Superior Lake Firing up Canadian Zinc Project

THE INSIDE STORY: Superior Lake Resources (ASX: SUP) is focused on the redevelopment of the Superior Lake zinc project in North Western Ontario, Canada.

The project is a high-grade zinc deposit with a JORC resource of 2.35 million tonnes at 17.7 per cent zinc, 0.9 per cent copper, 0.38 grams per tonne gold and 34g/t silver and a Probable Ore Reserve of 1.96 million tonnes at 13.9 per cent zinc, 0.6 per cent copper, 0.2g/t gold and 26.2g/t silver.

The Superior Lake Zinc project is located east of Thunder Bay in the province of Ontario and covers 175 square kilometres, consisting two deposits – Winston Lake and Pick Lake.

In August 2019, Superior Lake released a Bankable Feasibility Study (BFS), which outlined an operation at Superior Lake that would produce 34,000 tonnes per annum of contained zinc metal with All in Sustaining Operating Costs of US$0.47 per pound, ranking the project in the lowest cost quartile of zinc projects globally.

The BFS assumed mine access via a new decline from surface instead of rehabilitating the old Winston shaft.

The numbers were based on a 1,000 tonnes per day operation, with a total upfront capital cost of US$87 million (plus US$10M pre-production and Owner’s costs).

Superior Lake is expected to produce over life-of-mine an average of 32,000 tonnes per annum of zinc concentrate and 5200 tonnes per annum of copper concentrate.

At this stage, production is expected to commence in 2021 for a mine life of nine years.

The company believes several advanced exploration targets exist that present an opportunity for a potential extension to the mine life.

Key highlights from the study include:

Financial returns:

C1 Cost – US$ 0.35/lb zinc
AISC Cost – US$ 0.47/lb zinc
NPV8 pre-tax US$157 million (A$224M)
IRR 31 per cent (pre-tax)

Key production figures include:

Plant throughput 325,000 tonnes per annum
Total 2.2 million tonnes treated
Average grade: 13.7 per cent zinc
Average zinc recovery: 96 per cent
Initial capital expenditure of US$86 million (A$106M) excluding owners and pre-production
Life of Mine of nine years
Annual production (after ramp-up) of 38,000 tonnes per annum contained zinc and 1400 tonnes per annum contained copper

“The purpose of this BFS was to validate Superior Lake becoming a viable zinc operation,” Superior Lake CEO David Woodall said when the BFS was released.

“This was clearly achieved, as the Study demonstrates the project will generate strong cash flow throughout the nine-year mine life.

“The driving factor for the result was the low AISC (LOM – US$0.47/lb), which, if brought into production, would rank the project in the lowest quartile of producers globally.

“The development of the project has been completed with the future in mind, as the decline will be in close proximity to each of the major geophysical anomalies that were identified in the 2019 exploration program, all of which are expected to be tested in the near future.

“A discovery at any of these anomalies would significantly change the parameters of the project both in terms of mine life as well as production profile.

“In the coming months, the company will focus on finalising off-take, equity and debt financing as well as completing an Optimisation Study whereupon a decision to mine will be made.”