Tinka Reports Updated PEA FOR Ayawilca Project: Highlights Potential to Become TOP‐10 Global Zinc Producer After‐tax NPV8% of US$433M and IRR of 32% at $1.20/lb Zinc
TINKA REPORTS UPDATED PEA FOR AYAWILCA PROJECT: HIGHLIGHTS POTENTIAL TO BECOME TOP‐10
GLOBAL ZINC PRODUCER
After‐Tax NPV8% of US$433M and IRR of 32% at $1.20/lb Zinc
Vancouver, Canada – Tinka Resources Limited ( “Tinka” o r t h e “Company”) (T S X V & B V L : T K) (OTCQB: TKRFF) is
pleased to announce strongly positive financial results from an updated Preliminary Economic Assessment (“PEA”)
prepared for its 100%‐owned Ayawilca Zinc Zone project in centr al Peru. The updated PEA is disclosed in accordance
with National Instrument 43‐101 Standards of Disclosure for Mineral Projects (“NI 43‐101”) and prepared by Mining
Plus Peru S.A.C. (“Mining Plus”) as principal consultant, Transmin Metallurgical Consultants (“Transmin”), Envis E.I.R.L
(“Envis”), and SLR Consulting (Canada) Ltd (“SLR” ) . T h e u p d a t e d P E A p r o v i d e s the economic assessment for an
underground ramp‐access mine development with an 8,500 tonnes per day processing plant, a significant throughput
increase from the 2019 PEA.
PEA Highlights
After‐tax NPV8% of US$433 million (up 19% from 2019 PEA) using base case metal prices of US$1.20/lb zinc, US$22/oz
silver, and US$0.95/lb lead on a 100% equity basis (pre‐tax NPV8% of US$720 million);
Initial Capex of US$264 million with after‐tax IRR of 31.9% (pre‐tax IRR of 42.6%);
At current spot price of $1.50/lb zinc, the after‐tax NPV 8% increases to US$785 million and IRR increases to 45.7%
(pre‐tax NPV8% of US$1.27 billion and IRR of 61%);
Average annual production of approximately 155,000 tonnes of zinc in concentrate per year, which would make
Ayawilca the largest primary zinc producer in South America and a top‐10 global zinc producer;
43.5 million tonnes mined over 14.4 years using bulk underground mining methods (sub level stoping combined with
overhand cut and fill) with daily mill throughput of 8,500 tonnes per day (tpd);
Project located in a major mining region close to a paved highw ay under construction, ~200 km from an operating
zinc refinery and port;
Designed to minimize risk and environmental impact ‐ 40% of tai lings used as underground backfill and on‐surface
tailings treatment and storage facility to use filtered dry‐stack technology;
Numerous opportunities to add further value, including
o exploration upside for additional zinc discoveries including at Far South, Yanapizgo, and Zone 3 areas;
o further optimization of zinc and silver metallurgical recoveries;
o incorporating high grade Tin Zone resources into the mine plan.
Note: The PEA is preliminary in nature and includes inferred mi neral 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, and there is no certai nty that the preliminary econom ic assessment will be realized. Mineral resources are
not mineral reserves and do not have demonstrated economic viability.
Tinka’s President and CEO, Dr. Graham Carman, stated: “We are very excited to release the results of our updated PEA,
which shows Ayawilca to be an outstanding zinc project located in a mining friendly jurisdiction, well positioned to be
one of the next major zinc development projects worldwide. At current spot zinc prices (around US$1.50 per pound) the
PEA shows the project to be highly profitable with a post‐tax N PV8% of ~US$785 million. At our base case zinc price of
October 14, 2021
T: 604.685.9316 [email protected]
TSXV & BVL: TK OTCQB: TKRFF NEWS RELEASE
US$1.20 per pound, the PEA has excellent economics with a post‐ tax NPV8% of US$433 million. The updated PEA takes
advantage of a relatively modest initial capital as well as access to a local refinery and port.”
“The updated Ayawilca PEA demonstrates that, through the use of bulk tonnage underground mining methods and a
larger resource, Ayawilca has the potential to be the largest p rimary zinc producer in South America. Further
opportunities still exist to add more value at Ayawilca, including seeking to improve the zinc recoveries (currently 92%)
to a zinc concentrate and silver recovery to a silver‐lead concentrate (currently 45%), and also incorporating a tin circuit
into the mine plan.”
“Tinka is also committed to the highest standards of ESG performance. With the use of dry stack tailings and 100% use
of waste rock and 40% of tailings as backfill, Tinka is highlighting its strong commitment to utilize low impact and
environmentally sound solutions for tailings disposal. Tinka ha s been working at Ayawilca for a number of years, and
we believe an underground mine built using industry‐leading sta ndards incorporating a low environmental impact will
provide positive life‐changing opportunities for our local stak eholders. We look forward to continuing to advance the
Ayawilca project towards development.”
”Exploration remains a strong focus for Tinka, and the potentia l remains for significant new discoveries at Ayawilca to
further increase the resource along strike and at depth. Sever al targets at Ayawilca remain to be drill‐permitted, and
we have filed for an extended permit to cover those areas. Exploration is currently focused at the adjacent Silvia copper‐
gold project, where we recently announced the discovery of high grade copper‐gold skarn zones at Silvia NW (see news
release dated October 7, 2021).”
Financial Summary – Base Case Zn at US$1.20/lb Pre‐tax After‐tax
NPV (8% discount rate)
IRR
Payback period
US$720 million
42.6%
2.0 years
US$433 million
31.9%
2.6 years
Pre‐production capital expenditure (Capex)1
Sustaining Capex
Life of Mine (LOM) Capex
Closure Cost
US$264.0 million
US$186.8 million
US$450.7 million
US$15.2 million
Notes: 1 Includes contingencies of US$44 million.
Operating Summary
Processing plant throughput
Average annual zinc concentrate production
Average annual lead‐silver concentrate production
Average annual silver in lead concentrate
Total LOM zinc production
Net Smelter Return from zinc and lead concentrates
8,500 t/day
309,000 dmt/year
8,680 dmt/year
632,000 oz/year
4,450,000 tonnes
US$4,156 million
Mining costs
Processing costs
G&A costs
Total Operating Costs (Opex)
US$32.79/t
US$7.10/t
US$4.27/t
US$44.16/t
Notes: dmt = dry metric tonne.
Numbers may not add due to rounding.
Base Case 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$22/oz
US$65/t
3.87
Total material processed (LOM) 43.5 million tonnes
Mine Life 14.4 years
Figure 1. Ayawilca 2021 PEA – After tax cash flow by year of production
PEA Mine Plan – 8,500 Tonnes per Day Underground Mining Operation
The PEA for the Ayawilca Zinc Zone is based on an underground m ine operating at a minin g rate of 8,500 tonnes per
day for a mine life of 14.4 years. For the purposes of the PEA , production is assumed to commence in 2025 following
18 months of construction and commissioning. This initial mine plan is based on mining a total of 43.5 million tonnes
grading 5.56% Zn, 14.5 g/t silver and 0.20% lead over life of m ine (“LOM”) using an NSR cut‐off value of US$65/t. The
zinc‐rich mill feed will be trucked to the surface via a two‐wa y‐traffic ramp system connecting three mine portals to
the underground infrastructure and accessing production areas starting at West and South Ayawilca (see Figure 3).
Processing of the zinc mineralization will be through a standard crushing and grinding circuit followed 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 test work; and a lead concentrate which is anticipated to assay
50% lead and 2,272 g/t silver (calculated on assays and based o n similar base metal operations). Approximately 60%
of the tailings will be thickened and filtered for dry stack tailings disposal. The remaining 40% will be mixed with cement
and used as structural backfill in the underground operations.
‐$1,200
‐$800
‐$400
$0
$400
$800
$1,200
‐$150
‐$100
‐$50
$0
$50
$100
$150
‐2 ‐1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Cumulative After Tax Cash Flow (USD
millions)
Annual After Tax Cash Flow (USD millions) After tax cash flow
Cumulative after tax cash flow
Based on preliminary mine plan analysis including resource geom etry, the scale of the deposit and grade distribution,
sublevel stoping ("SLS") and overhand cut and fill with pillars ("OCF") methods were selected. The mining strategy
involves dividing the deposit into five zones by spatial locati on and by mining method: West, South and Silver zones
utilizing the SLS method (48.3% of mined tonnes for processing), and the Central and East zones utilizing the OCF
method with pillars (36.9% of mined tonnes for processing). Dev elopment in ore represents 14.8% of the processed
material.
Figure 2. Ayawilca Zinc Zone PEA ‐ Mining by Area showing average zinc grade by year of production
The estimated operating costs, over the life of the project, are as follows:
Operating Costs per Mining Method (Opex)
Description Cost p er Tonne Processed
Mining – SLS (48.3% of mine plan)
Mining – OCF (27.0% of mine plan)
US$25.37
US$29.79
Average Mining Cost ‐ including development (14.8% of mine plan) and
Pillars (9.9% of mine plan)
Process Plant
G&A (US$13M/yr)
Total Operating Cost
US$32.79
US$7.10
US$4.27
US$44.16
‐
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
‐
50,000
100,000
150,000
200,000
250,000
123456789 1 0 1 1 1 2 1 3 1 4 1 5 1 6
Average Zinc Grade Mined (%)
Annual Zinc Concentrate Production by Zone (t)
Production Year
Zinc Production by Area and Average Zinc Grade
SLS SOUTH SLS WEST OCF EAST SLS SILVER
OCF CENTRAL DEVELOPMENT ORE PILLARS Zn (%)
Figure 3. Mine plan showing areas by zinc grade (red = >5% Zn; yellow = 2‐5% Zn)
The major components of the initial capital expenditures of US$263.9 million include US$83.5 million for the processing
plant, US$34.0 million for on‐site infrastructure, US$47.2 million for mine equipment and underground pre‐production
development, US$9.1 million for off‐site infrastructure, and US$3.6 million for a starter filtered tailings storage facility
direct costs. Contingencies in the capital costs total US$43.8 million. The major components of sustaining capital are
US$95.3 million for mining equipment and underground developmen t, and US$91.6 million fo r tailings management
over the 14.4 year mine life.
Capital Cost Item Initial (US$ M) Sustaining (US$ M) Total (US$ M)
Mining & mine development
Process plant
On‐site infrastructure
Off‐site infrastructure
Filtered tailings storage facility
Indirect + Owner costs
Contingencies
47.2
83.5
34.0
9.1
3.6
42.7
43.8
95.3
‐
‐
‐
91.6
‐
‐
142.5
83.5
34.0
9.1
95.2
42.7
43.8
TOTAL PROJECT 263.9 186.8 450.7
CLOSURE COSTS 15.2
Numbers may not add due to rounding
Metallurgical Recoveries and Off‐Site Charges
As reported in the Company’s news release on June 5th 2019, metallurgical testing of sa mples 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 been assumed based on similar operations. The l ead concentrate is expected to assay 50% lead and
2,272 g/t silver on average over the life of mine. Based on pre liminary metallurgical test work, 45% of the silver is
expected to report to the lead concentrate and be payable, whil e 40% of the silver is expected to report to the zinc
concentrate and not be payable. The zinc 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 (%) Lead (%) Silver (g/t) Zinc Equiv. (%) Av. NSR (US$/t) Zinc Lead Silver
Feed grade
Zinc Concentrate
Lead Concentrate
5.56
50.0
4.0
0.20
0 to 0.1
50.0
14.5
0‐100
2,2722
5.92 96.2 100
92
0
100
0
70
100
40
45
Notes: Zinc Equivalent (%) = NSR/16.23. NSR = Zn(%)*US$16.23+Ag(g/t)*US$0.27+Pb(%)*US$10.20
2 Silver grades were calculated for the PEA and range from 1,122 to 4,173 g/t
All of the zinc concentrates are assumed to be delivered direct ly to a local refinery. All of the lead concentrates are
assumed to be shipped overseas. Off‐site charges include treatm ent charges, refining charges, and iron penalties at
refinery and summarized below.
Off‐site Charges
Description Zinc Concentrate Silver‐lead Concentrate
Transport to Port/Local refinery
Port Charges
Shipping to overseas smelter (FOB)
Local refinery Treatment Charge (TC)
Overseas Treatment Charge (TC)
Refining Charge (RC)
Iron Penalty
US$35/wmt
‐
‐
US$190/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
Tailings and Mine Waste Management
The tailings and mine waste concept for Ayawilca is based on a commitment to implementing best available practices
and best available technologies, as described in the International Council of Mining and Metals (ICMM) Global Industry
Standard for Tailings Management, and other, similar guides and standards. Of note:
100% of mine waste rock and 40% of tailings production will be re‐used as underground mine backfill;
On‐surface tailings will be processed as dry‐filtered tailings, and stacked at a secure, prepared facility. This
method will: reduce the environmental footprint; reduce risk of failure and impacts; and reduce closure costs
and schedule.
NSR Calculation
The mine plan for the PEA was based on a Net Smelter Return (“NSR”) cut‐off value of US$65 per tonne. The prices and
NSR factors for each metal utilized in the NSR calculation for the 2021 PEA compared to the 2019 PEA are presented in
the table below.
Comparison of Metal Prices and NSR Factors from 2019 PEA to 2021 PEA
Metal
2019 PEA 2021 PEA *
Metal Price
Assumptions NSR Factor Metal Price
Assumptions NSR Factor
Zinc (Zn)
Lead (Pb)
Silver (Ag)
US$1.20/lb
US$0.95/lb
US$18.00/oz
US$15.39
US$12.25
US$0.44
US$1.20/lb
US$0.95/lb
US$22.00/oz
US$16.23
US$10.20
US$0.27
Notes: * NSR for the 2021 PEA was calculated using the following formula:
NSR = Zn(%)*US$16.23+Ag(g/t)*US$0.27+Pb(%)*US$10.20
Sensitivities
The Ayawilca zinc project is strongly leveraged to zinc price. A 25% increase on the base case zinc price (around current
spot price of US$1.50/lb) results in an after‐tax NPV8% of US$785M, an increase of US$352M (or 81%).
Figure 4. After‐tax NPV8% Sensitivities
Note: Arrow indicates current spot zinc price
(100.0)
‐
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
‐40% ‐30% ‐20% ‐10% 0% 10% 20% 30% 40%
(US$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
Opportunities and Exploration Potential
The Ayawilca Zinc Zone has not been fully delineated and is open in several directions including to the northeast, south
and southwest.
Opportunities for additional value on the Ayawilca property not captured in the PEA include, but not limited to:
1. Potential for new zinc‐silver discoveries outside of the existi ng resource at South, Far South, Yanapizgo, and
Zone 3;
2. Optimization of zinc recovery to a zinc concentrate (currently 92%) and silver recovery to a silver‐lead
concentrate (currently 45%) through more detailed metallurgical test work;
3. The potential to incorporate a tin circuit into the mine plan b y mining all, or some, of the adjacent Tin Zone
resource (see news release dated September 27, 2021).
Tinka is well positioned to continue to move Ayawilca forward towards development. The project is fully permitted to
carry out a Prefeasibility Study.
A National Instrument 43‐101 Technical Report will be filed on SEDAR within 30 days.
Figure 5. Top‐10 world zinc mines by zinc production in 2020, with Ayawilca 2021 PEA highlighted
(Source: Stifel GMP and company data)
‐
100
200
300
400
500
600
kt Zinc in Concentrate
Top Global Zinc Mine Production (2020 Production)