Superior Lake Resources Ltd.'s bankable feasibility study for its namesake zinc project in Ontario outlined a net present value, discounted at 8%, of US$115 million, and a 27% internal rate of return.
The initial capital costs to develop a 325,000-tonne-per-annum operation and associated infrastructure were estimated at US$86.7 million, including a 9.5% overall contingency. The pre-production and owner's costs were estimated at US$10.5 million.
Annual production at the Superior Lake project, expected to start in 2021, was estimated at 32,000 tonnes of zinc concentrate and 5,200 tonnes of copper concentrate, with a nine-year life of mine.
The life-of-mine C1 operating cost was estimated at 35 U.S. cents per pound of zinc, with all-in sustaining costs expected at 46 cents per pound.
The project is expected to generate average EBITDA of US$34 million per year, according to the Aug. 28 release.
Superior Lake said it will need about US$100 million to fund capital works, pre-production capital costs, contingency and working capital, which will be sourced from a combination of debt and equity financiers.
The company recently received nonbinding indicative proposals of between US$50 million and US$70 million from global banks and resource funds to finance the project's development.
The bankable feasibility study is based on a JORC-compliant mineral resource estimate of 2.35 million tonnes grading 17.7% zinc, 0.9% copper, 0.38 g/t of gold and 34 g/t of silver, using a 3% zinc cutoff.
The resource includes a maiden probable ore reserve of 2 Mt at 13.9% zinc, 0.6% copper, 0.2 g/t of gold and 26.2 g/t of silver.
In May, Superior Lake entered a binding agreement to acquire up to an additional 15% interest in Ophiolite Holdings Pty. Ltd. to increase its stake in the project to 85%.
