Azure Minerals has officially greenlit the start of trial mining and processing at its Oposura zinc-lead project in Sonora, Mexico.
Activity is due to begin in 2019’s September quarter, with the initial mine production and processing rate estimated at between 1,500 and 3,000 tonnes per month (tpm) of mineralized material at an approximate grade of 15 percent. Combined zinc and lead with ore will be processed on a toll treatment basis through a nearby sulfide flotation processing facility.
According to Azure, there is also the possibility of increasing mine production if additional processing capacity becomes available.
“This is an exciting step forward for the company. This operation will provide additional confidence for development of the full-scale mining and processing operation at Oposura, while the delivery of high-quality concentrates ahead of full-scale production will support future concentrate marketing and project financing negotiations,” Azure Managing Director Tony Rovira said in a statement.
The company locked down funding for trial mining at Oposura through a binding commitment with major shareholder Deutsche Balaton for AU$2 million in the form of a convertible note. The funds will allow Azure to meet startup costs and working capital requirements; the convertible note itself has a two year term and an annual interest rate of 12.5 percent.
A recently updated resource estimate for Oposura puts the asset’s numbers at 3.1 million tonnes at 5 percent zinc and 2.7 percent lead, with 85 percent in the indicated category and 15 percent inferred.
The goal of the trial mining and processing, according to Azure, is to deliver early cash flow to the company in order to help finance the completion of a feasibility study. However, the catch-22 in this case is that Osopura’s feasibility study, which is still ongoing at a reduced rate, will be delayed up to six months due to the trial mining along with the interim prefeasibility study.
Azure shares jumped 10 percent on Wednesday (June 5) following the news, closing on the ASX at AU$0.11. As of Tuesday (June 4), zinc was trading at US$2,635 per tonne on the London Metal Exchange.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.