.03% Zinc and 1.10% Lead,
which equates to a Zinc Equivalent grade of 3.09%.
The water table at the Scotia Mine is divided into two horizons: the overburden horizon and the bedrock horizon. ScoZinc
plans to utilize 60 geotechnical depressurizing pumping wells, in conjunction with in-pit pumping via submersible sump
pumps, to dewater the overburden horizon. The bedrock horizon will be dewatered using the existing deep well
infrastructure in conjunction with in -pit temporary wells that access the underground workings. Horizontal wells will
also be utilized in the karst gypsum to deal with the localized trapped water and will be allowed to drain into strategically
placed in pit sumps which will then be pumped to the tailings storage facility (“TSF”). All in pit water will be pumped
to the TSF. Water from the 60 depressurizing pit perimeter wells will be discharged into either a reservoir or the Gays
River, however most of this water will be used as processing water in the mill. A similar setup will be utilized in the
North East and Getty pits.
Metallurgy and Mineral Processing
Metallurgical data from past production data and more recent metallurgical test work is available on the carbonate hosted
zinc-lead deposit. The combined data shows that the zinc and lead minerals liberate well from the host rock, resulting in
relatively high metal recoveries and concentrate grades. The simple mineralogy and metallurgy present the opportunity
to consistently achieve high recoveries and concentrate grades over the life of mine plan.
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The process design criteria, based on historical data and p lant design improvements, include overall average zinc
concentrate grades of 57% with an average 86.6% recovery, and the overall average lead concentrate grade of 71% with
an average 89.1% recovery. Due to the carbonate hosted deposit, the zinc and lead concentrates have very low levels of
impurities or deleterious minerals, resulting in the ScoZinc concentrates to be proven to be a clean, high -ranking
concentrate.
The ScoZinc concentrator plant (or Mill) was last operated in 2009 at 2,200 tonnes per day from the original name plate
design of 1 ,500 tonnes per day using conventional crushing, grinding flotation, concentrate dewatering/drying, and
rehandling loadout. After extensively reviewing all past production and incomplete engineering work, new final design
work as part of the 2020 Pre-Feasibility Study has confirmed that with relatively minor upgrades to the comminution,
flotation and dewatering circuits, the plant can consistently operate at 2,700 tonnes per day without major capital
expansion.
Site Infrastructure
The Scotia Mine is conveniently located 33 kilometres from Halifax’s International Stanfield Airport (YHZ) in Nova
Scotia with excellent infrastructure in place including processing facilities, waste dumps, a tailings pond, grid -power,
all-season port terminal access, and all-season highways. Building infrastructure in place has an area of approximately
131,585 square feet. The mine site infrastructure is well established, as it has been on high level care & maintenance
since 2009. ScoZinc equipment and spare parts asset inventory is assessed at approximately $5.3 million.
As the Scotia Mine is fully permitted for operations, relatively minor upgrades and improvements to the mining and
processing facilities to enable the operation to commence commercial production within a relatively short time frame of
months. ScoZinc intends to expand the existing operations with the additions of ROM based primary and secondary
crushers, a container handling yard, mobile fleet fuel bay and additional mobile fleet m aintenance workshop. Some of
these opportunities require permitting and have been included in the Pre-Feasibility Study by way of temporary additions
until permanent permitting can be provided. All mining and maintenance operations will be conducted by ScoZinc.
Electrical grid power systems are currently onsite with transformers and major motor control centres in place. Some of
these systems will be replaced during the pre -production phases in order to ensure performance and reliability dur ing
commercial production.
Water for mineral processing is provided from pit perimeter wells designed to un-saturate the pit slopes and to provide
clean water to the plant for optimal water quality. Water may also be sourced from the tailings pond. Additi onal water
is sourced from the nearby Gays River and treated for potable water site needs and fire suppression.
The Tailings Storage Facility is permitted with 8 million tonnes of capacity. ScoZinc intends to either seek approval to
expand the capacity by 6 million tonnes or use in-pit tailings deposal into its completed pits in approximately year 6 of
the life of mine.
Site Access
The Scotia Mine is located adjacent to sealed Highway 224, with a permanent 900 metre access road providing all season
access to the operation. The Mine is located in the Halifax Regional Municipality, which is approximately 62 kilometres
to downtown Halifax. Due to its convenient location and quality of potential personnel, Sco Zinc expects most of its
workforce will be sourced from the region.
The transport and handling of freight and concentrate is possible year-round due to ScoZinc’s location on an unrestricted
highway. The Scotia Mine is also located near a Canadian National Railway line siding, the Nova Scotia pr ovincial
highway (102), deep-water ports and container handling terminals, and the Trans-Canadian National Highway.
Concentrate Marketing
The Scotia Mine ’s carbonate-hosted orebody will produce high -quality zinc and lead concentrates through its 2,700
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tonnes per day processing plant on the mine site. The concentrates will be loaded directly into lined 20’ shipping
containers, which will be sampled, sealed and weighed on site. ScoZinc personnel will transport the containers by all
season highway to either t he Fairview Cove Container Terminal or a nearby Canadian National Railway siding. The
Scotia Mine’s concentrate container handling system will avoid excessive costs and risks associated with rehandling,
contamination, concentrate losses and excessive moisture build up employed historically.
ScoZinc had an initial concentrate offtake agreement by way of a Memorandum of Understanding, dated 3rd April 2018,
with MRI Trading AG, for the Scotia Mine’s lead and zinc concentrates for approximately 10 years of the 14-year mine
life. The agreement provides competitive terms for 333,000 wet metric tonnes of zinc concentrate and 133,000 of lead
concentrate from the Scotia Mine. ScoZinc expects to esta blish firm concentrate purchase contracts with one or more
metal trading companies under terms consistent with the current market terms. ScoZinc is engaged in negotiations with
a number of concentrate and gypsum offtakers but has not yet finalized a definitive binding agreement.
The forecast annual production of Zinc and Lead concentrate is provided below in Figure 2.
Figure 2: Forecast Annual Production of Concentrate: Zinc and Lead
Permitting, Environmental and Community
The Scotia Mine is an existing operation on high -level Care & Maintenance with substantial environmental databases,
operating history, and valid permits and licenses that allow for the mining, processing of resources, and the shipping of
zinc and lead concentrates.
Environmental responsibility and stewardship have been and continue to be a priority to ScoZinc. To that end, there are
extensive monitoring programs at the Scotia Mine including but not limited to: Surface Water quality, Groundwater
quality, Wetland, Wildlife and Vegetation. These programs have continued throughout Care & Maintenance and will be
implemented for operations.
Roughly half of the mineral resources used in this economic analysis are already under permit and mining of those
resources (Main Zone, Southwest Expansion) can begin immediately.
Another important aspect of the project status with respect to permits, environment and community is that regulators and
the community have experience with the project and environmental baseline conditions are already well understood. In
combination, these factors limit the overall permitting risk and anticipated timelines for permitting project expansions to
include the entire mineral resource used in this analysis.