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Zazu Metals Corporation (TSXV:ZAZ) is a Canadian-based exploration company which is focused on acquiring and developing base metal properties. They hold a 50 percent interest in the Lik Project, a joint venture with Teck Resources Limited. Zazu Metals is the operating partner, and automatically earns an 80 percent interest if expenditure commitments are met by 2018. The Lik property is one of the largest undeveloped zinc deposits in the west and is located in the mining-friendly state of Alaska.
In March 2014, Zazu Metals released a Preliminary Economic Assessment indicating an average annual production of 234,000 dry tonnes of zinc concentrate, capital cost of $352 million, and a 9 year mine life for its Lik South project.
- Lik South is expected to be one of the largest and lowest cost producers of zinc concentrate globally according to its March 2014 PEA
- In March 2014, a Preliminary Economic Assessment was completed for the Lik South project identifying the huge potential for zinc mining.
- The PEA estimates that 17.1Mt tonnes of ore milled at an average gade of 7.7% zinc, 2.6% lead and 47 g/t silver would come from the Lik South project
- Underground extension provides an exploration upside
- Excellent available infrastructure, such as a concentrate shipping port and a purpose built haul road, within the mining-friendly jurisdiction of Alaska
- Close proximity to Teck’s Red Dog Mine—one of the world’s largest zinc mines
- Tight share structure, low burn rate
- Experienced, goal-driven management team
The Lik Project, Alaska, United States
The Lik Project is a stratiform zinc-lead-silver property located 22 km southeast from Teck’s Red Dog zinc mine in northwestern Alaska. Teck has a 50 percent interest in the property. Zazu Metals has the exclusive right to increase its interest to 80 percent by meeting certain spending commitments.
Tighter zinc supplies and rising demand has helped propel prices. Zinc is up by more than 17 percent this year, hovering at $2300/tonne, with some estimates saying it can go higher.
In March 2014, JDS Energy and Mining Inc. completed a Preliminary Economic Assessment on Zazu Metals’s Lik Property that specifically considered the open pit potential of the Lik South deposit. The PEA involves the construction of a 5,500 tonne-per-day mill that will produce both a zinc and a lead concentrate using on-site crushing/grinding and sequential flotation methods. Results of the assessment indicated the Lik South deposit will be one of the largest and lowest cost zinc concentrate producers in the world.
The PEA expects that 17.1Mt tonnes of ore milled at an average grade of 7.7% zinc, 2.6% lead and 47 g/t silver would come from the Lik South open pit, making it one of the largest zinc mines in the world. The mine would have a life of nine years.
|Zinc Price||$0.80||0.92 (PEA Zn Price)*||$1.00||$1.10||$1.20|
|Post Tax IRR||2.60%||9.70%||13.40%||17.90%||22.10%|
|Post Tax NPV @8%||US$(76)mm||US$25mm||US$83mm||US$158mm||US$233mm|
|Pre Tax IRR||3.70%||12.50%||17.30%||23.10%||28.40%|
|Pre Tax NPV @ 8%||US$(60)mm||US$69mm||US$148mm||US$253mm||US$357mm|
*Lesser of November 3-year trailing average and spot price as of 12/30/2013. For lead: US$1.01 /lb, silver US$19.43per troy ounce.
Lik North would then be subsequently mined if the economics proved viable, ensuring it remains an intriguing exploration opportunity for Zazu Metals.
The property comprises of state claims covering 2,225 hectares. Zazu Metals transferred the claims from federal to state level to access mine development assistance provided by the Alaskan State government.
The Lik property hosted within the Red Dog plate of the Endicott Mountains, in a similar geologic setting to the Red Dog Mine. The deposit is continuous outside the Lik property onto the adjacent Teck’s property to the south.
The current Lik resource is located on the southern boundary of the property. The resource remains open to the north and down dip, purity of room in Zazu Metals’ large land position.
Lik South is near surface and will be mined as an open pit. Lik North is deeper and is therefore amenable to underground mining methods. Lik South would be mined first. A short ramp from the bottom of the pit enables access to Lik North.
In 2011, Zazu Metals began advancing the project toward the feasibility stage. Further exploration drilling tested the northern boundary of Lik North and identified mineralized intersections of grades and widths consistent with the Lik North deposit.
Zazu Metals’s metallurgical testing indicated the production of a clean concentrate free of deleterious elements, prized by smelters.
Zazu Metals completed the transition of all the Lik Block claims from Federal level to State level in 2012 to make the project eligible for a largely in-state permitting process.
Alaska created a coalition between various state permitting agencies titled the “Large Mines Group” to provide a clear path for resource development in the state.
Zazu Metals has now completed multi-year studies in preparation of permitting. Zazu anticipates entering the permitting process in 2015.
Zazu Metals is an exploration company focused on developing the zinc-lead-silver Lik Project. The Company holds the exclusive right to earn an 80 percent interest in the property by meeting development expenditure targets. Lik Project encompasses both the Lik South and Lik North deposits. A PEA completed in March 2014 highlighted the vast potential for its Lik South project. Roughly 17.1Mt tonnes of ore milled at an average grade of 7.7% zinc, 2.6% lead and 47 g/t silver is expected from the project. Its Lik North project remains amenable to underground exploration. Zazu Metal’s management team holds years of experience in exploration, mine development and finance, and is committed to advancing the project through development. The property is located in the mining-friendly state of Alaska near the world’s largest zinc producer, Teck’s Red Dog mine.
Gil Atzmon – Founder, Chairman, CEO, and Director
Mr. Atzmon has over 20 years’ experience in the mineral resources sector. His career has included positions as a mining executive, investment banker, mining fund manager and geologist. Mr. Atzmon has participated in many global exploration and mining projects and has successfully arranged financing for the exploration and development of several mineral properties. In 2001 and 2002, Mr. Atzmon acted as Vice President, Corporate Development of Ivanhoe Mines Ltd. In 2000 and 2001, Mr. Atzmon served as a global energy and mining specialist in institutional equity and sales for BNP Paribas. From 1998 to 2000, Mr. Atzmon was Chief Investment Strategist and Portfolio Manager for US Global Investors, Inc. Mr. Atzmon holds a Bachelors degree in Geology and Geography from Columbia College, Columbia University and obtained a Master Degree in Energy and Mineral Resources from the University of Texas at Austin, Texas.
Matthew Ford – President
Mr. Ford has 16 years experience with mining and exploration companies. Mr. Ford founded an exploration services company and worked as a geologist in West Africa, Australia and the UK. He later worked as a research analyst and portfolio manager focusing on the mining sector which provided extensive travel to evaluate mineral properties. Mr. Ford completed his B.Sc. in Exploration and Mining Geology at the University of Wales, College of Cardiff and his M.Sc in Mineral Resources Engineering and Management at Nottingham University, England.
Joe M. Britton – Vice President Exploration
Mr. Britton is the principal geologist for the Lik property. He has over 35 years of mineral exploration and development experience, principally in Alaska. This experience includes direct field responsibility and supervisory roles in nearly all aspects of the Lik project since 1978. In addition to his experience with the Lik project he has also been involved in the execution and management of several regional exploration projects in Alaska and a variety of general mineral assessments ranging from regional to property specific projects in Alaska, the western United States and Costa Rica. He has substantial experience with governmental, land ownership, regulatory, environmental and social issues in Alaska as they relate to mineral exploration and development projects. His years in the minerals business have included employment by several mining and minerals companies and since 1989 he has been a consulting minerals geologist. Mr. Britton holds a Bachelor of Science (Geology) and a Master of Science (Geology) from the University of Alaska-Fairbanks.