Name of the Project
Hermosa zinc/lead/silver sulphide project.

Location
The Hermosa property, which comprises the Taylor zinc/lead/silver sulphide deposit and the Central silver/manganese/zinc oxide deposit, is located about 80 km south-east of Tucson, Arizona, and is about 13 km north of the US border with Mexico.

Client
Arizona Mining.

Project Description
An updated preliminary economic assessment (PEA) on the project has significantly enhanced the Hermosa project.

The updated PEA illustrates a world-class project, with all key financial metrics improved relative to the previous study, and one of the world’s largest zinc resources and a top-five zinc equivalent producer.

The PEA envisages average production of 946-million pounds a year of zinc equivalent in the first five years of production.

The project has estimated measured and indicated resources of 101-million tons grading 10.4% zinc equivalent, up 39% on the 2017 PEA, and an inferred resource of 44-million tons grading 11.9% zinc equivalent, an increase of 13% on the 2017 PEA. The Taylor project also has globally significant contained silver of 214-million mineable ounces. This does not include the nearly 200-million-ounce endowment in the Central deposit.

The updated PEA for the Taylor sulphide deposit is based on an underground mine plan. The zinc/lead/silver resource will be hoisted to the surface by a shaft and processed through a 10 000 t/d concentrator.

The initial mine plan is based on 96.7-million tons of measured, indicated and inferred 4% zinc, 4.3% lead and 2.2 oz/t silver.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at an 8% discount rate, of $1.98-billion, a 57% increase compared with $1.26-billion in the 2017 PEA. The project has an improved after-tax internal rate of return of 48%, compared with 42% in the 2017 PEA.

An after-tax payback of 1.6 years is envisaged in the updated PEA, compared with 1.7 years in the 2017 PEA.

Value
The updated PEA estimated preproduction capital is $519-million, compared with $457.17-million in the 2017 PEA. This includes $126-million for the shaft, $98-million for the process plant, $90-million for site infrastructure, including a backfill plant and a tailings storage facility, $58-million for underground development, $64-million for contingency and $44-million for mining equipment.

Duration
The first mineralised material to plant from the Taylor deposit is expected to begin in 2020 and ramp up to 10 000 t/d in 2023.

Latest Developments
South32 has postponed the completion of a prefeasibility study (PFS) for the Taylor deposit at the Hermosa base metals project to the second half of June 2021.

The miner initially aimed to have a PFS for Taylor completed in the September quarter of this year.

Study work to date has supported a potential unconstrained development of Taylor, including its integration with the Clark deposit, for which a scoping study is under way.

The Taylor deposit hosts about 155-million tonnes grading 3.39% zinc, 3.67% lead, 69 g/t silver for about 5.3-million tonnes of zinc, 5.7-million tonnes of lead and 344-million tonnes of silver, while the Clark deposit has a resource of 55-million tonnes grading 2.31% zinc, 9.08% manganese and 78 g/t silver.

Key Contracts, Suppliers and Consultants
None stated.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Arizona Mining, tel +1 604 687 1717, fax +1 604 687 1715 or email info@arizonamining.com.