Location

  • Updated Independent Mineral Resource estimate completed containing 968,000 tonnes @ 15.9% Zn+Pb for 154,000t of contained metal in Indicated and Inferred categories;
  • This represents an increase of 70% in total tonnage and 60% in Indicated category;
  • Scoping Studies are ongoing with the focus increasingly on Tres Amigos and Las Espadas mineralisation, where resource tonnage increased by 148%, for recommencement of mining. Recent metallurgical studies on Tres Amigos indicate high zinc recoveries to saleable concentrate for lower processing capex and opex;
  • Metallurgical testwork results from the Tres Amigos Sulphide indicate zinc recoveries to concentrate of >90%; ? All Resource tonnes immediately accessible from within current mine infrastructure;
  • Further drilling planned to extend the resource at Las Espadas, Carola South, Level 7 and Tres Amigos as the project continues to grow. 

Consolidated Zinc Limited (ASX:CZL; “Consolidated Zinc” or “the company”) is pleased to announce its upgraded Mineral Resource estimate for its Plomosas zinc-lead-silver project in northern Mexico.

The resource estimate, independently completed by RPM Advisory Services Pty Ltd (“RPM”) in accordance with the JORC (2012) reporting guidelines, contains 968,000 tonnes @ 15.9% Zn+Pb and 24.0g/t Ag for 154,000t of contained metal in both Indicated and Inferred categories.

This represents an overall increase of 70% resource tonnes and an increase of 60% of contained metal. The additional Mineral Resource comes from the extensions both down dip and down plunge of existing mine development at Level 7, the extrapolation of in-mine mineralisation at Las Espadas and Carola South and the extension of mineralisation at Tres Amigos. Table 1 breaks down the resource by area and category.

Managing Director Will Dix said the updated estimate and excellent metallurgical results from Tres Amigos provide the final inputs to the Scoping Study into short term production. The study is expected to be completed by the end of September.

Las Espadas and Corola South will provide additional target areas for future drilling and rapid resource expansion from areas that are easily accessible within the existing mine infrastructure. 

“This resource increase is another step along the path we initially outlined with our objective to identify a viable resource for short term cash flow. Tres Amigos is shaping up really well and the excellent metallurgical results support this. The Carola South and Las Espadas areas are underexplored and we plan to target them for the next resource update in 2018. In the meantime our focus is on completing the Scoping Study and reviewing our options for the recommencement of mining at Plomosas utilising the on site plant and excellent underground infrastructure.” Mr Dix said.

The greater understanding of geological controls and the geometry of the mineralisation established during the resource definition studies have led to the identification of numerous immediate drill targets. Las Espadas and Carolas South are two such areas of interest (Figure 1) where recent results announced to the market justify further investigation in the next round of resource extension drilling.

Mineral Resource Details and Parameters

Results of the independent Mineral Resource estimate by RPM for the Project are tabulated in the Statement of Mineral Resources in Table 1. The Statement of Mineral Resources is reported in line with the requirements of the 2012 JORC Code and is therefore suitable for public reporting.

The Mineral Resource is reported above a cut-off grade of 3% Zn which was based on estimated mining and processing costs and recovery factors of similar projects in the region as discussed below.

A detailed discussion of the methodology and parameters used in estimating the Mineral Resources is provided in sections below along with an analysis of drilling, sampling and laboratory procedures and QA/QC protocols.

In summary:

  • Ordinary Kriging (OK) was used to estimate average block grades using Surpac software and parameters derived from modelled variograms. Parent block sizes were 10m x 5m x 2.5m;
  • Linear grade estimation was deemed suitable due to the geological control on mineralisation. Maximum extrapolation of wireframes from drilling was 40m along strike and down-dip;
  • The Mineral Resource estimate has been constrained by the wireframed mineralised envelope, is undiluted by external waste and reported above a Zn cut-off grade of 3%;
  • The Mineral Resource was classified as Indicated and Inferred Mineral Resource based on data quality, sample spacing, and lode continuity. The Indicated Mineral Resource was defined within areas of close spaced drilling of less than 20m by 20m, and where the continuity and predictability of the lode positions was good. This distance is two thirds of the Zn variogram range of 30m. The Inferred Mineral Resource was assigned to areas where drill hole spacing was greater than 20m by 20m and less than 40m by 40m, where small isolated pods of mineralisation occur outside the main mineralised zones, and to geologically complex zones. 
Table 1. Plomosas Project
September 2017 Mineral Resource Estimate (3% Zn Cut-off)

Note:

The Mineral Resource has been compiled under the supervision of Mr. Robert Dennis who is a full-time employee of RPM and a Member of the AIG and AusIMM. Mr. Dennis has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he has undertaken to qualify as a Competent Person as defined in the JORC Code.

All Mineral Resources figures reported in the table above represent estimates at September, 2017. Mineral Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate. Rounding may cause some computational discrepancies.

The Mineral Resource has been estimated in accordance with the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Geoscientists and Minerals Council of Australia (The JORC Code 2012).

Figure 2. Plan view of the Plomosas mine showing location of the underground development and updated resource outlines.
Resource definition work areas referred to in the text including Level 7 and Tres Amigos are identified. Figure 3 provides a schematic cross section through the mine and geological sequence.
 
Figure 3. Section view of the Plomosas mine through Cuevitas area showing the Tres Amigos zone, historical drilling and the drilling planned for mineralised horizons. 
 
Figure 4: Oblique view of Level 7 Deeps Mineral Resource wireframed solids showing drillhole traces looking NW.
 
Figure 5: Plan view of increased Tres Amigos Mineral Resource wireframed solids showing drillhole traces and intercepts
 
Figure 6: Oblique view looking NW of increased Tres Amigos Mineral Resource wireframed solids showing drillhole traces and intercepts. 
 
Figure 7: Schematic section through Tres Amigos area showing geological interpretation and mineral targets within the Juarez Limestone unit.
 
Metallurgical Testwork Program

Metallurgical testwork completed to date on composite samples from the Tres Amigos sulphide zone has attained positive results (Table 2).

Using a conventional zinc sulphide flotation scheme a high grade bulk zinc concentrate with a recovery over 90% has been achievable which may also contain possible credits for lead.

Low Bond Ball results of 10.9kWh/t to reach 80% passing 59 micron and low residence times also suggest a simple, low capex and low opex circuit will be required.

Metallurgical studies are now increasing the focus on detailed process design for treatment of Tres Amigos and Las Espadas sulphide mineralisation.

Geology and Geological Interpretation

Mineralisation in the Plomosas Deposit is structurally controlled as demonstrated from drilling and mapping, with a plunge component of approximately 20o -30o to the southeast along a shallow dipping plane defined by the Mina Vieja Manto unit. The main factor in targeting the mineralisation in this system are flexures and dilatant zones that host the high grade mineralisation. The structural setting of the Plomosas mineralisation also exhibits boudinaging that tends to create pinch-andswell structures both down-dip (in the plunge-direction) and along strike.

Additional mineralised structures have been defined in the underlying competent Juarez Limestone Unit, occurring in the footwall to the Mina Vieja Marble. These are more discrete dilatant zones, common occuring as sets or thin continous units within the limestone.

The geological setting and mineralisation styles in Plomosas is continually being defined as drilling and additional data is collected and the geological model is updated. As evidenced at Las Espadas and Carolas South this information will determine the future exploration procedures and techniques required to develop targets that will result in additional tonnes and grade for future mill plant feed.

On going drilling and work program

With the completion of this resource update, there is sufficient confidence to continue metallurgical and mining studies of the Tres Amigos (including Las Espadas) sulphide mineralisation. The company considers that the Resource Estimate demonstrates sufficient tonnage to support a mining study focused on the recommencement of mining at Plomosas using Tres Amigos material in the initial start up.

Tres Amigos is also immediately accessible from the upper mine levels and metallurgical studies indicate very good zinc recoveries are possible to a single zinc concentrate. Metallurgical and mining investigations are ongoing in the Scoping Study to establish the optimal mine schedule and economic viability of this proposed scenario.

Further drill testing and investigation will now target Las Espadas and Carolas South to confirm and extend the resource envelope of high grade mineralisation identified recently and announced to the ASX. The focus on Tres Amigos proper prevented additional drilling to confirm the face sampling and mapping at Las Espadas and Carolas South. This constrained the wireframe that could otherwise be used in the latest resource update and will be addressed in the next round of drilling.

Detailed Discussion of Resource Estimation Methodology and Parameters

Sampling and Sub-Sampling Techniques

Sampling of cut channels was conducted by locating a one metre sampling line, using spray paint across mineralisation and ensuring that the line began in hanging wall host, spanned mineralisation and terminated in footwall host. Where mineralisation was thicker than one metre, the line was adjusted accordingly. This was done to minimise the bias of the sample value. Channel sampling was then completed, using the line as a guide, without sampling the line itself. As much representative sample was taken from the length of the line to produce a two to four kilogram sample. For this level of exploration, the sample size and method of sampling was deemed adequate to represent in-situ material.

Sampling techniques employed at the Plomosas underground drilling program include saw cut NQ drill core samples. Diamond NQ3 core was sampled on geological intervals/contacts, with the minimum sample size of 0.5m and max 1.2m. Core was cut in half, with one half to be sent for analysis at an accredited laboratory, while the remaining half was stored in appropriately marked core boxes and stowed in a secure core shed. Duplicates were quarter core, sampled from the half sent for analysis.

Drilling Techniques

NQ triple tube core (NQ3) is currently being used to drill out the geological sequences and identify zones of mineralisation that may or may not be used in any Mineral Resource estimations, mining studies or metallurgical testwork.

Sample Analysis Method

All drill samples were submitted to ALS Laboratories in Chihuahua City for sample preparation with sample pulps sent to ALS in Toronto, Canada for multi-element analysis using a 30g charge with a multi-acid digest and ICP-MS or AAS finish (ME-ICP61). Over the limit results were routinely reassayed by ore grade analysis OG62. Over the limit results for the ore grade were re-assayed by titration methods Cu-VOL61, Pb-VOL50 or Zn-VOL50.

Analyses include 51 elements and include Ag, Au, Cu, Pb, Zn as the main elements of economic interest. The methods and procedures are appropriate for the type of mineralisation and the techniques are considered to be total.

Estimation Parameters

Using parameters derived from modelled variograms, Ordinary Kriging (OK) was used to estimate average block grades in three passes using Surpac software. Linear grade estimation was deemed suitable for the Plomosas Mineral Resource due to the geological control on mineralisation. Maximum extrapolation of wireframes from drilling was 40m along strike and down-dip. This was equal to the drill hole spacing in these regions of the Project. Maximum extrapolation was generally half drill hole spacing.

The parent block dimensions used were 10m NS by 5m EW by 2.5m vertical with sub-cells of 2.5m by 1.25m by 0.625m. The model was rotated to align with the strike of the mineralisation on a bearing of 330°. The parent block size dimension was selected on the results obtained from Kriging Neighbourhood Analysis that suggested this was the optimal block size for the dataset.

The deposit mineralisation was constrained by wireframe solids constructed using a nominal 2% combined Zn and Pb cut-off grade with a minimum down-hole length of 1m. The wireframes were applied as hard boundaries in the estimate.

Statistical analysis was carried out on data from 27 domains. After review of the project statistics, it was determined that high grade cuts for Ag within a single domain was necessary. The cut applied was 300g/t Ag resulted in a single composite being cut.

An orientated ‘ellipsoid’ search was used to select data and adjusted to account for the variations in lode orientations, however all other parameters were taken from the variography derived from domain 1. Up to three passes were used for each domain. The first pass had a range of 20, with a minimum of 8 samples. For the second pass, the range was extended to 40m, with a minimum of 4 samples. For the final pass, the range was extended to 100m, with a minimum of 2 samples. A maximum of 20 samples was used for all three passes.

It is assumed that the bulk density will have some variation within the mineralised material types due to the host rock lithology and sulphide minerals present. Therefore a regression equation for Zn and density was used to calculate density in the block model.

Validation of the model included detailed comparison of composite grades and block grades by strike panel and elevation. Validation plots showed good correlation between the composite grades and the block model grades.

Mineral Resource Classification Criteria

The Mineral Resource estimate is reported here in compliance with the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ by the Joint Ore Reserves Committee (JORC). The Mineral Resource was classified as Indicated and Inferred Mineral Resource based on data quality, sample spacing, and lode continuity. The Indicated Mineral Resource was defined within areas of close spaced diamond and RC drilling of less than 20m by 20m, and where the continuity and predictability of the lode positions was good. In addition, the 20m distance is equal to approximately two thirds of the observed major direction variogram range of 30m. The Inferred Mineral Resource was assigned to areas where drill hole spacing was greater than 20m by 20m and less than 40m by 40m, where small isolated pods of mineralisation occur outside the main mineralised zones, and to geologically complex zones.

Cut-off Grade, Mining and Metallurgy Methods and Parameters Considered to Date

The Mineral Resource estimate has been constrained by the wireframed mineralised envelope, is undiluted by external waste and reported above a Zn cut-off grade of 3%. The cut-off grade was calculated based on the following parameters which are based on an independent mining consultant’s report, RPM internal cost pricing within Mexico and a preliminary metallurgical study completed:

  • Zn price of US$2,800/t, Pb price of US$2,300/t and Ag price of US$17/oz
  • Mining cost of US$50/t ore
  • Processing costs of US$20/t ore milled, and
  • Processing recovery of 80% for a Zn and Pb concentrate.

A detailed mining schedule and mining option analysis has not been completed however, an underground mining method will be implemented at Plomosas using the available infrastructure if additional mine and processing design and more detailed and accurate cost estimates confirm the viability of extraction.

RPM applied the estimated cut-off grade in order to report the Mineral Resources contained within the mineralised envelope that have a reasonable prospect for eventual economic extraction. RPM notes that the calculations do not constitute a scoping study or a detailed mining study which along with additional drilling and testwork, will be required to confirm economic viability. It is further noted that in the development of the Project, capital expenditure will be required and is not included in the mining cost assumed. RPM has utilised the operating costs and recoveries along with the prices noted above in determining the appropriate cut-off grade. Given the above analysis, RPM considers the Mineral Resource demonstrates reasonable prospects for eventual economic extraction however, highlights that additional studies and drilling is required to confirm economic viability.

Yours faithfully,

Will Dix 
Managing Director
4 September, 2017
 

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Layne, A Granite Company, provides sustainable solutions for water resources and mineral exploration. Originally established in 1882, Layne offers a rich history of delivering safe, professional, and reliable water and minerals solutions throughout North and South America. Granite acquired Layne and its subsidiaries in the fall of 2018, to further Granite’s strategy to grow through acquisition and diverse end market expansion.