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MeneameVancouver-based Zincore Metals (TSX: ZNC) aims to complete metallurgical studies to improve on the prefeasibility study at its Accha zinc project in Peru roughly in mid-2010, said company VP and CFO Giovanni Susin.
"We weren't happy with the recoveries, so we're trying some different technologies and techniques in order to improve that," Susin told BNamericas.
Once the recovery issue is resolved, Zincore plans to begin infill drilling to improve Accha's resource base in anticipation of a feasibility study.
The May 2008 prefeasibility study contemplated a zinc concentrator to process ore from the high-grade Accha deposit, which forms part of the company's Accha-Yanque property. Output would be 130,000t/y zinc oxide concentrate containing 77Mlb (34,926t) of zinc over a seven-year mine life.
The study outlined pre-production capex of US$63.4mn, a pre-tax IRR of 40% and an NPV at a 10% discount rate of US$72mn at US$1.23/lb zinc.
However, the price of zinc steadily sank through the second half of 2008, hitting a low of US$0.473/lb on December 12 on the London Metal Exchange. The price has significantly improved since, but its Monday close of US$0.841/lb remains far from the Accha prefeasibility base case.
"Zincore had a variety of hurdles that it had to overcome. The most significant obviously was the crash in the zinc price," said Susin, adding that issues with former parent company Southwestern Resources and lack of funding were also problems.
Southwestern Resources was acquired in May 2009 by Peruvian precious metals producer Hochschild Mining (LSE: HOC), which now holds 48.2% of Zincore. The company has a new management team with "a Hochschild flavor."
Last week, Zincore completed a non-brokered private placement of common shares for total proceeds of Cdn$6.02mn (US$5.6mn), enough to cover its short-term work initiatives.
It is "definitely difficult for a base metals company to raise money in the public markets right now," said the CFO, adding that the placement was with insiders and "some other people who see the value in the company."
The company is now working to renew its access agreements with the local communities at Accha-Yanque, as well as at the Minasccasa and Dolores projects in Peru where drilling programs are targeted to begin early next year, said Susin.
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