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Consolidated Zinc starts mining at Plomosas project, agrees to processing deal

Consolidated Zinc Ltd. approved the development plan for its Plomosas zinc-lead-silver project in northern Mexico and will immediately start mining the high-grade Tres Amigos mineralization.

Mining contractor Servimin Sara will initially mine 3,000 tonnes of high-grade mineralization in the first month, ramping up to 7,500 tonnes per month by the end of December.

October is expected to be the first full month of ore delivery to the Santa Eulalia plant, according to the Sept. 5 release.

The company also entered agreements with Grupo México SAB de CV to process the Plomosas ore through the latter's concentrator plant at Santa Eulalia and sell the product to their San Luis Potosi smelter.

Consolidated Zinc said the toll processing and offtake agreements will allow it to start production and achieve first cash flow for a capital cost of under US$500,000.

The C1 operating costs are expected at under 50 U.S. cents per pound of zinc after by-product credits.

Additionally, the company secured a finance package by way of A$1.3 million of convertible notes to fund mining at Plomosas and meet working capital requirements until the operations deliver cashflow.

Consolidated Zinc recently received a claim from Pandion Minerals Pty. Ltd. that it conditionally holds a 10% interest in the Plomosas project. The company refuted the claim and said it will defend it "vigorously."