With commodity prices tumbling all around it, Tamerlane Ventures (TAM-V) finished its bankable feasibility study for its Pine Point project in the Northwest Territories.
The company says even with the recent downturn in metals prices, the project is still economical, and with production coming in 2010, zinc and lead prices will have ample time to correct themselves.
At press time in London zinc was selling for US 77 per lb. while lead’s spot price was US 82 per lb.
And while the study did indicate sound financials, it did so with a zinc price of US$1.14 per lb. and a lead price of US$1.16 per lb. Regardless, Pine Point showed an internal rate of return of 53% and a net present value of $157 million using a 7.5% discount rate.
Tamerlane says mining will focus first on the R190 deposit where it will freeze the perimeter to allow it to start underground mining.
Once the necessary infrastructure is in place, it will have access to five nearby deposits, which have been upgraded from measured and indicated resources to proven and probable reserve status.
Overall the project now has proven and probable reserves of 7.8 million tonnes grading 6.16% zinc and 3.01% lead. Measured and indicated resources stand at 8 million tonnes grading 2.26% zinc and 1.13% lead while inferred resources come in at 4.1 million tonnes grading 2.36% zinc and 0.82% lead.
The plan calls for the production of zinc and lead concentrate which will then be trucked 42 km from the mine by paved road to railcars which will then take it by rail to Vancouver.
Metal recovery is expected to be 93.6% for zinc and 88.9% for lead.
As for capital costs, Tamerlane estimates they will come in at $114 million.
To pay for it the company will turn to senior debt for 60% of the needed funds, 25% will come from subordinate debt, while the remaining 15% is slated to come through equity financing.
Financing is expected to be done this fall with construction following shortly after. That would mean concentrate production could start early in 2010.
Despite the markets cooling for the metals complex, Tamerlane was looking to find positives in the current situation. It says it plans to benefit from the weeding out process that lower prices will inflict on more marginal projects.
“As the industry slows down and other producers shut down Tamerlane will be able to procure equipment and contractors at more aggressive pricing than used in the study,” president and chief executive Ross Burns said in a statement.
In addition to the reserves outlines, Pine Point has another 50 million tonnes of historic resources that haven’t yet been verified.
In Toronto on Sept. 10, Tamerlane’s shares were up 8% or 1.5 to 20 on roughly 180,000 shares traded.
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