Vancouver — A US$32-million incentive package from the Portuguese government has enhanced the prospect of resuming operations at
The incentive package, which is based on a positive feasibility study, includes US$17.3 million in interest-free loans. Up to 40% of the loans, or US$7 million, can be converted to a non-repayable grant, provided certain conditions are met. These include the maintenance of a specified number of jobs and completion of mine development within a specified time period. A total of US$4.7 million in cash grants is available for research, development and training. The package also includes tax benefits worth US$10 million, and exemption from stamp and import duties.
EuroZinc is earning up to a 75% interest in the project by advancing it to production. The remaining interest is held by the Portuguese government through a state-owned mining company.
The original feasibility study called for annual production of 1.6 million tonnes at a capital cost of US$75 million. A more recent study found that by boosting production to 1.8 million tonnes, the economics of the project are improved.
Based on a zinc price of US$1,213 per tonne (US55 per lb.), the proposed mine had an after-tax internal rate of return of 15.5% and a payback period of five years. The production increase changes this to 21.6% and 3.8 years.
Reserves at the Feitais deposit’s zinc-rich zone are estimated at 12.2 million tonnes grading 5.67% zinc, 0.22% copper and 1.77% lead, plus 64.15 grams silver per tonne. Reserves in the deposit’s copper-rich zone are pegged at 1.6 million tonnes of 2.16% copper, 0.97% zinc, 0.27% lead and 14.26 grams silver.
Reserves at the Moinho deposit stand at 1.6 million tonnes grading 4.48% zinc, 0.54% copper, 1.78% lead and 53.47 grams silver.
Resources at Feitais total 18.4 million tonnes of 6.02% zinc and 6.7 million tonnes of 2.12% copper, whereas resources at Moinho total 5.9 million tonnes of 4.7% zinc and 2.2 million tonnes of 1.93% copper.
The junior is currently in the midst of arranging financing for the project, which is in the Iberian pyrite belt of south-central Portugal.
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