Breakwater polishes Langlois feasibility

An updated feasibility study at the Langlois base metal mine in northwestern Quebec, has Breakwater Resources (BWR-T) eyeing about $10 million more in cash flow from the mine.

The new study takes into account the recently blocked out 419,600 tonnes of new reserves running 8.1% zinc and 1.7% copper, plus 46.9 grams silver and 0.1 gram gold per tonne. The new reserves are found in the mine’s 97 zone, one of three mineralized portions of the deposit.

The new reserves, based on a 28-hole, 11,511-metre in-fill drill program, has added another year to the mine’s life.

The project’s net pre-tax cash flow is now pegged at $70.1 million, up from $60.9 million under a 2001 study completed by SRK Consulting. Similarly, the internal rate of return and net present value (at a 8% discount) have climbed to 25.3% and $30.9 million from 24% and $26.4 million, respectively.

The new study employs an exchange rate of US70 per Canadian dollar, up from US66 in the previous report. Metal prices used under the new study are: US50 per lb. of zinc; US80 per lb. of copper; US$5 per oz. of silver; and US$343 per oz. of gold.

The operating cost per lb. of payable zinc, including smelting, shipping and by-product copper and precious metal credits is US38.

Faced with zinc prices at near 16-year lows (currently around US36 per lb.), Breakwater has also tested the project economics based on a long-term zinc price of US45 per lb. In that case, the total net pre-tax cash flow comes in at $41.5 million, the internal rate is 15.2% and the NPV is $12.6 million. Operating costs is estimated at US36 per lb. of payable zinc.

Breakwater figures it will cost about $16.4 million to return the mine to production; another $21.8 of capital is required to keep it running over its lifetime. Most of the capital would go to the underground mine.

Under the new plan, some 3.3 million tonnes of reserves running 10.8% zinc, 0.8% copper, 0.1 gram gold, and 52 grams silver per tonne would be milled over 8 years.

The reserves are part of a larger, 5 million tonne resources grading 11.2% zinc, 0.8% copper, 0.1 gram gold, and 54 grams silver. Another 1.25 million tonnes of inferred material grade 9.7% zinc, 0.5% copper, 0.1 gram gold, and 40grams silver.

Life-of-mine metal-in-concentrate production is pegged at 335,000 tonnes of zinc, 22,700 tonnes copper, 2,600 oz. of gold and 2 million oz. of silver.

The new study also incorporates several operating improvements, including the elimination of ore passes for Zone 97, a steel lined storage bin, pre-development of several sublevels in Zone 97 to allow for continuous high-grade ore production on the resumption of mining and improvements for the underground equipment fleet.

Langlois was put on care and maintenance in 2001 when problems associated with the main ore pass combined with low metal prices to make the operation uneconomic.

Breakwater is looking for zinc prices to improve before resuming mining. The company also needs to secure financing.