Callinex Mines (CNX.V) has signed a binding purchase agreement with Newmarket Gold (NMI.TO) whereby Callinex will acquire Newmarket’s Point Leamington project in Newfoundland, Canada. Leamington is an advanced stage project with an inferred resource estimate of just over 14 million tonnes with an average grade of 6.2% zinc-equivalent.
The zinc-equivalent grade is based on a zinc grade of 1.86%, whilst the inferred resource also contains gold (1.07 g/t), silver (just over half an ounce per tonne) and approximately 0.42% copper. The average rock value per tonne based on the 6.2% zinc-equivalent grade is approximately US$120/t and if you’d consider this to be a zinc project, the value of the by-products would be $80-85/t and this could indicate the eventual production cost of the zinc could be pretty low.
Newmarket probably wanted to sell the project as it wants to profile itself as a debt-free and profitable Australian gold producer, and as Callinex is paying just C$115,000 in cash as well as an additional C$400,000 in cash or shares, the price tag for this project is pretty low, considering Leamington contains approximately 600 million pounds of zinc, half a million ounces of gold, 7.6 million ounces of silver and 130 million pounds of copper. This diversification bodes well for Callinex’ financing options, as a gold and/or silver stream could definitely be a possibility to finance the construction of any potential mine there.
But of course, Callinex will have quite a bit of work to do before getting to the moment a construction decision will have to be made. We’re looking forward to learn more about Callinex’ exploration plans, and the recent C$4.2M capital raise will definitely help the company to fund the 2016 and 2017 exploration program. Callinex issued 7 million flow-through and 7 million non-flow through shares to raise the C$4.2M, and by acquiring Point Leamington, the company will now be able to publish exploration results on a year-round basis.
Go to Callinex’ website
The author has a long position in Callinex Mines. Callinex is a sponsor of the website. Please read the disclaimer
