economic evaluation , page-2

Lead has now touched $1/lb. Zn still 16 cents to go.

A 40kg sample of diamond drill core from the Andrew Zinc Deposit was utilised by SGS Lakefield in Canada to determine indicative metallurgical recoveries and possible concentrate grades. Exceptional metallurgical recovery rates were achieved (98.5% for lead and 96.0% for zinc).

In my last phone call to the company I was reminded that cost reduction strategies are still being detailed. This was indicated in the Economic evaluation report.

"The coarse grained nature of the mineralisation at the Andrew Zinc Deposit and high recovery rates indicate that a very simple process flow sheet entailing proven conventional floatation technology is all that is required to produce separate zinc and lead concentrates. This significantly reduces both capital and operating costs for the Project and reduces the overall project risk.
The metallurgical study also identified that the mineralisation at the Andrew Zinc Deposit is amenable to Dense Media Separation (DMS). The application of DMS technology may facilitate the beneficiation of low grade material to provide an additional source of processing plant feed. This would potentially extend the life of the operation and increase the amount of saleable concentrate produced. This has not been factored into the economic evaluation."

"A 700,000 tonne per annum processing plant is expected to produce 493,000 dry tonnes of zinc concentrate and 135,000 tonnes of lead concentrate over the period under study. The operation would provide an undiscounted cash flow of US$210 million2 before capital, depreciation, tax and royalties over an initial 6 year mining period."

This was calculated on $1/lb for lead and zinc. a detail that tanked the sp when it was released on 9th June. Now we see this value as almost real but the sp is still down 60%.