Positive PEA Results For The Zancudo Project
TORONTO - Denarius Metals Corp. reported on the Preliminary Economic Assessment (PEA) for the Zancudo Project, which includes the historic producing underground Independencia Mine, located in the Municipality of Titiribi, Department of Antioquia, Republic of Colombia, approximately 30km southwest of Medellin. The PEA was prepared in accordance with the Canadian Institute of Mining Metallurgy and Petroleum (CIM) Definition Standards incorporated by reference in National Instrument 43-101 (NI 43-101).
Serafino Iacono, Executive Chairman and CEO, said, "The PEA affirms the robust economic viability of our planned underground mining operation at our Zancudo Project, generating near-term production and cash flow from a long-life asset yielding attractive returns for our shareholders. Material will be mined by a local mining contractor commencing in 2024 and processed by the Company through conventional crushing and milling facilities, initially at a rate of 500 tonnes per day (tpd) and increasing to 1,000 tpd in 2025, to generate a high-grade gold-silver concentrate. The PEA, based on the Mineral Resource estimate (MRE) announced by the Company prior, envisions a 10-year mine life over which the Company expects to generate net revenue of approximately US$1.0 billion from the sale of approximately 576,000 payable ounces of gold and 8.8 million payable ounces of silver at a life-of-mine (LOM) average all-in sustaining cost (AISC) of US$1,059 per ounce of gold. The Zancudo deposit remains open for further expansion in all directions and we expect to commence a 10,000 meters drilling program by the end of this year."
The Zancudo Project PEA is based on an updated MRE, with an effective date of July 31, 2023 comprising 4.1 million tonnes grading 6.5 g/t gold and 107 g/t silver totaling 860,000 ounces of gold and 14.1 million ounces of silver. At a gold equivalent grade of 8.1 g/t, the Inferred Resources in the updated MRE represent a total of 1,060,000 gold equivalent ounces. Over the approximately 10.3-year mine life, production from the mining and processing of approximately 3.5 million tonnes of material containing 899,000 gold equivalent ounces is expected to recover 683,000 payable gold equivalent ounces through the sale of approximately 636,000 tonnes of high-grade gold-silver concentrates. Recoveries of 85% for gold and 87% for silver to concentrates from a three-stage crushing circuit. Initial CAPEX costs of US$14.8 million including a US$2.0 million contingency. AISC of US$1,059 per ounce of payable gold on a by-product credit basis. The Project incorporates local contract mining and is expected to stimulate the local economy, benefitting the Municipality of Titiribi and surrounding communities through direct and indirect employment at the Project, local sourcing of services and supplies and community programs funded by the Company. At long-term gold and silver prices of US$1,800 per ounce and US$22 per ounce, respectively, total LOM undiscounted after-tax Project cash flow from mining operations amounts to US$266.4 million. At a 5% discount rate, the net present value of the total LOM after-tax Project cash flow amounts to US$206.3 million. The Project has an after-tax internal rate of return of 287% and payback in 2025.
The minable resource is accessed utilizing existing workings and new planned development including ventilation/secondary escapeways and rock handling systems. The minable resource will be extracted utilizing two mining methods, a modified re-sue shrinkage for the steeply dipping veins and traditional re-sue for the flat-lying mineralization. The majority of the re-sue waste is planned to remain underground reducing the requirement for surface waste facilities. Mining costs in the PEA are based on an agreement arranged between the Company and a local contract miner wherein the contractor will be paid for their services at a rate tied to actual gold production and spot gold prices.
Processing costs were built up using reagent consumptions from the metallurgical test work, scaled for the commercial operation using current market rates for the reagents. Labor costs were estimated using local wage structure with appropriate burden rates and staffing levels based on similar sized operations. Power costs were determined based on the equipment list installed power requirements and local grid power costs.
The Zancudo process scheme includes three-stage crushing followed by conventional grinding and product slurry conditioning. Processing of the conditioned slurry product will be followed by industry typical bulk sulfide flotation to produce a bulk sulfide concentrate for the recovery of gold and silver. The flotation concentrate will be thickened, filtered and readied for shipment. Flotation tailings will be thickened and filtered for disposal as dry-stacked material in the tailings storage facility (TSF).