Small but mighty: a phrase that aptly describes Fireweed Zinc (CVE:FWZ).
The resource developer is a relative newcomer to the zinc world, with its focus built around its flagship zinc lead silver project, Macmillan Pass, located near the eastern edge of Yukon.
But things have been cooking up lately and drill bits are turning, with the project rapidly advancing and zinc prices close to their highest levels in a decade due to ongoing supply issues.
Currently, the project is undergoing a 8,000-10,000 metre drill program carried out by three drills.
“We’re expecting about 8,000-10,000 metres by the end of the summer, or the end of the field season,” said chief executive officer Brandon Macdonald. “That will probably be a roughly equal mix of infill and step out as well as geotechnical drilling and also some regional exploration.”
Meet Tom and Jason
“We started with a few step-out holes, moving into some infill holes on the Tom side,” says chief executive officer Brandon Macdonald “We expect to be drilling on the Jason deposit reasonably soon.”
Meet Tom and Jason – the lead zinc-lead-silver deposits that make up a significant chunk of the Macmillan Pass project, which comprises more than 470 sq km of ground. The Tom and Jason claims, purchased outright from Hudbay Minerals (TSE:HBM) in 2018 after being optioned in 2016, are the core of the project.
Macmillan Pass is located about 350km east of Whitehorse, Yukon territory’s capital and 150km east of the village of Ross River. Access to the project is via Canol road, a government paved road that passes through the project, or alternatively, via an airstrip located within the property limits.
The Tom and Jason claims are only 6km apart and the total indicated resource for Tom and Jason, according to the 2018 assessment, is 11.2mln tons at 9.6% zinc equivalent. The inferred resource is 39.5mln tons at 10.0% zinc equivalent.
The Tom deposit is comprised of three main zones: Tom west, Tom east and Tom south-east. Of particular interest is the high-grade Tom east zone and the substantial Tom west zone.
Current drilling program
In early June, fieldwork began on the property with sampling and surveying orientation grids to optimize exploration methodologies.
Approximately 2,400 geochemical samples have been collected in the immediate Tom and Jason deposit areas with plans to sample the end zone area next.
The goal? To expand known zones through step out drill holes to build tonnage, to upgrade priority zones to measured and indicated categories to de-risk key parts of the mineral resources and to drill new exploration targets in an effort to discover new deposits on the large land package.
“Every successful step out hole that hits means a growth in the tonnage of the deposit in question,” says Macdonald.
“One of the things we’ve been trying to focus on this year is that our step-outs are really step-outs into areas where we expect higher grades, rather than stepping out into lower-grade areas that would add tonnage but would not add meaningful difference to the economics.”
It’s a point of reasonableness (and accountability). Macdonald is looking to the future and not compromising in the present.
Global supply of zinc is challenged
According to Natural Resources Canada, in 2017, the production of zinc rose 5.2%, and the value rocketed up 42.8% based on higher prices, which reflected global supply constraints.
But all has not been so rosy in recent weeks, with zinc prices tumbling, as expectations for a rise in zinc concentrate supplies in coming years drove the metal price to one-year lows.
This week, benchmark zinc on the London Metal Exchange (LME) hit US$2,473.85 a tonne, its lowest since mid-June 2017 and 31 percent below February's 11-year high of US$3,595.50.
Zinc and lead are the two most widely used non-ferrous metals after aluminum and copper.
Preliminary economic assessment looks strong
In May, the preliminary economic assessment showed a long mine life of 18 years, which showed net present value (NPV) of C$779mln, using an 8% discount rate, with an internal rate of return of 32%.
Project economics showed that Macmillan Pass is not only viable at the zinc, lead and silver prices levels measured in the study, but quite robust. It’s a significant step for the company as the project strides towards production.
"Many aspects of this study were completed at a level even higher than that required for a PEA study, and we will continue to strive to present the most comprehensive work that shows the robustness of our project," says Macdonald.
Other highlights included pre-production capex of US$404mln and a payback period of four years.
Simply stated: global demand for zinc is expected to grow steadily at about 2% a year for the next two to three years, due to robust manufacturing activity, analysts say.
The construction industry accounts for about 50% of it, while the rest is distributed between transport, infrastructure, consumer products and industrial machinery.
For Fireweed Zinc, the path remains clear.
"Results and methods will be interpreted and assessed, and field work will continue in search of new discoveries," it says.
And quite honestly, It's the first time in more than 25 years that any large-scale exploration program has been carried out in the district.
The future looks bright for Fireweed Zinc as it continues on its drill program.