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Constantine Metal says Palmer project's potential enhanced with latest step-out hole

Last updated: 11:50 25 Sep 2019 EDT, First published: 07:50 25 Sep 2019 EDT

Constantine Metal Resources Ltd. -
The firm hit copper of 0.52%, zinc of 4.65%, silver of 27.7 grams per ton (g/t) and gold of 0.20 g/t and barite of 43.7% in the step-out hole

Constantine Metal Resources Ltd (CVE:CEM) (OTCMKTS:CNSNF) told investors that its Palmer joint venture project in Alaska had been enhanced by the results of a step-out hole at its volcanogenic massive sulphide-sulphate (VMS) flagship property.

The hole was sunk in the RW zone, an area the firm wants to show can be expanded as it was not included in the recent preliminary economic assessment (PEA).

READ: Constantine Metal says Palmer project in Alaska shows low-cost, high-margin underground mine

It was designed to test the open down-dip and down-plunge extension of the RW West Zone and the hole hit massive baritic sulphide mineralization, representing a significant 335 meter step-out of the mineralized zone, the company said.

From a depth of 151.8 metres (m) to 156.4m (width 4.6m), the firm hit copper of 0.52%, zinc of 4.65%, silver of 27.7 grams per ton (g/t) and gold of 0.20 g/t and barite of 43.7%.

"We are very encouraged by this new intersection at the RW Zone, which shows the potential to expand the RW Zone through further targeted step-out holes," said Constantine's president and CEO Garfield MacVeigh. "This could ultimately lead to the inclusion of the RW Zone in future economic studies on Palmer and further enhance the project."

Notably, mineralization at the hole was very similar in character to previous RW Zone drill hole intersections, which were last drilled in 2014, the resource group said.

The nearest up-dip hole returned 3.9 meters averaging 5.11% zinc, 0.19% copper, 92.5 g/t silver and 0.37 g/t gold, it added.

Palmer, of which Constantine is the operator, is a high-grade VMS project in an accessible part of coastal southeast Alaska, with road access to the property and within 60 km of the year-round deep-sea port of Haines. Constantine holds 51% of the venture, while Dowa Metals & Mining Co Ltd has 49%.

The PEA put a mine life of 11 years after two years of pre-production and operating cost of $54.2 per tonne. That generated US$354 million in pre-tax net present value (NPV). The pre-tax internal rate of return (IRR) was pegged at 24%.

The study assumed metal prices of US$1.22 per pound zinc, US$2.82 per pound copper, US$16.3 per ounce silver, US$1,296 per ounce gold and US$220 per metric tonne of barite.

Exploration success

Exploration at the site has led to the discovery of the new AG deposit and continued to grow the resource base to its current estimated size of 4.68 million tonnes of indicated resources at a  grade of 5.23% zinc, 1.49% copper, 30g/t silver, 0.30 g/t gold. Inferred hosts 9.6 million tonnes grading 4.95% zinc, 0.59% copper, 69.3 g/t silver, 0.39 g/t gold.

Notably, VMS deposits are known to occur in clusters, and the project hosts at least 25 separate base metal and/or barite occurrences and prospects.

The firm also updated Wednesday on its waste management permit, which has now been sent for review by the Alaska Department of Environmental Conservation (DEC), due to a court decision related to "the Hawaiian Wildlife case" that is currently before the Supreme Court that may change the way that US Environmental Protection Agency (EPA) and DEC permit water discharges in the United States.

Shares in Toronto slipped around 6.7% to C$0.34.

Contact the author at giles@proactiveinvestors.com

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