FLAGSHIP PROJECT
Oposura Project (AZS 100%): Zinc-Lead-Silver
Overview
Oposura is an advanced-stage, high-grade, massive sulphide-hosted, zinc-lead-silver deposit with a current JORC Mineral Resource of 3.1Mt @ 5.0% Zn, 2.7%Pb & 18g/t Ag. Azure is aiming to bring this project into small-scale mining and toll treatment production in 2019 and stand-alone, full-scale production by mid-2021.
Classified as a distal skarn deposit, calc-silicate minerals and sulphide mineralisation (sphalerite and galena) replace bands within an interbedded limestone-volcanic tuff unit. The mineralised horizon is sub-horizontal with an aerial extent of approximately 1,500m x 400m and an average true thickness of about four metres. The deposit remains open in several directions, providing excellent exploration upside, and further drilling is expected to significantly increase the current resource base.
Located in the northern, mining-friendly Mexican state of Sonora, Oposura is underpinned by the following highlights:
- JORC Mineral Resource of 1Mt @ 5.0% Zn, 2.7%Pb & 18g/t Ag;
- High grade mineralisation is near to surface and easily accessible;
- Simple mining methods will comprise shallow open pits followed by underground room and pillar extraction;
- Standard sulphide floatation processing will produce clean, high-grade zinc and lead-silver concentrates; and
- Significant exploration upside with potential to at least double the current mineral resource.
Large-Scale Mining and Processing Operation
For the proposed large-scale mining and processing operation, a Scoping Study was published in October 2018 and a Feasibility Study is scheduled for completion in 2020. The Scoping Study highlighted Oposura as an economically and technically robust, high-margin project, underpinned by low operating and capital costs, high-value concentrate, strong operating cash flows and a 16-month payback period.
The proposed 500,000tpa (1,500tpd) mining operation will have an initial 6-year mine life and generate an EBITDA of US$178M, an NPV of US$84M, and an IRR of 76%. Most importantly, Oposura’s C1 cash costs are expected to be in the lowest cost quartile of world zinc producers.
A major advantage of Oposura is the simple geology and mining and processing methods. High grade, massive sulphide mineralisation commences at or very near to surface with ore grades of +20% Zn+Pb, which are expected to provide a quick payback period.
Over the initial 6-year mine life, mining will be by open pit for 3 years followed by underground mining utilising room and pillar extraction for another 3 years.
Utilising standard sulphide floatation processing, Oposura is expected to achieve annual metal production of about 19,000 tonnes of zinc, 10,000 tonnes of lead and 145,000 ounces of silver in separate zinc and lead-silver concentrates. Concentrate grades of +53% zinc, +60% lead and +320g/t silver are projected, with both concentrates containing very low levels of deleterious elements. These attributes are expected to make the concentrates very attractive to end-users.
Small-Scale Mining Operation
Meanwhile, Azure is undertaking a small-scale mining and processing operation to generate cash flow to fund the Feasibility Study and assist the development of the stand-alone, full-scale mining and processing operation.
Under this small-scale opportunity, easily-accessible, near-surface, high-grade mineralisation is expected to be mined at approximately 3,000 tonnes per month, with production of about 750-1,000 tonnes per month of separate high-grade zinc and lead-silver concentrates, generating significant positive cash flow for the Company.
The expected timeline for development of Oposura is:
- Commencing small-scale high-grade mining and toll treatment in 2019
- Completing the Pre-Feasibility Study by early 2020
- Completing the Feasibility Study by mid-2020
- First full-scale production by early to mid-2021