TINKA REPORTS POSITIVE PEA FOR THE AYAWILCA ZINC PROJECT After-Tax NPV8% of US$363M and IRR of 27% Initial Capex of US$262M
TINKA RESOURCES LIMITED
www.tinkaresources.com
TSXV & BVL: TK OTCPK: TKRFF
NEWS RELEASE July 2, 2019
TINKA REPORTS POSITIVE PEA FOR THE AYAWILCA ZINC PROJECT
After-Tax NPV8% of US$363M and IRR of 27%
Initial Capex of US$262M
Vancouver, Canada – Tinka Resources Limited (“Tinka” or the “Company”) (TSXV & BVL: TK)
(OTCPK: TKRFF ) is pleased to announce positive results from the Preliminary Economic
Assessment (“PEA”) prepared for its 100%-owned Ayawilca Zinc Zone project in central Peru. The
PEA was prepared in accordance with National Instrument 43-101 Standards of Disclosure for
Mineral Projects (“NI 43-101”) by Amec Foster Wheeler Peru S.A. (Wood) as principal consultant,
Transmin Metallurgical Consultants, and RPA Inc. The PEA provi des the initial economic
assessment for an underground ramp-access mine development with a 5,000 tonnes per day
processing plant.
PEA Highlights
After-tax NPV8% of US$363 million and pre-tax NPV 8% of US$609 million using metal prices of
US$1.20/lb zinc, US$18/oz silver, and US$0.95/lb lead on a 100% equity basis;
Initial Capex of US$262 million with after-tax IRR of 27.1% and pre-tax IRR of 37.2%;
21-year mine life with average head grades of 6.05% zinc, 18.3 g/t silver, 67.1 g/t indium, and
0.25% lead;
Average annual production of approximately 101,000 tonnes of z inc recovered in concentrate
and approximately 906,000 ounces of silver in a silver-lead concentrate;
Leverage to zinc price: 20% increase in zinc price increases after-tax NPV8% to US$606 million;
Numerous opportunities identified for potential economic improvement & exploration upside.
Note: The PEA is preliminary in nature and includes inferred mineral resources that are considered
too speculative geologically to have the economic consideration s applied to them that would
enable them to be categorized as mineral reserves, and there is no certainty that the preliminary
economic assessment will be realized. Mineral resources are no t mineral reserves and do not
have demonstrated economic viability.
Tinka’s President and CEO, Dr. Graham Carman, stated: “We are very pleased with the results of
the PEA, which is based on a mid-sized underground mining case of 5,000 tonnes per day and
relatively modest initial capital. The PEA shows that the Ayawilca Zinc project, which is located in
one of the world´s most prolific polymetallic be lts, is shaping up to be one of the best new zinc
development projects in the Americas with strong economics and a long mine life of over 20 years.
The excellent PEA results are a major milestone and justify the continued advancement of Aya-
wilca towards production while exploration drilling is continuing with the aim of discovering addi-
tional high grade zinc resources.”
Financial Summary Pre-tax After-tax
NPV (8% discount rate)
IRR
Payback period
US$609 million
37.2%
2.2 years
US$363 million
27.1%
3.1 years
Pre-production capital expenditure (Capex)1
Sustaining Capex
Life of Mine (LOM) Capex
Closure Cost (5.0% of LOM Capex)
US$261.9 million
US$144.6 million
US$406.5 million
US$20.3 million
Notes: 1 Includes contingencies of US$45 million.
2
Operating Summary
Processing plant throughput
Average annual zinc concentrate production
Average annual lead-silver concentrate production
Average annual silver in lead concentrate
Net Smelter Return from zinc and lead concentrates
5,000 t/day
201,500 dmt/year
7,570 dmt/year
905,700 oz/year
US$4,002 million
Mining costs
Processing costs
G&A costs
Total Operating Costs (Opex)
US$36.66/t
US$6.44/t
US$5.48/t
US$48.57/t
Notes: dmt = dry metric tonne
Metal Prices & Exchange Rate Assumptions Input value
Zinc Price
Lead Price
Silver Price
NSR Cut-off value
Exchange Rate - Peruvian SOL/USD
US$1.20/lb
US$0.95/lb
US$18/oz
US$65/t
3.3
Total material processed (LOM) 38.2 million tonnes
Mine Life 21.1 years
PEA Mine Plan – 5,000 Tonnes per Day Underground Mining Operation
The PEA for the Ayawilca Zinc Zone is based on an underground mine operating at a mining rate
of 5,000 tonnes per day for a mine life of 21.1 years. For the purposes of the PEA, production is
assumed to commence in 2023 following 18 months of construction and commissioning. This
initial mine plan is based on mining a total of 8.4 million ton nes Indicated Resources (grading
6.95% Zn, 0.18% Pb and 15.8 g/t Ag) plus 29.8 million tonnes Inferred Resources (grading 5.79%
Zn, 0.27% Pb, and 19.0 g/t Ag) over the life of mine (“LOM”) using an NSR cut-off value of US$65/t
(of the 11.7 Mt Indicated and 45.0 Mt Inferred Resources at a U S$55/t NSR cut-off value). The
zinc-rich mill feed will be trucked to the surface via a one-way-traffic ramp system connecting two
mine portals to the underground infrastructure and accessing pr oduction areas starting at West
and South Ayawilca.
Processing of the zinc mineralization will be through a standar d crushing and grinding circuit fol-
lowed by froth flotation, concentrate thickening and filtration. The mine operation will produce two
concentrates: a zinc concentrate which is anticipated to assay 50% zinc based on metallurgical
‐$1,600
‐$1,200
‐$800
‐$400
$0
$400
$800
$1,200
‐$200
‐$150
‐$100
‐$50
$0
$50
$100
$150
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
Cumulative Cash Flows (US$ millions)
Annual Cash Flows (US$ millions)
After‐tax cash flow
Cumulative after‐tax cash flow
3
test work; and a lead concentrate which is anticipated to assay 50% lead and between 2,750 and
5,930 g/t silver (calculated on assays and based on similar bas e metal operations). About half of
the tailings will be thickened and sent to a surface tailings storage facility, while the remainder will
be mixed with cement and used as structural backfill in the underground operations.
Based on preliminary mine plan analysis including resource geometry, the scale of the deposit and
grade distribution, room and pillar ("R&P") and post-pillar mining ("P&P") methods were selected.
The estimated operating costs, over the life of the Project, are as follows:
Operating Costs per Mining Method (Opex)
Description Cost per Tonne Processed
Mining – Room & Pillar
Mining – Post & Pillar
US$38.06
US$35.29
Average Mining Cost
Process Plant
G&A (US$10M/yr)
Total Operating Cost
US$36.66
US$6.44
US$5.48
US$48.58
The major components of the initial capital expenditures of US$261.9 million include US$76.3 mil-
lion for the processing plant, US$34.3 million for on-site infr astructure, US$43.1 million for mine
equipment and underground pre-produc tion development, US$14.7 m illion for off-site infrastruc-
ture, and US$6.7 million for a starter tailings storage facilit y direct costs. Contingencies in the
capital costs total US$44.5 million. The major components of s ustaining capital are US$109.7
million for mining equipment and underground development, and US$34.9 million for tailings man-
agement over the 21.1 year mine life.
‐
250
500
750
1,000
1,250
1,500
1,750
2,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
Annual Silver Production (koz)
Annual Zinc and Lead Production (tonnes)
Annual Metal Production in Concentrates
Zn recovered to Zn concentrate (left)
Pb recovered to Pb‐Ag concentrate (left)
Ag recovered to Pb‐Ag concentrate (right)
4
Capital Cost Item Initial (US$ M) Sustaining (US$ M) Total (US$ M)
Mining & mine development
Process plant
On-site infrastructure
Off-site infrastructure
Tailings storage facility
Indirect + Owner costs
Contingencies
43.1
76.3
34.3
14.7
6.7
42.3
44.5
109.7
-
-
-
34.9
-
-
152.8
76.3
34.3
14.7
41.6
42.3
44.5
TOTAL PROJECT 261.9 144.6 406.5
CLOSURE COSTS 20.3
Metallurgical Recoveries and Off-Site Charges
As reported in the Company’s news release on June 5 th 2019, metallurgical testing of samples
from Ayawilca indicate that a zinc concentrate grading 50% zinc can be produced with 92% of the
zinc recovered to the concentrate. The lead metallurgy has bee n assumed based on similar
operations. The lead concentrate is expected to assay 50% lead and between 2,750-5,930 g/t
silver. Most of the silver is expected to report to the lead co ncentrate and be payable, while silver
is not expected to be payable in the zinc concentrate. The zin c concentrate is expected to be a
marketable concentrate with no deleterious elements other than an iron penalty. Concentrate
grade assumptions and recoveries for the principal metals are provided in the table below.
Composite Head Grade, Metallurgical Results and Recoveries
Product
Average Grade LOM Metallurgical Recoveries (%)
Zinc
(%)
Indium
(g/t)
Lead
(%)
Silver
(g/t)
Zinc Equiv.
(%) Zinc Indium Lead Silver
Feed grade
Zinc Concentrate
Lead Concentrate
6.05
50.0
4.0
67.1
555
0.25
0 to 0.1
50.0
18.3
0-100
3,721**
6.77* 100
92
0
100
92
0
100
0
85
100
0
85
* Zinc Equivalent (%) = NSR/15.39. See NSR Calculation below
** Silver grades were calculated for the PEA and range from 2,750 to 5,930 g/t
Off-site charges include road transport of concentrates either to the local port of Callao, Peru, or a
local smelter. For the purposes of the PEA, 75,000 tonnes per year of the zinc concentrates are
assumed to be delivered directly to a local smelter and the rem ainder of the concentrates (aver-
aging 126,750 tonnes per year) are assumed to be shipped to ove rseas smelters. All of the lead
concentrates are assumed to be shipped overseas. Off-site charg es include treatment charges,
refining charges, and iron penalties at smelter.
Off-site Charges
Description Zinc Concentrate Lead-Silver Concentrate
Transport to Port/Local Smelter
Port Charges
Shipping to overseas smelter (FOB)
Local smelter Treatment Charge (TC)
Overseas smelter* Treatment Charge (TC)
Smelter Refining Charge (RC)
Iron Penalty
US$35/wmt
US$17.5/wmt
US$45/wmt
US$190/dmt
US$170/dmt
-
US$7.50/dmt
US$35/wmt
US$17.5/wmt
US$45/wmt
-
US$150/dmt
US$1.50/oz
-
Notes: wmt = wet metric tonne. dmt = dry metric tonne
* Assumes a US$20/t credit for high indium values in the zinc concentrate, expected to be around 550 g/t In
5
NSR Calculation
The mine plan for the PEA was based on a Net Smelter Return (NS R) cut-off value of US$65 per
tonne, which is higher than the NSR cut-off value used for previous resource estimates and higher
than the US$48.58 operating cost per tonne assumed in the PEA.
The prices and NSR factors for each metal utilized in the NSR c alculation are presented in the
table below.
Metal Prices and NSR Factors
Metal
2019 PEA Nov. 26 2018 Resource Estimate
Metal Price
Assumptions NSR Factor Metal Price
Assumptions NSR Factor
Zinc (Zn)
Lead (Pb)
Silver (Ag)
Indium (In)
US$1.20/lb
US$0.95/lb
US$18.00/oz
-
US$15.39
US$12.25
US$0.44
-
US$1.15/lb
US$1.00/lb
US$15.00/oz
US$0.30/g
US$15.34
US$4.70
US$0.22
US$0.18
NSR for the PEA was calculated using the following formula:
NSR (US$) = [Zn(%)*US$15.39+Pb(%)*US$12.25+Ag(g/t)*US$0.44].
NSR factors are different to those used for the Nov. 26, 2018 m ineral resource estimation, as
shown in the above table. Metal price assumptions are marginally different, while indium was not
considered as payable for the PEA due to low current indium prices. However, a US$20/dmt credit
is assumed for high indium zinc concentrates sent to overseas smelters. The difference in the NSR
factor for lead is the result of higher recovery of lead and higher lead grade in the concentrate.
Sensitivities
The Ayawilca Zinc Project is highly leveraged to zinc price. A 20% increase to the price of zinc
results in an after-tax NPV 8% of US$606M, an increase of US$243M over the base case PEA
scenario.
Opportunities and Exploration Potential
The Ayawilca Zinc Zone has not been fully delineated and is ope n in several directions, including
to the east and northeast. Exploration drilling is currently ongoing.
Opportunities for additional value on the Ayawilca property not captured in the PEA include:
1. Potential for expansion of Zinc Zone resources at Central, S outh, East, Zone 3, and Camp
(100.0)
‐
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
‐40% ‐30% ‐20% ‐10% 0% 10% 20% 30% 40%
(US$M)
Change in Parameter
After Tax NPV @ 8.0% Sensitivity
Zinc selling price Lead selling price Silver selling price Feed grades Initial CAPEX Operating Cost
6
areas through additional drilling;
2. The Tin Zone, which was not included in the PEA because it r equires additional metallur-
gical work, offers significant exploration potential as the res ource remains open in several
directions;
3. The Colquipucro silver oxide deposit is amenable to open pit mining methods, but was not
included in the PEA because it is believed to require higher si lver prices to potentially be
economic. However, the prospects of economic extraction may im prove if a zinc mine is
built on the property;
4. A number of untested exploration targets on the Company’s 17 0 km2 area of mining con-
cessions that comprise the Ayawilca property.
Next Steps
Based on the positive initial PEA, the Company intends to conti nue to advance the Ayawilca Zinc
Project towards production. Next steps will include:
1. Continuing exploration drilling with the aim of expanding th e Zinc Zone resources,
especially in high grade areas;
2. Obtain the required permits for infill drilling to support a Prefeasibility Study. This process
has already begun and is expected to take the remainder of 2019 . Further expansion of
the drill permits will be required in 2020 in order to test exp loration targets outside of the
current drill permitted areas;
3. Optimization studies will be completed to evaluate potential economic improvements,
including higher metallurgical recoveries (for both Zn and Pb) and a reduction in the iron
content in the zinc concentrate;
4. Additional geotechnical data is required to evaluate more ad vanced mine planning studies,
including potentially higher mine throughput options than contemplated in the PEA;
5. High indium grades in the zinc concentrate represent a poten tial value-add, although
limited value was applied in the PEA for indium. Further techn ical and marketing studies
will be carried out to evaluate how additional value may be der ived from indium as part of
a future mining operation;
6. Conduct mineralogical and metallurgical studies on the Tin Z one resources in order to
evaluate the economic potential of these resources.
A National Instrument 43-101 Technical Report will be filed on SEDAR within 45 days.
Mineral Resources
The table below outlines the Indicated and Inferred Mineral Res ources estimates (Nov. 26, 2018)
used in the PEA, including those that are not included in the mine plan. The Base Case resource
is highlighted in bold, which assumes a cut-off value of US$55/ t NSR. As noted above, the metal
prices and cut-off used in the mine plan are slightly modified from the resource estimation.
Sensitivity Analysis - Ayawilca Zinc Zone Tonnage and Grade Rep ort by NSR Cut-off Value –
November 26, 2018
Class NSR US$/t
Cut-off
Tonnage
(Mt) ZnEq% Zinc % Lead % Indium g/t Silver g/t
Indicated
40 13.6 7.4 6.3 0.16 75 15
50 12.4 7.9 6.7 0.17 80 15
55 11.7 8.1 6.9 0.16 84 15
60 10.8 8.5 7.2 0.16 89 16
70 9.4 9.2 7.7 0.15 99 16
80 7.9 10.0 8.4 0.15 111 17
Class NSR US$/t
Cut-off
Tonnage
(Mt) ZnEq% Zinc % Lead % Indium g/t Silver g/t
40 52.7 6.2 5.2 0.24 60 17
50 48.1 6.5 5.4 0.24 64 17
7
Inferred 55 45.0 6.7 5.6 0.23 67 17
60 41.5 7.0 5.8 0.23 70 18
70 33.9 7.6 6.4 0.22 78 18
80 26.9 8.3 6.9 0.22 86 20
Notes:
1. CIM (2014) definitions were followed for Mineral Resources.
2. Mineral Resources are reported above a cut-off NSR value of US$55/t. The Base Case resource is high-
lighted in bold.
3. The NSR value was based on estimated metallurgical recoverie s, assumed metal prices and smelter terms,
which include payable factors, treatment charges, penalties, and refining charges. Metal price assumptions
were: US$1.15/lb Zn, US$300/kg In, US$15/oz Ag, and US$1.0/lb Pb. Metal recovery assumptions were:
90% Zn, 75% In, 60% Ag, and 75% Pb. The NSR value for each block was calculated using the following
NSR factors: US$15.34 per % Zn, US$4.70 per % Pb, US$0.18 per gram In, and US$0.22 per gram Ag.
4. The NSR value was calculated using the following formula:
NSR = [Zn(%)*US$15.34+Pb(%)*US$4.70+In(g/t)*US$0.18+Ag(g/t)*US$0.22].
5. The ZnEq value was calculated using the following formula: Z nEq = NSR/US$15.34.
6. Numbers may not add due to rounding.
7. Mineral Resources are not Mineral Reserves and do not have d emonstrated economic viability.
Qualified Person Statements
Technical information related to the PEA contained in this news release has been reviewed and
approved by William Colquhoun, FSAIMM, Principal Metallurgical Consultant with Amec Foster
Wheeler (Perú) S.A., a Wood company (Wood). Mr. Colquhoun is a Fellow of the South African
Institute of Metallurgy and a registered Professional Engineer of the Engineering Council of South
Africa with 32 years' experience. Edwin Peralta, P.E., SME Regi stered Member and a Qualified
Person as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects ,
is a Senior Engineer with Wood Mining and Metals USA with 23 years of experience.
The Mineral Resources disclosed in this press release were esti mated by Ms. Dorota El Rassi,
P.Eng., and Mr. David Ross, P.Geo., both employees of RPA and independent of Tinka. By virtue
of their education and relevant experience, Ms. El Rassi and Mr . David Ross are “Qualified
Persons" for the purpose of National Instrument 43-101. The Mineral Resources were classified in
accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves (May,
2014). Both Ms. El Rassi, P.Eng. and Mr. David Ross, P.Geo. ha ve read and approved the
contents of this press release as it pertains to the disclosed Mineral Resource estimates.
The metallurgical and recovery inputs have been reviewed and ve rified by Mr. Adam Johnston,
FAusIMM, CP (Metallurgy) of Transmin Metallurgical Consultants, Lima, a Qualified Person as
defined by National Instrument 43-101. Mr Johnston has 25 years of mineral processing
experience and is a Fellow of the Australasian Institute of Mining and Metallurgy.
Dr. Graham Carman, Tinka’s President and CEO, reviewed, verifie d and compiled the technical
contents of this release. Dr Carman is a Fellow of the Australa sian Institute of Mining and
Metallurgy, and is a Qualified Person as defined by National Instrument 43-101.
Data verification and quality control and assurance
RPA visited the Ayawilca property, reviewed the sampling and pr eparation methods, QA/QC
methods and results, and sample chain of custody procedures; an d performed independent
resource database verification tests. Details on the database verification work are provided in a
RPA Technical Report dated January 9, 2019. RPA is of the opin ion that the procedures are
appropriate and the resource database is suitable to estimate Mineral Resources.
8
About Tinka Resources Limited
Tinka is an exploration and development company with its flagship property being the 100%-owned
Ayawilca carbonate replacement deposit (CRD) in the zinc-lead-s ilver belt of central Peru, 200
kilometres northeast of Lima. The Ayawilca Zinc Zone contains 1 1.7 Mt of Indicated Resources
grading 6.9% zinc, 0.2% lead, 15 g/t silver and 84 g/t indium, and 45.0 Mt Inferred Resources
grading 5.6% zinc, 0.2% lead, 17 g/t silver and 67 g/t indium. The Ayawilca Tin Zone contains an
Inferred Mineral Resource of 14.5 Mt at 0.63% tin, 0.21% copper and 18 g/t silver. The Colquipucro
silver oxide deposit contains 2.9 Mt of Indicated Resources gra ding 112 g/t silver (for 10.4 Moz
Ag) and 2.2 Mt Inferred Resources grading 105 g/t silver (for 7 .5 Moz Ag) in high grade lenses
within a preliminary open pit shell using a $46/t NSR cut off (November 26, 2018 release).
On behalf of the Board,
“Graham Carman”
Dr. Graham Carman, President & CEO
Investor Information:
www.tinkaresources.com
Rob Bruggeman 1.416.884.3556
Company Contact:
Mariana Bermudez 1.604.699.0202
Forward Looking Statements: Certain information in this news release contains forward-look ing statements and
forward-looking information within the meaning of applicable se curities laws (collectively " forward-looking
statements"). All statements, other than statements of historical fact a re forward-looking statements. Forward-looking
statements are based on the beliefs and expectations of Tinka as well as assumptions made by and information currently
available to Tinka's management. Such statements reflect the c urrent risks, uncertainties and assumptions related to
certain factors including, without limitations, statements abou t strategic plans, including timing, extend and success of
future operations and work programs, capital expenditures, disc overy and production of minerals, price of metals and
currency exchange rates, community relations, government regulation of mining operations, environment and permitting,
timing of geological reports and the preliminary nature of the PEA and the Company’s ability to realize the results of the
PEA. Should any one or more of these risks or uncertainties mat erialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described herein. Forward-looking statements are based on the
reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception
of trends, current conditions and expected developments, and other factors that management believes are relevant and
reasonable in the circumstances at the date such statements are made. Although the Company has attempted to identify
important factors that could cause actual results to differ materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as anticipated. There can be no assurance that such information
will prove to be accurate, as actual results and future events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue relian ce on forward-looking statements. The Company does
not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release