A path to development in mining-friendly Peru
First time Bongará Mine and Charlotte-Bongará projects have been under one operator
Bongara mined by open pit in 2007 and 2008 by a previous owner
Production targeted for 2021 via open pit mining with permitting on-track; exploration upside exists
Waelz kiln processing planned on-site to exploit zinc oxide, which uses less water than flotation method
What is the Bongara project?
Zinc One got its hands on the asset when it bought Forrester Metals last year in a one-for-5.5 all-share acquisition.
The mine was discovered in 1974 and various companies have completed exploration programs across the area. Zinc One has access to most of the data and technical work that date back to the 1990s and was included in the technical report issued in 2016.
The Bongara zinc mine and the associated Charlotte Bongara zinc project are home to zinc oxide mineralization occurring over a 2.5 km trend, and much of the area has been subject to sampling from pits and trenches, as well as by shallow drilling.
Previous exploration has resulted in a resource of up to 1.2 mln tonnes of oxides grading around 21% zinc, although this is not a number that is compliant with modern NI-43-101 legislation.
Bongara was previously a mine in production (between 2007 and 2008) exploiting high grades at the surface (150,000 tonnes mined at over 20%) but was shut down due to the zinc price decline and the global financial meltdown.
The historical measured and indicated resource was around 1.007mln tonnes at 21.61% zinc.
Production via open pit is targeted for 2021 and permitting is on track.
A milestone resource estimate
Earlier this month (February), a major milestone was reached as the group unveiled a positive first resource estimate for Bongara.
The report was eagerly awaited as it included near-surface, high-grade, zinc-oxide mineralization, encountered at the Mina Grande, Mina Chica, and Bongarita deposits at the property, but significantly the company highlighted that the NI 43-101 report still only covered a small area along a strike of 8km of prospective geology
The Mina Chica discovery was an exciting one for the Vancouver-based firm last year as significant intercepts from the zone have included 19.8m (meters) at 46.8% zinc from 1.9m depth, and 49.5m at 38.7% zinc from 7.3m.
The new estimate showed higher-confidence indicated mineral resource of 812,000 tonnes averaging 18.9% of the commodity, containing 339 million pounds of zinc at a 10% zinc cut-off.
It also has a lower confidence inferred mineral resource of 1,339,000 tonnes averaging 16.8% of zinc, containing 496 million pounds of zinc at a 10% zinc cut-off.
"This initial mineral resource estimate quantifies the amount of high-grade zinc in an area of known near-surface mineralization along a 1.4-kilometre trend," said Greg Crowe, director at Zinc One. "Further, geologic mapping and surface sampling confirm the potential of the larger Bongara Zinc Mine project to host additional significant zinc mineralization."
For 2019, Zinc One plans to carry out further drilling, including to upgrade the confidence level of the currently defined inferred resources and to expand the overall resource at nearby undrilled high-priority targets between Mina Chica and Mina Grande Norte and northwest of Mina Chica at Campo Cielo.
Peru a leader in the mining sector
The South American country, with a growing economy, is the third largest in terms of its zinc reserves and is the second largest producer of the metal on the planet.
Zinc production dates back to the pre-Colonial era and La Oroya, Peru’s first modern zinc refinery, started operations in 1922. In 2017, Peru produced 1.47 million tonnes of the stuff, up 10.2% from 1.3 million tonnes of the metal in 2016.
It is a mining friendly country with legal and tax regimes designed to support the industry.
Company leveraging the zinc market
Industrial metals have enjoyed some welcome stability of late, buoyed by easing fears of a US-China trade war.
Base metal prices fell by 23.43% in 2015, but in 2016 they rose 26.77%. In 2017, the sector of nonferrous industrial metals was the best-performing commodities sector posting a 21.99% for the year.
So the zinc price has been somewhat volatile but the World Bank has predicted a more stable picture by 2030, when prices are expected to hover around US$1.09 per pound, giving zinc a strong economic forecast and boosting confidence for juniors like Zinc One.
Earlier in February, zinc prices touched $2,801 a tonne, representing a seven month high, boosted by shortage to supplies and delays to new capacity in the top producer China.
Permits for new drilling
An updated resource estimate including new targets
A preliminary economic assessment (PEA) earmarked for late 2019
What the CEO says
CEO Bill Williams told Proactive in December that the firm was applying to drill 583 holes in the area between Mina Chica and Mina Grande Sur - along a ridge about 140km long.
"The purpose of this drilling is first and foremost to delineate what we just discovered at Mina Chica as well as what was drilled at Mina Grande Norte, Centro and Sur," he said, but also exploration targets, particularly in an area between Mina Chica and Mina Grande Norte, where there is low lying vegetation, which could be indicative of near-surface mineralization.