Vancouver — Eurozinc Mining (EZM-V) has arranged a non-brokered private placement consisting of up to 2.25 million units priced at 35 each. The company is in the midst of arranging project financing for the Aljustrel zinc-copper-lead property in Portugal.
A full unit holds one share and half a warrant. One warrant entitles the holder to purchase one share at a price of 40 for one year. The junior will pay a finder’s fee of 7% of the proceeds from the sale of up to 1.5 million units.
Eurozinc plans to use the $787,500 for general working capital while project financing is put in place to resume production at Aljustrel.
Last year, the prospect of a resumption of operations at Aljustrel was enhanced by a US$32-million incentive package from the Portuguese government and the European Union.
The package, which was based on a positive feasibility study, included 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.
An updated feasibility study on Aljustrel, finalized by Steffen, Robertson and Kirsten and Rescan Hatch, has upped the internal rate of return to an impressive 30.9%. It cranks production levels up to 1.8 million tonnes per year and lowers the capital costs to US$69.2 million.
The financial anlaysis takes into account the US$32-million incentive package. The original feasibility study called for annual production of 1.6 million tonnes at a capital cost of US$75 million.
Based on a zinc price of US 51 per lb., the project would have a capital payback period of 3.4 years.
Zinc production is now expected to average 176 million lbs. per year over a minimum 10-year mine life. Average operating costs come in at US$16.7 per tonne. Cash costs of payable zinc are pegged at US 39 per lb., net of byproduct credits.
Reserves at the Feitais deposit’s zinc-rich zone are estimated at 12.2 million tonnes grading 5.67% zinc, 0.22% copper, 1.77% lead and 64.15 grams silver. 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 have been increased to 2.2 million tonnes from 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.
Resources at Moinho total 5.9 million tonnes of 4.7% zinc and 2.2 million tonnes of 1.93% copper.
EuroZinc is earning up to a 75% interest by advancing the project to production. The remaining interest is held by the Portuguese government through a state-owned mining company.
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