Heron Resources aiming to tap into 2018 zinc supply gap with near-term Woodlawn project

TORONTO (miningweekly.com) – Heron Resources is looking towards 2018 for first production from its flagship Woodlawn zinc/copper brownfield project, at about the same time that the zinc supply gap is expected to be at its peak.

“Woodlawn is one of the very few near-term zinc production projects, positioned to tap into the strong fundamentals of zinc,” CEO Wayne Taylor told Mining Weekly Online during a recent interview.

The Woodlawn project was based at the former Woodlawn mine site, 30 km south of Goulburn and 220 km southwest of Sydney, and comprised two significant polymetallic resources – the Woodlawn underground project (WUP) and the Woodlawn tailings retreatment project.

Woodlawn saw historical production of 13.1-million tonnes grading 9.1% zinc, 3.6% lead, 1.6% copper, 74 g/t silver and 0.5 g/t gold.

A mineral resource of 9.83-million tonnes, grading 2.25% zinc, 0.51% copper, 1.33% lead, 0.31 g/t gold and 32 g/t silver had been estimated for the tailings. The WUP held resources of 6.5-million tonnes grading 17% zinc equivalent.

Taylor explained that the tailings retreatment project was an integral part of the ongoing feasibility study at Woodlawn. The retreatment project was based on the reprocessing of the tailings generated from the Woodlawn openpit and underground mining operations between 1978 and 1998.

According to Taylor, new advances in technology had made it possible for the company to economically mine the tailings, which was comparable to Trevali’s Cariboo project, in New Brunswick.

An April 2015 preliminary economic assessment (PEA) had estimated that the WUP would have a post-tax net present value of around A$300-million and an internal rate of return of 46%.

Over the 11-year mine life, the Woodlawn project was expected to produce some 353 000 t of zinc, 77 000 t of copper, 112 000 t of lead, 8.9-million ounces of silver and 59 000 oz of gold.

C1 costs of $0.01/lb of zinc were expected to place the project in the lower half of the cost curve.

The PEA also estimated that the project would generate a net cash flow after tax of A$594-million.

Taylor stressed that the project could be developed for a relatively modest capital expenditure of between A$160-million to A$170-million. The project had been fully permitted since 2013 and was shovel ready, pending financing. Meanwhile, the company was well funded with about A$23-million in the bank.

Heron was currently working on completing a feasibility study before end-June, which could be the catalyst to secure project funding, after which a 14-month construction period would follow.

Taylor believed in zinc’s strong fundamentals. “Despite there having been a plateauing of demand, several significant mine closures in recent months owing to depletion would start chipping away at the significant inventory levels,” he said, noting that zinc had been the commodity that saw the most restraint and discipline of all commodities during the price downturn.