viewTinka Resources Limited

Tinka Resources looking forward to rigs turning again as it advances one of the largest undeveloped zinc prospects in world


The flagship asset spans 170 square kilometres in the richly mineralized silver-lead-zinc belt of Central Peru

Tinka Resources Limited -

Quick facts: Tinka Resources Limited

Price: 0.27 CAD

Market: TSX-V
Market Cap: $92 m
  • Operates in Peru, a top global producer of copper, zinc and silver
  • Low risk jurisdiction amid scarcity of new zinc projects in development
  • Preliminary economic assessment underscores credentials

What Tinka Resources does:

Tinka Resources Ltd (CVE:TK) (OTCPK:TKRFF) is advancing its wholly-owned Ayawilca zinc project in Peru, one of the largest undeveloped prospects of the metal in the world.

The asset spans 170 square kilometres (km) in the richly mineralized silver-lead-zinc belt of Central Peru, which is one of the top two global producers of copper, zinc and silver.

A resource estimate released in November, 2018 showed a higher confidence indicated resource of 11.7 million tonnes, containing 1.8 billion pounds of zinc, 983 tonnes of indium, 5.8 million ounces of silver, 42 million pounds of lead.

And in July last year, the firm published its eagerly anticipated preliminary economic assessment (PEA) for the Ayawilca Zinc zone, which showed the project was "shaping up to be one of the best new zinc development projects in the Americas".

The pre-tax net present value (NPV) was pegged at US$609 million, using metal prices of US$1.20 per pound zinc, US$18 per ounce silver, and US$0.95 per pound lead on a 100% equity basis.

Initial capital expenditure for the mine was put at US$262 million with a pre-tax IRR (internal run rate) of 37.2%. The mine life is 21 years with average head grades of 6.05% zinc, 18.3 g/t (grams per ton) silver, 67.1 g/t indium, and 0.25% lead.

Processing will be through a standard crushing and grinding circuit followed by froth flotation, concentrate thickening and filtration. The operation will produce a zinc concentrate and a lead concentrate.

It is worth noting that the Ayawilca zinc zone has not been fully delineated and is open in several directions, including to the east and northeast.

The project also benefits from good infrastructure and lies 15 km from Peru's largest silver mine and 40 km from the country's second-largest zinc mine.

After copper, aluminum and iron, zinc is the most commonly used metal by industry, mainly for galvanizing. It is also used in human health products and zinc air batteries. Zinc oxide is also widely used in making many household products such as paints, rubber, cosmetics.

In mid-March this year, analysts at Fitch Solutions revised down their zinc price forecast for 2020 from US$2,450 per tonne to US$2,250 on the back of a mixture of headwinds, prompted by the coronavirus outbreak, which will weigh in the short term. Longer term, commentators say the metal has support as global supplies begin to dwindle.

How is the company doing:

Due to the current pandemic, Tinka's camp at Ayawilca has been in lock-down since the state of national emergency declared in Peru on March 15 this year and all non-essential personnel were removed before lock-down.

Drilling this year will be delayed while the state of emergency and restrictions on travel remain in place.

Earlier, on January 13, Tinka closed a C$18.5 million private placing, which brought aboard major Peruvian miner Compañia de Minas Buenaventura SAA (NYSE:BVN) as a key shareholder with around a 19.3% stake.

Buenaventura took nearly 66 million shares, while Sentient Global Resources Fund IV LP exercised participation rights, buying an additional 10.3 million shares. It holds around 21.7%.

The funds are to further advance Ayawilca, with resource definition and exploration drilling in 2020 ahead of potentially upgrading the Ayawilca resource to the measured and indicated classification for a pre-feasibility study.

That came after a key achievement was reached late last year, when Tinka received approval for its modified environmental impact assessment from the government, allowing it to drill from a large number of drill platforms - up to 240 - in the coming years.

Drilling at the project continues to throw up highly encouraging finds. In October, Tinka released what it called "exceptional' recent zinc grades found during drilling of three holes.

One returned some of the best zinc intersections ever drilled at the South Ayawilca part of the property, both within and immediately outside of the zinc resource boundary, including 18.65 metres (m) at 17.4% zinc, 11 g/t silver and 68 g/t indium from 221.5 metres.

The final hole of its 2019 program, consisting of over 4,000 m, was an infill hole at South Ayawilca, which hit several zones of high-grade zinc mineralization.

Inflection points:

  • Restart of drilling
  • Updated resource estimate

What the boss says:

Tinka’s CEO Graham Carman said in a statement about the closing of the C$18.5 million financing: "We look forward to advancing our Ayawilca project in 2020 with additional resource definition and exploration drilling, and project development.”

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