Callinex Issues Letter to Shareholders
Callinex Issues Letter to Shareholders
VANCOUVER
,
Jan. 16, 2019
/CNW/ -
Callinex Mines Inc.
(the "Company" or "Callinex") (TSX-V:
CNX) (OTC: CLLXF) is pleased to provide its year-end letter to shareholders from President and
CEO,
Max Porterfield
:
Dear Shareholders,
I want to thank you on behalf of our team for your support of the Company throughout the past year.
In 2018, Callinex aggressively advanced its zinc-rich assets in the Bathurst Mining District. The
milestones achieved were highlighted by an updated resource estimate that confirmed a major
expansion of the Nash Creek Deposit and a maiden Preliminary Economic Assessment ("PEA") that
outlined attractive economics and opportunities to further enhance the potential economic benefits.
Positive results from the Company's exploration activities since mid-2017 contributed to a substantial
increase in the size of the Nash Creek Deposit that was announced in April. The Indicated zinc
equivalent resource increased to 963 million pounds, a growth of 74% since the project was
acquired in 2016. Additionally, the Inferred zinc equivalent resource increased by 385%, to 407
million pounds (See Table 1 and News Release dated
April 16, 2018
). The rapid expansion of the
deposit highlights the exploration potential of the area based on limited historic drilling.
The most significant milestone achieved over the past year was the maiden PEA that was
announced in May. The PEA outlined a high-margin, open-pit mine plan that generates a healthy pre-
tax internal rate of return of 34.1% and Net Present Value at an 8% discount rate of
$230 million
based on a zinc price of US
$1.25
(See News Release dated
May 14, 2018
).
The key to the exploration success that led to the major expansion at the Nash Creek Deposit was
from utilizing a 2011 Induced Polarization ("IP") survey for drill targeting. This led the company to
commence a district-scale IP survey in September that will cover 17 km along trend south of the
Nash Creek Deposit.
Since the start of the ongoing IP survey, two holes were drilled at the end of the 2018 drilling
campaign to test an initial target. Results from these drill holes confirmed that IP is the most
effective method to directly target near-surface mineralization. This was a critical exploration
success as the ability of the IP survey to accurately vector towards increased sulphide
mineralization, which generally correlates with higher grade mineralization at the Nash Creek
Deposit, is very encouraging to apply over the 150 km
2
district-scale land package. This approach
will allow for a cost-effective 2019 exploration program that can test the potential for additional
deposits over a much larger area.
The past year was met with significant volatility in the zinc market. Zinc prices started off the year
with a great deal of optimism at
US$1.53
per pound and quickly rallied to
US$1.64
in February. That
optimism for prices in the short term was doused by the start of the ongoing trade war between
the
United States
and
China
and the potential impact it could have on future global growth. This scenario
triggered the zinc price to commence a significant decline before bottoming out around
US$1.04
by
September.
It is our view that the zinc market has been significantly oversold based upon pessimism over
potential global growth concerns, which we anticipate will be resolved as the US and
China
negotiate
an end to the ongoing trade disputes. It is anticipated that an increase in global demand will
continue to play out developed and emerging economies expand their infrastructure programs.
Recently, steel has been thrusted in the spotlight with the US government shutdown over the debate
for construction of a wall along the southern border with
Mexico
. That discussion, which is turning
towards a wall constructed of steel, highlights the critical role zinc plays in the global economy. The
majority of all zinc consumed is related to the galvanization of steel, which is a major component of
global infrastructure projects.
Despite the dramatic pullback in prices the market has not seen any significant growth in inventories,
in fact today LME inventories remain near a decade low. As of mid-December LME inventories
were at 122,000 tonnes, down from 180,000 tonnes in
January 2018
when prices reached
$1.60
per
pound and now make up less than a week's supply of global demand. This critically low inventory
level is comparable to 2006 when the zinc price exceeded
$2.00
per pound.
Moving forward we are focusing near term efforts on generating compelling exploration targets that
can, if successful, cause a material impact to the Company's valuation. We are eager to complete
and receive results from the ongoing district-scale IP survey at the Nash Creek Project. The maiden
PEA completed on the project highlighted the opportunity to further improve economics by
sequencing additional higher grade and/or near surface mineralization early in the mine plan. We
believe that IP is the best exploration tool to discover additional mineralization at the Nash Creek
Project based on the success we've had to date.
Furthermore, Callinex also plans to complete an IP survey over key stratigraphy at the Company's
Pine Bay Project located in the Flin Flon Mining District of
Manitoba
. The goal of the survey is to
model lowly conductive pyrite that has the potential to host high-grade zinc, copper, gold and silver
mineralization. Previous exploration discovered multiple pyrite-rich massive sulphide intersections
that are very poorly conductive and as a result traditional electromagnetics has been an ineffective
vectoring tool in this geological environment. The discovery of an economic deposit is critical for the
future for the community of
Flin Flon
, where Hudbay's 777 mine will be shut down in three years and
no new discovery has been made to fill the impending void.
The Company plans to drill test the most compelling targets generated from ongoing exploration
programs in
New Brunswick
and
Manitoba
this year.
Our team is very excited about the opportunities to advance our project portfolio through exploration
underpinned by strong fundamentals for zinc as well as other base and precious metals in 2019.
Sincerely,
"
Max Porterfield
"
President & CEO
J.J.O'Donnell, P.Geo, a qualified person under National Instrument 43-101 and a Consultant for
Callinex, has reviewed and approved the technical information in this news release.
Cautionary Note on PEA.
The PEA is preliminary in nature and it includes Inferred Mineral
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. There is no certainty
that the PEA will be realized
Table 1: Comparison of Mineral Resources Since Acquisition in 2016
Timeframe
1
Classification
2
Cut-off, ZnEq
3,4
(%)
Tonnes
Zn
(%)
Pb
(%)
Ag (gpt)
ZnEq
3,4
(%)
ZnEq
3,4
Contained (lbs)
Pre-Acquisition
Indicated
2.0
7,807,900
2.72
0.55
18.3
3.22
554,268,000
Post-Acquisition
Indicated
1.5
13,592,000
2.68
0.58
17.8
3.21
963,392,000
Percent Change
N/A
N/A
+ 74%
- 1%
+ 5%
- 2%
0%
+ 74%
Pre-Acquisition
Inferred
2.0
1,211,700
2.66
0.52
18.0
3.14
71,057,000
Post-Acquisition
Inferred
1.5
5,929,000
2.68
0.47
13.9
3.11
407,130,000
Percent Change
N/A
N/A
+ 389%
+ 1%
- 10%
- 23%
- 1%
+ 385%
(1)
Callinex reported closing the acquisition of the Nash Creek Property on August 15, 2016. The effective date of the "Pre-Acquisition" mineral resource estimate is March 27,
2009, the effective date of the "Post-Acquisition" mineral resource estimate is March 21, 2018. The 2009 mineral resource is considered to be historical and has been
superseded by the mineral resource estimate with effective date March 21, 2018.
(2)
Classification conforms to NI 43-101, Companion Policy 43-101CP, and the Canadian Institution of Mining, Metallurgy and Petroleum ("CIM") Definition Standards on Mineral
Resources and Mineral Reserves adopted by CIM council, as amended. Inferred Resources have been estimated from geological evidence and limited sampling and must be
treated with a lower level of confidence than Measured and Indicated Resources.
(3)
Pre-acquisition zinc equivalency (ZnEq) was calculated as Zn% + 0.633*Pb% + 0.008*Ag_ppm, the Post-Acquistion zinc equivalency is calculated as Zn%+ 0.747*Pb% +
0.006*Ag_ppm.
(4)
The Post-Acquisition estimate is reported using a 1.5% ZnEq cut-off value, which is reduced from a 2% ZnEq cut-off that was used to report the Pre-Acquisition estimate.
(5)
A bulk density value of 2.76 was used in the Pre-Acquisition estimate, and bulk density was calculated based on relationship to grade for the Post-Acquisition estimate using
the formula 2.74+0.028*(Zn%+Pb%).
(6)
Tonnes and ZnEq contained pounds are rounded.
About Callinex Mines Inc.
Callinex Mines Inc. (TSXV: CNX) (OTCQX: CLLXF) is advancing its portfolio of zinc rich deposits
located in established Canadian mining jurisdictions. The portfolio is highlighted by its
Nash Creek
and Superjack deposits in the Bathurst Mining District of
New Brunswick
. A 2018 PEA outlined a
mine plan that generates a strong economic return with a pre-tax IRR of a 34.1% (25.2% post-tax)
and NPV8% of
$230 million
(
$128 million
post-tax). The projects have significant exploration
upside over a district-scale land package that encompasses several high-grade mineral
occurrences along a 20 km trend. Click here to view a video overview of the Nash Creek Project.
Callinex has a project portfolio that also includes projects within the Flin Flon Mining District of
Manitoba
that are located 25 km to an operating processing facility that requires additional mining
feed. The Company's projects host Indicated resources of 13.6 Mt averaging 3.2% Zn Eq. totaling
963 million pounds and Inferred resources of 23.2 Mt averaging 5.2% Zn Eq. totaling 2.7 billion
pounds (See News Release dated
April 16, 2018
).
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 release.
Some statements in this news release contain forward-looking information. These statements
include, but are not limited to, statements with respect to future expenditures. These statements
address future events and conditions and, as such, involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements
to be materially different from any future results, performance or achievements expressed or
implied by the statements. Such factors include, among others, the ability to complete the
proposed drill program and the timing and amount of expenditures. Except as required under
applicable securities laws, Callinex does not assume the obligation to update any forward-looking
statement
.
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SOURCE
Callinex Mines Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2019/16/c8580.html
%SEDAR: 00031889E
For further information:
Callinex Mines Inc., Max Porterfield, President and Chief Executive
Officer, Phone: (604) 605-0885, E-mail: [email protected]
CO: Callinex Mines Inc.
CNW 08:30e 16-JAN-19