Nexa Resources (TSX: NEXA; NYSE: NEXA) – one of the largest zinc producers in the world – has acquired a 9% stake in Tinka Resources (TSXV: TK; US-OTC: TKRFF), which is developing Ayawilca, one of the largest zinc projects in Peru.
Nexa owns Peru’s only operating zinc smelter as well as three underground base metals mines in the country, and according to Wood Mackenzie was among the top five producers of mined zinc last year.
Under the transaction, Nexa has acquired nearly 30 million of Tinka’s common shares at 26¢ per share – a 13% premium to the junior’s closing share price on March 16. (Over the last year, Tinka has traded in a range of 9¢ and 30¢ per share.)
Tinka’s 100%-owned Ayawilca zinc-silver project is 200 km northeast of Lima in central Peru’s Pasco region, and is about 40 km northeast of Volcan’s Cerro de Pasco copper-zinc-lead-silver mine and about 100 km south of the Antamina copper-zinc mine owned by BHP, Glencore, Teck and Mitsubishi.
The junior has drilled more than 75,000 metres on the 170 sq. km property and the mineralization at Ayawilca occurs as massive sulphide lenses hosted in limestones of the Pucara Group, the same host rock as at the Cerro de Pasco mine.
The project’s zinc zone contains indicated resources of 11.7 million tonnes grading 6.9% zinc, 0.16% lead, 84 grams indium per tonne and 15 grams per tonne silver (8.1% zinc equivalent) for contained metal of 1.8 billion pounds of zinc, 983 tonnes of indium, 5.8 million oz. of silver and 42 million pounds of lead. Inferred resources stand at 45 million tonnes grading 5.6% zinc, 0.23% lead, 67 grams indium per tonne and 17 grams silver per tonne (6.7% zinc-equivalent).
A separate tin zone at the project has inferred resources of 14.5 million tonnes grading 0.63% tin, 0.21% copper, and 18 grams silver (0.70% tin equivalent) for 201 million pounds of tin, 67 million pounds of copper and 8 million ounces of silver.
The resource – announced in November 2018 – was reported above an NSR cut-off value of $55 per tonne.
In a March 17 press release announcing Nexa’s investment, Tito Martins, Nexa’s CEO, described Ayawilca as “one of the largest zinc projects in development in Peru with excellent development potential as well as resource expansion.”
Tinka has 340.7 million common shares outstanding for a market cap of about $93.7 million.
(This article first appeared in The Northern Miner)