From Pine Point, Tamerlane sees beyond metals trough

With commodity prices tumbling all around it, Tamerlane Ventures (TAM-V) has finished a bankable feasibility study for its Pine Point project, in the Northwest Territories, 130 km south of Yellowknife.

The company says that even with the recent downturn in metals prices, the project is economic, and with production coming in 2010, zinc and lead prices will have ample time to correct themselves.

At presstime, zinc was selling for US77 per lb. in London, while lead’s spot price was US82 per lb.

The study did indicate sound financials, but it did so at a zinc price of US$1.14 per lb. and a lead price of US$1.16 per lb. The internal rate of return at Pine Point was pegged at 53%, with a net present value of $157 million using a 7.5% discount rate.

Tamerlane says mining will focus first on the R190 deposit, where it will freeze the perimeter to allow it to start underground mining.

Once the necessary infrastructure is in place, it will have access to five nearby deposits, which have been upgraded from measured and indicated resources to proven and probable reserve status.

Overall, the project now has proven and probable reserves of 7.8 million tonnes grading 6.16% zinc and 3.01% lead. Measured and indicated resources stand at 8 million tonnes grading 2.26% zinc and 1.13% lead, while inferred resources come in at 4.1 million tonnes grading 2.36% zinc and 0.82% lead.

The plan calls for the production of zinc and lead concentrate, to be trucked 42 km from the mine by paved road to a railway line that will then transport it to Vancouver.

Metal recovery is expected to be 93.6% for zinc and 88.9% for lead.

As for capital costs, Tamerlane estimates they will come in at $114 million.

The company will turn to senior debt for 60% of the needed funds, 25% will come from subordinate debt, and the remaining 15% is slated to come through equity financing.

Financing is expected to be completed this fall with construction following shortly thereafter. That would mean concentrate production could start early in 2010.

Despite the cooling metals market, Tamerlane was looking to find positives in the current situation. It says it plans to benefit from the weeding out process that lower prices will inflict on more marginal projects.

“As the industry slows down and other producers shut down, Tamerlane will be able to procure equipment and contractors at more aggressive pricing than used in the study,” president and chief executive Ross Burns said in a statement.

In addition to the reserves outlined, Pine Point has 50 million tonnes of historic resources that haven’t yet been verified.