Pasinex shines at Pinargozu mine in Turkey

Pasinex Resources — the 50%-owner of the high-grade Pinargozu zinc mine in southern Turkey — has seen its shares climb more than 300% over the past year. Driving the share-price appreciation have been improvements at the Pinargozu mine and the soaring zinc price following supply shortages.

In a telephone interview from Turkey, Pasinex’s founder and CEO Steve Williams says the company has just started reaping the production benefits at Pinargozu.

“The big thing with us was that the last few years were terrible and tough times. And we took the decision to build the mine. This year is where we are really going to benefit … And we expect to show the market that we will have a very good year of zinc production.”

Five years ago, Williams — who previously worked as the managing director at SGS Canada — took Pasinex public with a vision of becoming a base metals miner.

“We weren’t trying to be in just exploration. Although exploration is important, our objective was always to build a project that we could take into production.”

Pasinex began evaluating potential partnerships. “Right from the get-go knowing that we wanted to do mining, we went looking for a partner. It was a conscious decision to try to find the right strategic partner.”

The company’s Turkish network from Canada helped it get in touch with Akmetal AS, a large Turkish miner. In 2012, Pasinex and Akmetal created their fifty-fifty joint venture Horzum AS to explore the Horzum zinc trend in the province of Adana, where Akmetal operated the past-producing Horzum zinc mine.

A machine operator heads into the portal at Pasinex Resources’ Pinargozu zinc mine in Turkey. Credit: Pasinex Resources.

In 2013, the partners bought the Pinargozu property, sitting 6 km from the Horzum mine, from a private Turkish party for US$250,000. The property contained an old small-scale zinc mine with seven adits used by artisanal miners.

In early 2014, Pasinex completed ground-penetrating radar surveys over Pinargozu to help find drill targets. Drilling started in May that year, where along with surface drilling, the joint venture refurbished two of the old adits for underground drilling. After the adits Pasinex began small-scale mining and produced zinc direct-shipping ore (DSO) at a rate of 25 tonnes per day.

The first 570-tonne bulk sample returned a 34% zinc assay, showing the material could be sold with no extra processing costs. Pasinex then led efforts to ramp up the mine and carry out drilling with proceeds from the DSO sales.

“We haven’t had to go out and market our product. There truly is a supply-side shortage of zinc. So once people became aware that we had product to sell, they have been knocking on our doors. We had at least 30 groups approach us wanting to buy our product, so it has been very good.”

A machine operator at Pasinex Resources’ Pinargozu zinc mine. Credit: Pasinex Resources.

Through its joint venture, Pasinex sells the high-grade zinc material to commodity traders at spot prices. Most of the product ends up in Europe and the Middle East, Williams says.

In August 2016, Pasinex opened a third adit in the mountainside of Pinargozu to access mineralization at the 670-metre level and accommodate larger mining equipment. As a result, mine production doubled from an average of 60 tonnes per day to 120 tonnes per day. Grade also increased as the company started extracting high-grade sulphide material. In its latest corporate presentation, Pasinex states production grades for zinc exceeds 30% in oxides and 48% in sulphides.

Pinargozu is now in its third production year. It forecasts producing 160 tonnes per day of direct-shipping mineralization.

This year’s mine sales (on a 100% basis) should total 40 million lb. zinc. This is more than double the 17.6 million lb. averaging 32.5% zinc produced and sold in 2016, at total costs of $304 per tonne mined.

Pasinex Resources geologist Faruk Ünlü (left) and CEO Steve Williams examine samples in the core shack at the Pinargozu zinc mine in Turkey. Credit: Pasinex Resources.

The joint venture’s net profit for 2016 was $3.6 million. As a result, Pasinex realized a $1.8-million equity gain in 2016, and its first-time net income of $829,906 (1¢ per share), after operating expenses.

Williams expects Pasinex will continue to shine in 2017, as it records its first year of production from the third adit.

On the drilling front, Pasinex has completed up to 12,000 metres each year since production started in 2014 to build an internal resource and mine plan. This year it will also retain independent geological consultants CSA Global to publish a maiden resource estimate at Pinargozu, which it couldn’t do earlier due to a lack of funds.

Drilling to date at the mine totals 35,000 metres, Williams says, noting the consultants would decide the cut-off date for the resource estimate, expected out in August.

It’s likely the firm will follow up on the resource estimate, with an economic statement to help the market understand Pinargozu’s potential.

From the top of the mineralization to where it is mining, Pasinex is 200 metres into Pinargozu. Williams says the system can “run a lot deeper in the sulphides,” noting similar systems run 2 to 3 km deep.

On May 1, Pasinex shares slipped 6% to close at 25¢, up 317% from a year ago. The spot price for zinc recently closed at US$1.186 per lb., up 39.5% from the earlier year. Zinc reached a 52-week high of US$1.35 per lb. in early 2017.