Scotia Mine Restart Plan
The restart of the Scotia Mine is seen as the first step in unlocking the potential for continued exploration and development within the Windsor Basin. It also provides ScoZinc with an operating base in Nova Scotia to pursue other exploration and development opportunities.
On November 22, 2012, an update to the August 30, 2011 Preliminary Economic Assessment (“PEA”) Report for the potential restart of the Scotia Mine Restart was reported. A second update to the PEA was reported June 11, 2013 to reflect reviews to the proposed mine plan, including an addition of a potential underground mining operation to remove higher grade mineralization between the Main and Northeast pits that straddle the Gays River.
The June 11, 2013 updated PEA HIGHLIGHTS:
- 2,500 tonnes per day mill processing plan;
- Unit operating costs of $50.35 per tonne milled for the first five years ($40.85 per tonne milled for the life-of-mine);
- Mine and mill restart capital expenditures (CAPEX) of CAD $32.8 Million (including $1.4 million contingency and $3.2 million of working capital);
- Base Case zinc and lead prices of US$1.00 and US$1.10/lb respectively;
- Exchange rate of 1 Canadian dollar to 0.98 US dollar;
- Project pre-tax NPV 8% of CAD $52.4 million (NPV 5% – CAD $61.3 million);
- Project pre-tax Internal Rate of Return (IRR) of 49.0%;
- Zinc C1 or Direct cash cost of production (after deducting credits for lead) for the first five years is CAD $0.55/lb to be optimized through ongoing studies;
- Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first five years of operations averages CAD $24.1 million per annum.
The updated PEA was reviewed by Qualified Person, Joseph Ringwald, and then VP Mining with Selwyn Resources Ltd. PEAs are preliminary in nature and include inferred resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
For complete PEA details please see the Company’s June 11, 2013 news release available under SEDAR filings at www.sedar.com,
The Company continues to monitor zinc and lead prices, the exchange rate between the Canadian and United States dollars, and the financing environment for the potential restart of the mine. The Company has all of the necessary permits to restart the mine, which is currently on care and maintenance.