ZincX Announces Positive Preliminary Economic Assessment for the Cardiac Creek (Akie Property) Zinc-Lead-Silver Deposit
FOR IMMEDIATE RELEASE
Contact: Investor Relations Wednesday, June 20, 2018
Phone (604) 684-2181 (No.2018-06-09)
ZincX Announces Positive Preliminary Economic Assessment
for the Cardiac Creek (Akie Property) Zinc-Lead-Silver Deposit
Vancouver, British Columbia, Canada – Wednesday, Ju ne 20, 2018 – ZincX Resources Corp.
(“ZincX” or “the Company”, TSX Venture Exchange: ZN X) is pleased to announce it has received
positive and robust results from the recently commissioned independent Preliminary Economic Assessment
(“PEA”) for the 100% owned zinc-lead-silver Cardiac Creek deposit located on the Akie property in
northeast British Columbia, Canada.
Economic Highlights:
• Estimated pre-tax NPV 7% of $649M ($401M after-tax)
• Estimated pre-tax 35% IRR (27% after-tax)
• Estimated pre-tax 2.6 year payback (3.2 year payback after-tax)
• PEA contemplates a 4,000 tonne per day underground mine and 3,000 tonne per day
concentrator with an 18-year mine life
• Total mine production of 25.8 million tonnes of which 19.7 million tonnes are processed
• Initial CAPEX (excluding contingency) estimated at $256.7M; total of $302.3M including $45.7M in
contingency
• Payable metal production over life-of-mine is 3,268M lbs of zinc & 362M lbs of lead
• Average annual production of 178M lbs of payable zinc and 20M lbs of payable lead at an all-in
operating cost of $102.38/tonne milled
• Total payable metal LOM is $3,960M; or $201/tonne milled
• Saleable zinc and lead concentrates with no penalty elements (clean concentrate )
• There are no net smelter royalties owed ( 0% NSR )
• Opportunities for continued refinement through additional studies including upgrading lead and
silver recoveries and reducing operating costs
• The Cardiac Creek deposit remains open at depth with potential to increase mine life
• Akie and Kechika Regional combined offer district-scale potential for new discoveries
The PEA is considered preliminary in nature and incl udes mineral resources, including inferred mineral re sources that are considered too speculative
geologically to have the economic considerations app lied to them that would enable them to be categorized as mineral reserves. Mineral resources that
are not mineral reserves have not yet demonstrated e conomic viability. Due to the uncertainty that may be attached to mineral resources, it cannot be
assumed that all or any part of a mineral resource will be upgraded to mineral reserves. Therefore, there is no certainty that the results concluded in the
PEA will be realized.
“The positive results outlined in the PEA demonstrate a robust, stand-alone base metal project with a large
and potentially growing resource base, all-season a ccess; good rail and road infrastructure and amenab le
to conventional mining and milling practices common to similar projects. We are delighted with the str ong
results of the PEA and intend to now move to advance the project through feasibility, permitting and towards
production. This project has significant exposure to zinc given the almost 10 to 1 zinc to lead ratio
in payable metal production over life-of-mine.
We have a strong competitive advantage that will appeal to mining and investment partners, including 100%
ownership, 0% NSR, long-term mineral tenure securit y, good stable jurisdiction, and strong First Natio n
community support. The PEA demonstrates low risk ec onomics and well-established mining and milling
techniques,” stated Mr. Peeyush Varshney, President and CEO.
Additional optimization studies are anticipated to improve the overall economics. Specific areas of
advancement include:
• Additional metallurgical variability testing to op timize metal recoveries and include silver as a
payable
• Optimize dense media separation (DMS) circuit by u sing a coarser grind in future testing
• Investigate optimal grinding size to improve lead liberation
• Reduce reagent and collector dosages to reduce mil l OPEX
• Continue discussions with rail companies to furthe r reduce transportation costs to Trail smelter
• Exploration potential remains open at depth at the Cardiac Creek deposit and significant upside
remains as higher grades seem to be improving with depth. Further drill testing is required to
delineate the down-dip potential
• District-scale exploration potential exists over t he 800 square kilometre highly prospective land
package. Additional focused exploration is planned
PEA Results
The PEA was completed by JDS Energy & Mining Inc. (JDS) of Vancouver, British Columbia. JDS is widely
known in the mining space for fit-for-purpose desig n and fundamentally sound technical engineering
studies. All inputs are based on budget quotations , peer comparisons and JDS’ recent experience in
projects of similar scope. All figures are quoted in CDN$ unless otherwise noted.
The PEA envisages a conventional underground mine a nd concentrator operation with a small
environmental footprint measuring approximately 20 hectares in size upon startup, growing to
approximately 35 hectares at closure. The mine will produce an average production rate of 4,000 tonnes
per day (tpd) principally from longhole stoping. Mu ch of the waste rock and the majority of the volume of
mill tailings will be placed back underground as ce mented backfill. The remainder of filtered tailings will be
stacked in a surface filtered tailings facility located near the mill.
The mine will have an 18-year life with potential t o extend the life-of-mine (LOM) through resource
expansion at depth. Key parameters for the PEA are summarized in the tables below.
The estimated pre-tax NPV 7% is $649M, with a 35% IRR and 2.6 year payback ; post-tax NPV 7% is $401M,
with a 27% IRR and 3.2 year payback .
Total payable LOM metal production is expected to b e 3,268 million pounds of zinc and 362 million
pounds of lead . Silver is not expected to be a payable due to rel atively low head grade and anticipated
smelter deductions. Future metallurgical work will continue to optimize the lead and zinc circuits to improve
recoveries and potentially add silver as a payable metal.
The pre-production capital cost (CAPEX) is estimated at $256.7M, for a total of $302.3M including $45.7M
contingency . Sustaining capital is estimated at $302.7M, for a total of $315.6M including $12.9M
contingency .
The total estimated capital cost over LOM, including closure costs but net of salvage value, is estimated at
$559.4M; for a total of $617.9M including $58.5M contingency. The majority of mine construction is
expected to take approximately 24 months.
The average on-site all-in operating costs (OPEX) t otal $102.38 per tonne processed, which includes
$38.13 per tonne mined for mining, $33.13 per tonne milled for milling, $2.87 per tonne milled for tailings
and DMS rejects, and $16.33 per tonne milled for general and administrative (G&A).
The base case used metal prices are calculated from the 3 year trailing average coupled with two year
forward projection of the average price; and are: US$1.21/lb for zinc , US$1.00/lb for lead and US$16.95
for silver . A CDN$/US$ exchange rate of 0.77 was used. The NPV discount rate is 7% .
Table 1: Summary of Key Parameters
Parameter Base Case Spot Price 1
Mine Life 18 years
Mine Production Rate 4,000 tpd
Plant Throughput (LOM
average; after DMS) 3,000 tpd
Tonnes Mined 25.8 Mt
Mined Head Grades 7.6% Zn; 1.5% Pb; 13.08 g/t Ag
Tonnes Milled 19.7 Mt
Milled Head Grades (after
DMS upgrade) 10.0% Zn; 1.9% Pb; 17.17 g/t Ag
Total Payable Metal (LOM) $3,960M $4,888M
Total Operating Expenses
(LOM) $2,014M $2,014M
Net (Pre-tax) Operating
Income (LOM) $1,946M $2,874M
Net Pre-tax Cash Flow (LOM)
$1,328M
$74M/year
$2,257M
$125M/year
Net After-tax Cash Flow (LOM) $870M
$48M/year
$1,459M
$81M/year
Pre-Tax NPV 7% $649M $1,160M
Pre-Tax IRR 35% 52%
Pre-Tax Payback 2.6 years 1.8 years
After-Tax NPV 7% $401M $727M
After-Tax IRR 27% 40%
After-Tax Payback 3.2 years 2.2 years
1. Spot prices at close of London Metal Exchange on June 15, 2018: US$1.42/lb Zn; US$1.08/lb Pb; US$16.95/oz Ag
Table 2: Summary of Capital Expenditures
Capital Costs Initial ($M) Sustaining ($M) LOM Total ($M)
Mining 58.2 260.0 318.2
Site Development 7.5 0.7 8.2
Mineral Processing 78.8 11.8 90.6
Tailings Management 5.0 8.3 13.3
On-Site Infrastructure 55.1 6.3 61.4
Off-Site Infrastructure 1.0 0.2 1.2
Project Indirects 28.0 5.1 33.2
Engineering and Project Management 17.4 1.5 18.8
Owner Costs 5.6 - 5.6
Closure - 8.9 8.9
Total 256.7 302.7 559.4
Contingency 45.7 12.9 58.5
Total 302.3 315.6 617.9
$/Tonne mined 11.71 12.22 23.92
Table 3: Summary of Operating Costs
Average Operating Costs Per tonne milled LOM
Mining $50.05* $984.7M
Processing $33.13 $651.7M
Tailings & DMS Rejects $2.87 $56.5M
G&A $16.33 $321.3M
All-in Total OPEX $102.38 $2,014.1M
*38.13/tonne mined
Table 4: Summary of Payable Metal Production
Metal Per annum (avg M lbs/yr) LOM (M lbs)
Zinc 178 3,268
Lead 20 362
Total Payable
Metal $ LOM $/tonne milled
$3,960 $201
Table 5: Sensitivity Analysis
-$0.10 Base Case +$0.10
Zinc (US$/lb.) US$1.11 US$1.21 US$1.31
Lead (US$/lb.) US$0.90 US$1.00 US$1.10
Pre-tax
NPV 7% $389M $649M $908M
IRR 25% 35% 44%
Payback 3.5 years 2.6 years 2.1 years
Post-tax
NPV 7% $234M $401M $567M
IRR 20% 27% 34%
Payback 4.1 years 3.2 years 2.7 years
Table 6: Exchange Rate Sensitivity Analysis
-0.02 Base Case +0.02
CDN$:US$ 0.75 0.77 0.79
Pre-tax
NPV 7% $718M $649M $583M
IRR 37% 35% 33%
Payback 2.5 years 2.6 years 2.8 years
Infrastructure
The Akie property is accessible year-round by a net work of all-weather logging roads leading north fro m
Mackenzie, BC. It is expected that the Company will share in road maintenance expenses with other
resource users including local forestry licensees and mining companies. Mackenzie is connected to the BC
provincial highway network via Highway 39 that bran ches off of Highway 97. No road or bridge upgrades
are anticipated and road maintenance costs are fact ored into the concentrate trucking costs from site to
Mackenzie.
Power will be generated onsite using liquefied natural gas (LNG) powered portable generators each with a
2,500 kW capacity. The connected load is estimated to be less than 18 megawatts.
A modular 250 person all-weather camp will be constructed and installed during the pre-production period,
and will serve both the construction and lifetime operation phases of the project.
JDS evaluated several concentration transportation options to deliver concentrate from the Akie projec t to
either the Port of Prince Rupert (for shipment overseas to an Asian smelter) or to the Trail Smelter located
in southeastern BC and owned by Teck Resources. Two options for each destination were evaluated for
transporting zinc concentrate; these included truck ing the entire distance from site to the final dest ination;
or trucking from site to Mackenzie, BC, and then vi a rail from Mackenzie to the final destination. It is
assumed that a rail load out facility at Mackenzie BC will be available for use.
After a careful assessment of cost it was determined that the most efficient transportation option for zinc is
to truck haul the concentrate from site to Mackenzie and load onto rail cars for delivery to the Trail smelter.
Zinc concentrate will be initially shipped bulk in covered ore hauler trailers and then by covered gon dola
rail cars. The lead concentrate will be truck haule d direct from site to the Trail smelter. Lead conce ntrate
will be shipped in sealed bags or totes, inside 20’ shipping containers, which act as double containment as
a safety precaution. The containers are limited to 20’ length due to weight restrictions and because CN Rail
does not have the ability to cost effectively handle and manage the 20’ containers, rail is not a viable option
for the lead concentrate.
Mining & Processing
The PEA is based on a conventional underground mine similar to other operations in Canada. The deposit
will be accessed via a main underground production haulage way with secondary ingress/egress provided
by a secondary portal and a vent raise to surface. Stope spacing is estimated at 20 metres. Mining dilution
is estimated at 15% with 95% recovery predicted.
Given the steep dip of the deposit (-75 degrees) th e deposit is amenable to longitudinal longhole open
stoping as the main method of underground mining. Underground mining equipment will include twin boom
jumbos, longhole drills, LHD scoop trams, haul trucks and support mobile equipment.
A concentrator with conventional milling and flotat ion is envisaged to be built on-site. The process p lant
contemplates 3,000 tonnes per day throughput and will include 3-stage crushing circuit, a DMS circuit and
a grinding circuit using ball mills. Sequential zinc and lead flotation circuits will incorporate cleaning stages.
The concentrate dewatering will use thickeners and pressure filters.
Recent metallurgical testwork conducted in 2017 and announced on the 9 th of April, 2018 was utilized by
the PEA. This work indicates that marketable zinc a nd lead concentrates could be produced from the
deposit with no deleterious substances or penalty elements.
Knight Piésold Ltd. (KP), a consultant to JDS, deve loped the tailings, waste and water management plan
for the PEA. KP assessed tailings management technologies and potential storage locations to support the
study. KP and JDS concluded that the preferred wast e management strategy is to store Potentially Acid
Generating (PAG) waste rock and the bulk of the tailings (approx. 70%) in mined-out underground stopes ,
based on the geochemical characteristics of the was te materials and the need for structural backfill. The
remaining waste materials, including Non-Potentially Acid Generating (NPAG) waste rock, DMS rejects and
the balance of tailings not used for backfill (appr ox. 30%), will be stored on surface in a filtered t ailings
management facility (TMF), which allows the DMS reject and filtered tailings to be co-mingled into a single
facility. A separate water management pond is included for managing process water and storm water runoff
from the surface of the TMF.
Next Planned Steps:
The Company will be working closely with its mining consultants and advisors to plot a course forward for
the most cost effective and efficient development o f the Cardiac Creek deposit. The Company anticipate s
more detailed engineering assessments leading to a Pre-feasibility Study.
2018 Plans:
• Recently announced diamond drill program on the Ak ie property including drill targets on other
known mineralised occurrences, including the Sitka showing and the North Lead Zone
• A satellite structural analysis will be completed on the northern portion of the Kechika Regional
properties providing the Company with seamless deta iled structural analysis over its entire Akie
and Kechika Regional claims holdings; representing 140 kilometres of highly prospective and
thrust-repeated Gunsteel Formation, the known host rock for SEDEX mineral occurrences and
deposits in the Kechika Trough. Complete coverage w ill aid in target definition for future drill
programs
• Continue examining cost effective means to conduct the planned and permitted 2-year
underground drill program which has been designed to carry out infill drilling on the Cardiac Creek
deposit from close-spaced drill centres from an underground platform, enabling year-round drilling
and advancement of the project towards a PFS level
• Continue baseline environmental studies to facilit ate further permitting and advancement of the
project
Qualified Persons
The PEA was led by JDS, an independent consulting f irm, and will be incorporated into a National
Instrument 43-101 (“NI 43-101”) technical report to be filed on SEDAR and the Company’s website within
45 days of this release.
Various personnel at JDS or their sub-consultants a re Qualified Persons and responsible for portions o f
this news release; and are identified as follows: M ichael Makarenko (P.Eng.) mining; Richard Goodwin
(P.Eng.) mining; Richard Boehnke (P.Eng.) infrastru cture/transportation; Kelly McLeod (P.Eng.) mill
processing; and Jim Fogarty (P.Eng. - Knight Piésol d) tailings disposal. A full list of Qualified Pers ons
contributing to the PEA will be summarized in the NI 43-101 technical report.
The Akie Zn-Pb-Ag Project
The 100% owned Akie property is situated within the Kechika Trough, the southernmost area of the
regionally extensive Paleozoic Selwyn Basin and one of the most prolific sedimentary basins in the wor ld
for the occurrence of SEDEX zinc-lead-silver and stratiform barite deposits.
Drilling on the Akie property by ZincX Resources (f ormerly Canada Zinc Metals Corp) since 2005 has
identified a significant body of baritic-zinc-lead SEDEX mineralization known as the Cardiac Creek deposit.
The deposit is hosted by siliceous, carbonaceous, fine grained clastic rocks of the Middle to Late Devonian
Gunsteel Formation.
With additional drilling completed in 2017, the Com pany has updated the estimate of mineral
resources at Cardiac Creek, as follows:
5% Zinc Cut-Off Grade Contained Metal:
Category Tonnes
(million) Zn (%) Pb (%) Ag (g/t) Zn (Blbs) Pb (Blbs) Ag (Moz)
Indicated 22.7 8.32 1.61 14.1 4.162 0.804 10.3
Inferred 7.5 7.04 1.24 12.0 1.169 0.205 2.9
In addition to the Akie Project, the Company owns 100% of eight of eleven large, contiguous property blocks
that comprise the Kechika Regional Project includin g the advanced Mt. Alcock prospect. The Kechika
Regional Project also includes the Pie, Yuen and Ci rque East properties within which the Company
maintains a significant 49% interest with partners Teck Resources Limited (TSX: TECK.B) and Korea Zinc
Co. Ltd. These properties collectively extend north west from the Akie property for approximately 140
kilometres covering the highly prospective Gunsteel Formation shale; the main host rock for known SEDEX
zinc-lead-silver deposits in the Kechika Trough of northeastern British Columbia. These projects are located
approximately 260 kilometres north northwest of the town of Mackenzie, British Columbia, Canada.
Ken MacDonald P.Geo., Vice President of Exploration for the Company, is the designated Qualified Person
as defined by National Instrument 43-101 and is res ponsible for the technical information contained in this
release.
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.
ON BEHALF OF THE BOARD OF DIRECTORS
ZINCX RESOURCES CORP.
“PEEYUSH VARSHNEY”
PEEYUSH VARSHNEY, LL.B
CEO & CHAIRMAN