Processing germanium and gallium from zinc leachate could earn Strategic Resources Acquisition Corp. (SRA) (SRZ-T) a bonus operating profit of US$25 million a year on top of zinc income, a new scoping study says.
Or, from another perspective, it could cut cash costs by US15 per lb. payable zinc; current cash costs are about US79 per lb. while spot zinc settled just under US83 per lb. today.
The Aker Metals study looks at adding a germanium/gallium processing plant to the mill at the Mid-Tennessee zinc mine in Gordonsville which the company brought back into production early this year. It recommends pilot-scale testing to further test the viability of the additional plant.
The mine is currently operating at a rate of 3,000 tonnes per day but the company plans to ramp up to 7,500 tonnes per day. This will allow SRA to produce 147 million lbs. of zinc in concentrate per year, or 125 million lbs. of payable zinc, for 10 years.
The mine has an indicated resource of 12.5 million tons grading 3.35% zinc and an inferred resource of 6 million tons grading 3.43% zinc, both using a cutoff of 2% and a cap of 4.5%.
The ore has an average grade of 0.04% germanium and 0.055 gallium.
Annual sales of germanium and gallium could reach US$40 million by feeding the plant 13,000 dry tonnes of leachate with a process recovery of 84% germanium and 82% gallium.
The study used selling prices of US$1,000 per kg germanium and US$300 per kg gallium, which are lower than the current market price.
Capital cost of the facility, including commissioning and startup, would be US$34 million with a payback period of 18 months.
Even before building the plant, SRA plans to sell its germanium and gallium-rich leachate over the next two years, earning US$10-15 million per year.
The Mid-Tennessee zinc mine was in operation for 28 years up until 2003. It was put on care and maintenance when zinc prices sank below US40 per lb.
SRA shares were down a penny today to 86 each on a trading volume of 94,000 shares. SRA shares have a 52-week high of $6.88 apiece and a low of 84.
Germainium and gallium are used in the making of semiconductors, wireless devices, fibre optics, high brightness for LEDs and solar energy.
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