Vancouver-based junior
The study, prepared by Steffen, Robertson & Kirsten (Canada), estimates that US$75 million would be required to build a 1.6-million-tonne-per-year underground mine and refurbish an existing surface concentrator.
From two deposits, named Feitais and Moinho, the mine would produce an average of 65,830 tonnes zinc, 15,436 tonnes lead and 1.1 million oz. silver annually over the first nine years and 13,620 tonnes copper annually over the next two years. Additional resources, combined with the area’s high exploration potential, render a long-mine life likely.
Based on a zinc price of US$1,213 per tonne (US55 per lb.), the project has an after-tax internal rate of return of 15.5% and a payback period of five years.
Cash flow during the first five years of production from Feitais is projected at US$17.5 million per year, with total operating costs pegged at US$19.75 per tonne over 11 years. The average cost per tonne of payable zinc in the first five years of production is expected to be US$926 (US42 per lb.).
With most infrastructure already in place, production could begin as early as the fourth quarter of 2001, with initial feed coming from the Moinho deposit. Moinho would provide cash flow for underground development at Feitais, which could achieve full-scale production in the third year.
Using standard flotation methods, the mine would produce zinc and lead concentrates during the first nine years and a copper concentrate over the next two years.
EuroZinc has carried out extensive metallurgical studies on material from both Feitais and Moinho, processing more than 1,000 tonnes through an on-site pilot plant.
These studies have generated recoveries comparable to those outlined in EuroZinc’s prefeasibility study: zinc recovery of 81% from Feitais concentrate grading 50% zinc; lead and silver recoveries of 58% and 37%, respectively, from a concentrate grading 50% lead and 1,150 grams silver per tonne; and copper recovery of 84.5% from a concentrate grading 23% copper.
EuroZinc says further improvements in recovery rates are possible and test work is ongoing.
Reserves in Feitais’ zinc-rich zone are estimated at 12.2 million tonnes grading 5.67% zinc, 0.22% copper, 1.77% lead and 64.15 grams silver, whereas reserves in the deposit’s copper-rich zone are pegged at 1.6 million tonnes of 2.16% copper, 0.97% zinc, 0.27% lead and 14.26 grams silver.
Reserves at Moinho stand at 1.6 million tonnes grading 4.48% zinc, 0.54% copper, 1.78% lead and 53.47 grams silver.
In addition, resources at Feitais total 18.4 million tonnes of 6.02% zinc and 6.7 million tonnes of 2.12% copper, while resources at Moinho total 5.9 million tonnes of 4.70% zinc and 2.2 million tonnes of 1.93% copper.
Apart from its ongoing discussions with potential lenders, EuroZinc is pursuing various European Union grants that might reduce project costs by as much as 25%.
Aljustrel operated for several years in the early 1990s. However, low recoveries (about 40% for zinc) and inefficient mining methods, combined with low metal prices, forced its closure. The existing 3,500-tonne-per-day mill and related facilities have been kept in good condition.
EuroZinc is acquiring a 75% interest in Aljustrel from a state-owned enterprise, which will own the remainder. EuroZinc’s last major hurdle in acquiring its interest is the clinching of project financing.
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