Total measured and indicated mineral resource tonnages now sit at 6.5 million tonnes at a combined grade of about 20 percent lead and zinc with 150 g/t silver.
Canadian Zinc (TSX:CZN) has spent 2015 flying under the radar, but that changed Thursday when the company released an updated mineral resource for its Northwest Territories-based Prairie Creek zinc-lead–silver mine.
Total measured and indicated mineral resource tonnages now sit at 6.5 million tonnes at a combined grade of about 20 percent lead and zinc with 150 g/t silver. Breaking it down further, Canadian Zinc includes details on what the new numbers mean for three different structures at Prairie Creek: the Main Quartz vein (MQV), the Stockwork zone (STK) and the Stratabound massive sulfide (SMS). It states:
- MQV: tonnage up by 11 percent, to 4.1 million tonnes grading 12.4 percent lead, 11.2 percent zinc and 199 g/t silver
- STK: tonnage up from 410,000 tonnes grading 3.7 percent lead, 7.7 percent zinc and 69 g/t silver to 1.4 million tonnes grading 4 percent lead, 7.1 percent zinc and 63 g/t silver
- SMS: tonnage down by 17 percent, to 1.1 million tonnes grading 5.4 percent lead, 10.8 percent zinc and 55 g/t silver
The new mineral resource is an update of one that was released in June 2012 along with a preliminary feasibility study (PFS) for Prairie Creek. The following chart breaks down exactly what’s changed in that time:
Going into more detail about what differentiates this new mineral resource from the previous one, Canadian Zinc notes that among other things, it’s based on a “newly constructed and more detailed geological wireframe and three dimensional block model” that the company spent the last year developing. The updated resource also includes data from 50 further diamond drill holes and underground chip samples.
Prospects good for zinc
As those who’ve been paying attention to the zinc space are well aware, prospects look good for the base metal. Put simply, big zinc mines are set to close or have already closed, and there is not enough new supply ready to come online and replace that output. And while some believe that China poses a threat to that positive outlook — after all, the Asian nation may restart production at its higher-cost mines if the metal’s price rises — others have pointed out that even China won’t be able to instantaneously jump back on the zinc bandwagon.
Zinc juniors are thus understandably excited, and many are touting their projects as the answer to the zinc market’s supply problem. It’s worth noting, however, that simply owning a zinc project isn’t an automatic ticket to success. Indeed, as Wood Mackenzie’s Jonathan Leng recently pointed out at PDAC, juniors not only often lack the experience to move their projects into production, but also “have limited ability to finance, especially now with subdued zinc prices.”
Luckily, Canadian Zinc appears to be doing its best to make Prairie Creek appealing to potential backers. A Northern Miner article published towards the end of last year notes that the company has taken the route of optimizing 2012 numbers for the project at least in part because improved economics could give it a better chance of gaining financing and getting operations off the ground.
And for the time being, the company will continue with those optimization efforts. It notes in Thursday’s press release that it’s in the midst of an underground diamond drill program at Prairie Creek, with the objective being to bring part of the inferred resource up into the indicated category. Data gained during the program may be included in an updated PFS set for completion later in 2015. Ultimately, that update could increase Prairie Creek’s life-of-mine potential.
At this point, it’s tough to say whether Canadian Zinc’s optimization work will help with financing, but given the fact that it continues to move forward at Prairie Creek, it will definitely be a company to watch in 2015. At close of day Thursday, Canadian Zinc’s share price was sitting at $0.20, down 6.98 percent. Year-to-date it’s down 2.38 percent.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.