Consolidated Zinc Limited (ASX:CZL; “Consolidated Zinc” or “the company”) is pleased to announce that the Scoping Study into recommencing mining at its Plomosas mine in Mexico was completed with positive results at a base-case level as well as several potential areas where returns might be improved.

The study focussed on mining the Tres Amigos resource on Level 5 using existing infrastucture. An increase in the Tres Amigos portion of the resource was recently announced to the ASX on 4 September, 2017 and comprised a total resource of 544,000 tonnes grading 11.2% zinc, 2.1% lead and 13.9 g/t silver (see Table 1 for full details). Of this, 10% falls into the indicated category.

While slightly lower grade than the other resources at Plomosas, this material was prioritised due to its proximity to surface, the ability to immediately accessthe ore via existing infrastructure, the high metallurgical recoveries that had previously been identified and the quality concentrate that testwork has established can be obtained.

The strategy underpinning the Scoping Study was to recommission the mine and plant with an early start up at Tres Amigos while optimising and drilling to expand the remaining resource to provide higher grade millfeed in years 2 and 3 onwards.

The mining component of the study was undertaken by independent global consultant RPM Advisory Services Pty Ltd (“RPM”) while BatteryLimits Pty Ltd addressed the metallurgical and process engineering options as well as the final financial model.

The Scoping Study was conducted at an accuracy of ±35% with a 15% contingency applied to capital costs. The results of the study and highlights are discussed below:

  • The top of the Tres Amigos mineralisation is located at a depth of 260 meters from surface and can be immediately accessed by existing declines and drives.
  • The orientation of the resource, particularly the dip, would be best suited to mining by cut and fill methods.
  • The metallurgical testwork indicates thatzinc recoveries of 90% to 95% could be obtained to produce a clean concentrate with contained grades of 55% Zn and 4% Pb. Lead recoveries have achieved 70% from testwork but there are low levels of lead in the Tres Amigos mineralisation and the economic influence is minor. There will only be one high grade zinc concentrate produced.
  • Initial confidential discussions with a number of potential offtake partners suggest this will be a sought after concentrate due to the low levels of deleterious elements or elementsthat attract a penalty.
  • The Scoping Study assumes a contract mining model.
  • The refurbished plant would utilise existing float cells and thickeners but requires a new crushing , milling circuit and rougher flotation cells . Whether that is purchased or acquired on a contract basis is an area requiring further investigation.
  • The finished processing plant would be industry standard and would comprise crushing and grinding followed by conventional bulk flotation roughing and cleaning stages to produce a single zinc concentrate.
  • The Scoping Study has arrived at an industry competitive total capital expenditure, comprising plant, mining, infrastructure and indirects including contingency of 15%. Several areas have been identified that could be optimised and warrant further review.

Commenting on the outcomes of the Scoping Study, Managing Director, Will Dix said:

“Our goals over the last 10 months have been to complete a resource upgrade and deliver a positive Scoping Study and I’m delighted that we have been able to achieve these objectives.

We are confident that our strong technical understanding of the project given our access to the ore, existing plant and previous successful concentrate production will enable us to secure the funding necessary to advance the project.

Our strategy moving forward is focussed on optimising the study outputs particularly through the addition of new ore sources from within the Plomosas mine area and completing the permitting required to commence construction and production. As the Company moves from the exploration to development and production phase we are reviewing our organisational structure to reflect the new requirements. An element to thisisstrengthening the mining and metallurgicalskillset both at Board and management level and the search for people to fill these roles has commenced.”

Will Dix
Managing Director
27 October, 2017