Emerging base metal and lithium play Metalicity (ASX: MCT) has moved a step closer to bedding down a binding agreement with one of China’s leading zinc smelter companies China Minmetals after initial zinc and lead testwork delivered outstanding results.
A preliminary metallurgical testwork study – carried out by an independent laboratory nominated by China Minmetals Nonferrous Metal Co Ltd (CMN) – confirmed high zinc and lead recoveries, high concentrate grades and low deleterious elements.
Zinc concentrate grades averaged 51.2 per cent zinc from high reported recoveries of 88.27 per cent zinc while lead concentrate grades averaged 65.13 per cent lead from high reported recoveries of 91.88 per cent lead.
The testwork – carried out on 52.4 kilograms of core samples – was part of a Memorandum of Understanding (MoU) inked between Metalicity and CMN for the Admiral Bay Pre-Feasibility Study announced in July 2017.
The MoU covers the potential supply of an initial 10 per cent of future offtake from anticipated production of 174,000 tonnes of zinc concentrate and 115,000 tonnes of lead concentrate per annum from Admiral Bay in exchange for preliminary metallurgical testwork.
The successful testwork is further validation of the quality of the project by Minmetals, one of China largest zinc concentrate and metal producers. It is also another important step towards a binding offtake and financing agreement,” Metalicity Managing Director Matt Gauci said.
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“We will now advance more detailed testwork with CMN as we continue discussions and site visits with a range of parties.
Mr Gauci said independent analysts reported compelling economics on Admiral Bay with an NPV of A$1.2B, initial Life of Mine of 21 years, Net Cash After Tax of A$6.8B and starter mine DSO operation capex at A$300m.
Development of the project would also generate more than 1,000 new employment positions and more than A$1B of tax revenues and royalties for the local economy,” Mr Gauci added.
Admiral Bay is regarded as one of the world’s largest and highest value zinc development projects and lies in the premium mining jurisdiction of the Canning Basin, Kimberley region, Western Australia.
Shares in MCT were trading over 5 per cent higher at 3.9c in afternoon trading AEDT.