Tinka Resource Ltd. (TK.V) 100%-owned Ayawilca zinc-silver-tin project in central Peru is its flagship property.
The Zinc Zone deposit has an estimated Indicated Mineral Resource of 19.0 Mt @ 7.15% Zn, 16.8 g/t Ag & 0.2% Pb and Inferred Mineral Resource of 47.9 Mt @ 5.4% Zn, 20.0 g/t Ag & 0.4% Pb (dated August 30, 2021 - see news release).
The Ayawilca Tin Zone has an estimated Inferred Mineral Resource of 8.4 Mt grading 1.0% Sn. Tinka holds 46,000 hectares of mining claims in Central Peru, one of the largest holders of mining claims in the belt.
Tinka is actively exploring for copper-gold skarn mineral deposits at its 100%-owned Silvia project.
Previous coverage: June 2018, November 2018 , June 2019, March 2020, December 2020 and August 2021.
News releases
Sep. 27 - Increases Indicated Zinc Resources at Ayawilca by 68%: Mineral Resource estimates for two Ayawilca deposits have been updated as a result of nearly 12,000 metres of drilling completed in the past 18 months.
Zinc Zone
Indicated Mineral Resource of 19M tonnes grading 7.2% zinc, 0.2% lead and 16.8 g/t silver containing: 3.0 billion pounds of zinc; 10.3M ounces of silver; and 87M pounds of lead. Inferred Mineral Resource of 47.9M tonnes grading 5.4% zinc, 0.4% lead & 20.0 g/t silver containing: 5.7 billion pounds of zinc;30.7M of silver; and 370M pounds of lead.
Tin Zone
Inferred Mineral Resource of 8.4M tonnes grading 1.0% tin (from 0.68% circa), containing: 189M pounds of tin. The Tin Zone and Zinc Zone resources do not overlap, with the Tin Zone situated predominantly beneath the Zinc Zone.
Oct. 7 - Discovers High Grade Copper & Gold at Silvia Project: Surface Samples Up to 12.3% Copper and 18.6 G/T Gold: Sampling at "Area A", one of three mineralized zones at Silvia NW has yielded high-grade copper-gold mineralization.
A total of 108 trench and rock chip samples were collected over a 400 m x 100 m area of semi-continuous skarn: i) A total of 108 trench and rock chip samples were collected over a 400 m x 100 m area of semi-continuous skarn ii) Copper ranges between 0.01% to 12.31% Cu, and gold ranges between 0.01 g/t to 18.60 g/t Au;
Oct. 14 - Updated PEA for Ayawilca Project: Highlights Potential to Become Top-10 Global Zinc Producer: i) After-tax NPV8% of US$433M (up 19% from 2019 PEA) using base case metal prices of US$1.20/lb zinc, US$22/oz silver, and US$0.95/lb lead on a 100% equity basis (pre-tax NPV8% of US$720M); ii) Initial Capex of US$264M with after-tax IRR of 31.9% (pre-tax IRR of 42.6%); iii) Average annual production of roughly 155,000 tonnes of zinc in concentrate per year, which would make Ayawilca the largest primary zinc producer in South America and a top-10 global zinc producer.
Numerous opportunities to add further value, including: i) exploration upside for additional zinc discoveries including at Far South, Yanapizgo, and Zone 3 areas; ii) further optimization of zinc and silver metallurgical recoveries; iii) incorporating high grade Tin Zone resources into the mine plan.
Nov. 10 - Samples 6 Metres @ 12.8 Grams/Tonne Gold and 2.7% Copper at Silvia: High-grade gold and copper trench results from Silvia NW project located 30 km from the Company's flagship Ayawilca zinc-silver project.
New trench results: 46M at 1.9 g/t gold & 0.8% copper (2.2% CuEQ or 2.9 g/t AuEQ), including: i) 6M at 12.8 g/t gold & 2.7% copper (12.3% CuEQ or 16.4 g/t AuEQ), including 2M at 22.5 g/t gold & 2.5% copper (19.4% CuEQ or 25.8 g/t AuEQ);
Exploration is continuing at Areas A and B along the 3 km prospective trend at Silvia NW.
Nov. 10 - Announces Filing of Ni 43–101 Technical Report for the PEA on the Ayawilca Property, Peru:
Jan. 13 - Increases Scale of The High-Grade Copper-Gold Discovery at Silvia NW: Silvia NW copper-gold project: i) Copper-gold mineralization at ‘Area A' has been significantly expanded. The skarn mineralization now covers an area of 550 metres by 400 metres including areas of shallow cover; ii) Field work has commenced in preparation for an Environmental Impact Declaration to obtain the necessary permits for drilling at Silvia NW;
Ayawilca zinc-silver project: Tinka is planning a resource extension and definition drill program at South Ayawilca during the first half of 2022. Details of this program will be announced soon.
Apr. 29 - Tinka Announces Results of Annual and Special Meeting of Shareholders.
May 9 - Market Report Newsletter: Our intention is to rapidly advance Ayawilca towards development by undertaking exploration drilling, hydrology studies, and metallurgical programs during 2022 and 2023. Drill Campaign 2022 is aim to expand the Zinc Zone resources, and in particular, to improve the resource confidence at the South and West areas.
A metallurgical study of the Tin Zone mineralization at Ayawilca (which is physically separated from the Zinc Zone) has commenced, aiming to improve the tin recovery assumptions.
Summary
Ayawilca
Tinka reported increasing Indicated Zinc Zone resources by 68% but the updated Preliminary Economic Assessment (PEA) of the Zinc Zone delivered an incremental 19% NPV totalling US$433M.
Comparing the After Tax Financial Summary at a base case of Zn ($1.20/lb) reveals some improvements.
However, at the time of the release it was indicated: At current spot price of $1.50/lb zinc, the after-tax NPV8% increases to US$785 million and IRR increases to 45.7% (pre-tax NPV8% of US$1.27 billion and IRR of 61%);
Hence, recent Zinc prices increase continue to add value to the project. As of Friday, Zinc Prices were $1.63/lb.
Other highlights of the updated PEA were noted: Numerous opportunities to add further value, including: i) exploration upside for additional zinc discoveries including at Far South, Yanapizgo, and Zone 3 areas; ii) further optimization of zinc and silver metallurgical recoveries; iii) incorporating high grade Tin Zone resources into the mine plan.
As such, a resource extension and definition drill program at South Ayawilca is planned for H1 2022. In addition, the last Market Report Update issued by the company indicated that a metallurgical study of the Tin Zone was underway.
With tin price hovering around US$40,000 per tonne, improving the tin recoveries should have a positive impact on future economic studies of the Tin Zone which would be beneficial for our shareholders.
We expect this metallurgical work to be completed by the end of July 2022. Remember that the Tin Zone at Ayawilca hosts 84,000 tonnes of tin grading 1.0% Sn in inferred resources, a deposit that was not incorporated into the 2021 PEA.
Sylvia
Last year, Tinka acquired the Copper-Gold-Zinc project adjacent to Ayawilca. Surface Samples return some encouraging high grade results in October 2021, November 2021, and January 2022.
As of now, the field work toward obtaining drilling permits has been initiated.
In short
Tinka's valuation continues to fluctuate widely and is not aligned with the metal prices. It is also still not consistently priced near or above the investment value of Nexa Resources S.A. ($0.26 cents) and Buenaventura ($0.243 cents).
Also being well funded (C$10M cash in treasury as December 2021), does not matter to the market. With roughly two-thirds of the share ownership from institution, its unlikely that retail investors are influencing the share price.
Questions at this stage are: i) How much more evidence is needed for a major to be convinced that Ayawilca is a worthwile project to acquire? And ii) How is the acquisitions of the Sylvia project fit with the objective of maximizing (and sustaining) shareholders value? Valuation for the last two and half years suggests that other forces are at play.
Investors can look forward to FY 2022 for Tin Zone metallurgical results (July 2022) and more exploration drilling at Ayawilca as potential catalysts. However, expecting a sustained increase in valuation seems illogical at this point.
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