Tinka surges on zinc discovery in Peru

VANCOUVER — Explorer Tinka Resources (TSXV: TK) has made a high-grade discovery at its Ayawilca zinc-silver property, 300 km east of Lima, Peru, in what it calls the “best adjacent mineralized holes ever drilled” at the project.

Tinka has been working on Ayawilca since 2004 mainly for its silver prospectivity. The company spent much of 2016 awaiting three-year drill permits after having expanded the project boundaries.

Ayawilca appears to have been worth the wait. On April 4, Tinka reported that hole 17-56 cut 52 metres grading 10.1% zinc, 62 grams silver per tonne and 233 grams indium per tonne from 242 metres deep. The intercept features a higher-grade section running 20.6% zinc, 152 grams silver and 441 grams indium over 14.9 metres.

“We added to our property package last year after the geophysics because we saw the opportunity to expand our targets based on magnetics,” Tinka Resources president and CEO Graham Carman says by phone from Toronto. “Much of last year was a question of engaging in the regulatory process for this drill program, since we’re looking at areas we hadn’t touched previously.”

“We stepped out from our existing resource into a brand-new area. The targeting was based on geophysics we completed last year, and we’ve intersected thick, high-grade zones of zinc,” Carman says.

“It’s early days, but we believe this discovery has serious potential. You simply don’t see these types of grade at that thickness on earlier-stage projects. And the geophysics we’ve put together indicate promising size potential,” he says.

Tinka completed a maiden resource at Ayawilca in mid-2016 of 18.8 million tonnes of 5.9% zinc, 0.2% lead, 15 grams silver and 74 grams indium. The contained metal totals 2.4 million lb. zinc, 82 millions lb. lead, 3 million lb. indium and 9 million oz. silver. The resource data incorporates 74 drill holes over 27,000 metres.

Ayawilca is modelled as carbonate-hosted replacement deposit with zinc sulphide (sphalerite) occurring in multiple generations as semi-massive sulphide replacements of limestone together with other — mostly iron — sulphides.

The deposit is made up of multiple, gently dipping sulphide lenses, or “mantos,” generally with vertical thicknesses of between 10 metres and 30 metres within three areas named West, Central and East. West Ayawilca is suspected to have formed a vertical “chimney” up to 200 metres thick, comprised of several thick mantos.

Tinka recently started a 10,000-metre drill program that will focus on West Ayawilca, as well as the Zone 3 and Chaucha areas. The company generated its targets based on results from a helicopter magnetic survey covering 150 sq. km of mineral claims. Tinka’s coincident soil and geophysical samples reportedly identify a prospective 5 km magnetic trend.

“The objective right now is to increase the grade at the project, but also look at target opportunities that might allow us to double the size of the resource,” Carman says.

“We’ve already got two drill rigs turning and a third rig on the way. There’s a lot of work left to be done, but we hope this discovery could be a game changer. It’s an encouraging start, but the key is to define the scale here, and see if we can merge the discovery with existing resources. I expect we’ll have a fourth drill rig on the property shortly to follow-up on some of the other targets we’ve generated.”

Tinka surged 34%, or 19¢, to a 52-week high of 75¢ per share at press time.

The company has 206 million shares outstanding for a $150-million market capitalization, and reported $11 million in cash at press time.

“It had been that real tough market, and it’s great to see results like this generating a positive response. I don’t know if we’d have caught this type of attention even six months ago,” Carman says.

He adds that the fundamentals for zinc look very good, mainly due to supply declines as major mines shut down. “There are just very few zinc projects at this stage out there … we have one of the up-and-coming stories in the space.”

The company closed the final tranche of an $11-million private placement in November, when it issued 55 million shares priced at 20¢ each.

Over the past few years, Tinka has significant institutional shareholders. Australian private-equity firm The Sentient Group holds a 20% position, JP Morgan has a 7.3% equity stake and the World Bank’s International Finance Corp. holds a 14% position.