With the revised BFS due any day now, I thought it may be...

With the revised BFS due any day now, I thought it may be worthwhile to go back and revisit what was being reported in January 2018 an excerpt from that report.

World class zinc project nearing starters' blocks - MiningNews.net

“The feasibility study is done, it is on a granted mining licence, and the zinc price is really very strong. It’s really just a question of how quickly we can get into production now.”

An update of the Citronen feasibility study, released in September to factor in some positive developments such as shrinking smelter margins, makes a compelling case. Based on a largely underground mining operation at a rate of 3.3 million tonnes per annum, Citronen would produce revenue of US$6.4 billion and net profit after tax of US$1.8 billion over its 14-year mine life.

That translates into a pre-tax NPV of just over US$1 billion and an internal rate of return of 36%, although these impressive numbers could still be conservative. The feasibility study was based on a zinc price of US$3,044/t, which is about US$400/tonne below recent spot prices. Sensitivity analysis in the feasibility study showed every US$100/t increase in zinc prices added about US$100 million to Citronen’s net present value, which means the project is approaching a net worth of US$1.5 billion at current zinc prices. In the background is the huge exploration upside of Citronen and the real possibility that it could grow into a much larger mine or operate for many more decades.

The feasibility study numbers seem stratospheric compared to Ironbark Zinc’s market cap of about $50 million at recent prices of 7 cents a share. This kind of mismatch is not unique to Ironbark, with zinc explorers and developers in general finding it tough to get market attention. Patersons believes Ironbark is ready to bust out, and recently initiated coverage with a price target of 35 cents a share.

Citronen currently has a resource estimate of 132Mt at 4.4% zinc and lead, including a higher-grade resource of 30Mt at 7.6% zinc and lead. But the JORC 2012 resource is a function of how much drilling has been completed, not the base metal endowment in the project area. Mineralisation is open in all directions and extends over a strike length of at least 11km, based on evidence of outcropping lodes or where drilling has proven continuity.

This led Ironbark to publish an exploration target for Citronen of 302Mt to 347Mt at average grades of 4.4% to 5% zinc and lead, but that could still be only part of the story.

In 2010, IBG published an exploration target of 302-347Mt at 4.4-5% Zn. This demonstrates that the project has the potential to enter the Giant or Super-Giant area in Figure 5. Based on the current throughput rate this would mean that the project could have another 100 years of mine life. Such a long-term project would likely attract the attention of the large diversified miners seeking large low-cost long-life projects.


It will be interesting to see the new numbers with zinc having a run. Today's zinc price US$3061/t

cheers.