Tinka Resource Ltd. (TK.V) is an exploration and development company with its flagship property being the 100%-owned Ayawilca zinc-silver-tin project in central Peru. 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.
Coverage: June 2018, November 2018, June 2019, March 2020, December 2020, August 2021.and May 2022.
News releases
May 25 - Announces C$11M Strategic Investment by Nexa and Buenaventura: Nexa will subscribe for 40,792,541 common shares of Tinka at of C$0.22 for C$8.97M. Prior to the Private Placement, Nexa held approximately 9% of the common shares of Tinka (see NR March 17, 2021). Upon closing of the Private Placement, Nexa will become a new insider of Tinka holding 71,343,053 common shares or approximately 18.2% of the Company on a non-diluted basis.
Buenaventura will subscribe for 9,770,669 common shares in the Private Placement at the Issue Price for C$2.15M. Upon closing of the Private Placement, Buenaventura will hold 75,614,289 common shares of Tinka and will continue to hold approximately 19.3% of the outstanding common shares of the Company on a non-diluted basis.
Proceeds will be used for development of the Company’s Ayawilca project (including significant exploration and infill drilling programs, metallurgical programs, and other technical and environmental studies), the continued early-stage exploration of the Silvia project, and for working capital and general corporate purposes.
May 31 - Closing C$11M Strategic Investment by Nexa and Buenaventura: An aggregate of 50,563,210 common shares of the Company at C$0.22 per Common Share for gross proceeds to the Company of C$11.12 million
Nexa becoming a new insider of Tinka holding a total of 71,343,053 common shares or 18.2% of the outstanding common shares of Tinka on a non-diluted basis. Pursuant to the closing of the Private Placement, Buenaventura now holds 75,614,289 common shares of Tinka or approximately 19.3% of the Company on a non-diluted basis.
June 14 - Commences Ayawilca Resource Expansion Drill Program: The drill program will consist of up to 10,000 metres of drilling, initially with one rig and increasing to two rigs by the end of August, with drilling expected to continue for the rest of 2022. A key objective of the up to 10,000 metre drill program is to expand Zinc Zone Measured and Indicated resources at South and West with infill and step-out drilling, in part, through the conversion of higher grade Inferred resources. A second objective is to expand the high grade resources at Central and West through the drill testing of possible lateral extensions. Additional drilling will go towards metallurgical and geotechnical test work which, coupled with the resource expansion drilling, will form the backbone of a future prefeasibility study. We expect the overall drill program to consist of 25 to 30 drill holes over a period of approximately 6 months.
Metallurgical test work of the Ayawilca Tin Zone is ongoing. Results of this test work are expected by August 2022.
June 29 - Grant of Stock Options: A total of 5,750,000 common shares at $0.25 cents for a period of four years.
Oct. 11 - Drills 6 Metres Grading 19% Zinc At Ayawilca, Expands Tin Zone: Announce results for five holes in the Company’s ongoing 2022 drill program. Roughly 10 to 12 more drill holes are planned for the zinc resource definition.
Key highlights: South Ayawilca Zinc Zone resource extensions;
i) A22-195: 6.0m at 18.8% zinc from 392.6m depth including 3m at 27.7% zinc from 395.9 m.
ii) A22-194: 26.8m at 4.2% zinc from 293.0m depth including 1.0m at 31.6% zinc from 310.1 m.
iii) A22-192: 16.7m at 3.2% zinc, 0.4% lead and 18 g/t silver from 312.3m depth.
Central Ayawilca zinc exploration:
i) A22-191: 36.8m at 3.6% zinc from 264.0m depth including 6.3m at 6.0% zinc from 264.0 m.
ii) A22-190: 17.9m at 3.1% zinc, 0.2% lead and 10g/t silver from 330.4m depth.;
Tin Zone exploration:
i) A22-190: 32.0m at 0.36% tin, 0.33% copper and 13 g/t silver from 398m depth, including 9.4m at 0.52% tin.
"An important next step for the Tin Zone mineralization will be the results of key metallurgical test work being completed at a specialist laboratory in Australia, which will be available in Q4 2022,” - Tinka's CEO.
Nov. 21- Drills 45 Metres @ 12% Zinc Including 16 Metres @ 22% Zinc at West Ayawilca: announce results from four recent drill holes. Drill holes A22-200, A22-197 and A22-198 all intersected high-grade zinc mineralization.
i) A22-200: 44.9m at 12.0% zinc from 283.3m depth, including 16.1m at 22.2% zinc from 312.1m depth.
ii) A22-197: 79.4m at 5.3% zinc from 271.6m depth, including 26.3m at 8.4% zinc from 281.7m depth.
iii) A22-198: 37.0m at 5.2% zinc from 312.3m depth, including 7.2m at 9.1% zinc from 326.0m depth.
Drilling to continue into early 2023 with two rigs operating - one at South and one at West. Results are now reported for nine drill holes in the 2022 drill program, with approximately 12 additional holes planned or in progress.
Dec. 1 - Announces Resignation of VP Exploration:
“Tinka has been building and expanding its management team in recent times, and we have a strong in-house leadership team with significant technical expertise. Tinka has no plans to fill the role of VP Exploration currently.”
- Tinka's CEO.
Jan. 9 - Drills Spectacular Hole at Ayawilca: 38.9 M @ 20% Zinc Including 10.4 M @ 42% Zinc: All four drill holes are from South Ayawilca. Hole A22-202 has returned the best drill intercept ever made at the Ayawilca project: 38.9 metres grading 20.0% zinc including an ultra high-grade interval of 10.4ms grading 42.0% zinc . The 2022-2023 drill program has now been expanded due to the excellent results to date, with about half of the drill holes (13) now reported of the estimated 30 holes to be completed at both South Ayawilca and West Ayawilca.
i) A22-202: 38.9ms at 20.0% zinc from 170.5m depth, including 10.4m at 42.0% zinc from 193.3m depth, including 3.8m at 49.9% zinc from 198.0m depth. The widest interval is the highest grade-thickness intercept ever drilled.
ii) A22-199: 5.3m at 14.3% zinc from 138.8m depth and 42.4m at 9.4% zinc from 246.5m
iii) A22-204: 14.8m at 8.4% zinc from 196.4m depth.
The drill program at Ayawilca is continuing without interruption with two rigs operating 24/7. Around 7,000m have been completed with another 4,000m planned. Drilling is expected to continue until April 2023.
Jan. 24 - Drills 45m at 11.5% Zinc and 6.5m at 27% Zinc at West Ayawilca: Results from four infill drill holes from the Company's ongoing resource definition and expansion drill program at the Ayawilca zinc project in Peru. Approximately 8,200 metres in 24 drill holes have been completed with results reported for 17 holes. The drill program is progressing without interruption with two rigs operating 24/7 and is expected to continue until April 2023.
i) A22-207: 5.9 meters at 24.0% zinc from 115.9 meters and 132.5 meters at 6.8% zinc from 193.9 meters depth, including: 45.2 meters at 11.5% zinc from 248.0 meters depth, and 6.5 meters at 27.2% zinc from 319.9 meters depth. ii) A22-203: 49.8 meters at 8.3% zinc from 186.8 meters depth, including: 5.9 meters at 13.9% zinc from 197.7 meters depth, and 2.8 meters at 23.3% zinc from 216.2 meters depth
iii) A22-205: 134.0 meters at 4.8% zinc from 180.0 meters depth, including: 14.4 meters at 9.4% zinc from 300.0m .
iv) A22-209: 1.0 meter at 11.4% zinc, 0.8% lead & 63 g/t silver from 274.3 meters depth.
Summary
Financing
An $11M strategic investment from Nexa and Buenaventura was made via a Private Placement at $0.22 cents. Nexa purchased 40.7M shares for C$8.97M and Buenaventura bought 9.7M shares for C$2.15M. Cumulative Nexa has 71M shares, owning 18.2% of Tinka while Buenaventura now has 75M shares or 19.3% of the company.
Options
A total of 5,750,000 common shares were granted at $0.25 cents for a period of four years.
Ayawilca Resource Drill Expansion Program
June 2022, a 10,000M drilling program was initiated with two objectives i) Expand Zinc Zone Measured and Indicated resources at South and West with infill and step-out drilling, in part, through the conversion of higher grade Inferred resources. ii) Expand the high grade resources at Central and West via the drill testing of possible lateral extensions.
In addition, metallurgical and geotechnical work were initially planed as a "backbone" of a future prefeasibility study.
Overall, since the drill campaign was initiated four sets of results were reported totaling 17 drills holes. Thus far the results have been impressive and consistent with high grade mineralization. Highlights are below.
October 2022
A22-195: 6.0m at 18.8% zinc from 392.6m depth including 3m at 27.7% zinc from 395.9 m.
A22-191: 36.8m at 3.6% zinc from 264.0m depth including 6.3m at 6.0% zinc from 264.0 m.
A22-190: 32.0m at 0.36% tin, 0.33% copper and 13 g/t silver from 398m depth, including 9.4m at 0.52% tin.
November 2022
A22-200: 44.9m at 12.0% zinc from 283.3m depth, including 16.1m at 22.2% zinc from 312.1m depth.
A22-197: 79.4m at 5.3% zinc from 271.6m depth, including 26.3m at 8.4% zinc from 281.7m depth.
A22-198: 37.0m at 5.2% zinc from 312.3m depth, including 7.2m at 9.1% zinc from 326.0m depth.
January 2023
A22-202: 38.9ms at 20.0% zinc from 170.5m depth, including 10.4m at 42.0% zinc from 193.3m depth including 3.8m at 49.9% zinc from 198.0m depth. The widest interval is the highest grade-thickness intercept ever drilled.
A22-199: 5.3m at 14.3% zinc from 138.8m depth and 42.4m at 9.4% zinc from 246.5m
A22-204: 14.8m at 8.4% zinc from 196.4m depth.
A22-207: 5.9 meters at 24.0% zinc from 115.9 meters and 132.5 meters at 6.8% zinc from 193.9 meters depth, including: 45.2 meters at 11.5% zinc from 248.0 meters depth, and 6.5 meters at 27.2% zinc from 319.9 meters depth.
A22-203: 49.8 meters at 8.3% zinc from 186.8 meters depth, including: 5.9 meters at 13.9% zinc from 197.7 meters A22-205: 134.0 meters at 4.8% zinc from 180.0 meters depth, including: 14.4 meters at 9.4% zinc from 300.0 meters.
In short
Tinka's valuation continues to be stagnant with no real alignment with the metal price. It also consistently trades below the last investment value from Nexa Resources and Buenaventura ($0.22 cents). Note that the latest round of financing which came after the Updated PEA claiming a 68% increase of indicated zinc resources occurred at a lower valuation than the previous round (Nexa Resources S.A. $0.26 cents vs. Buenaventura $0.243 cents).
Unfortunately, It seems that no amount of positive, impressive or "spectacular" drill results can move valuation of late. Also the 70% institutional ownership [Buenaventura (19%), Nexa (18%), Sentient (19%) and Others (14%)] seems irrelevant in generating additional 'buying" interests from other institutions and/or retail investors at large.
Granted, according to the December 2022 investor presentation, Tinka has C$16 M in cash and is reportedly fully-funded for 2022-23 work programs (no debt), but the company also now has 400M fully diluted shares.
The longer the exploration process, the more the dilution; that's expected! However, in the absence of sustained improved valuation, it represents an opportunity cost for Tinka's retail shareholders. Especially given that as the project advances (and is de-risked), the financing has materializes at lower valuation (instead of a higher one).
Fortunately, the last stock options were granted at $0.25 cents but the fact remains; Tinka is chronically undervalued. However, It's inevitable that the tide is very likely to change; valuation is simply not reflective of Ayawilca's potential.
Along with ongoing drill results, a resource update* (21:25) after the current program could be catalysts for a rerating.
*Source: Crux Investor Interview
DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.
