Titan Mining acquired the Empire State Mine (“ESM”), an underground zinc mine near the town of Gouverneur, New York, in December 2016. The Empire State Mine is comprised of a group of high-grade mines – ESM #4 mine which is in production, and six historic mines. ESM #4 mine restarted mining operations in January 2018 and began producing zinc concentrate in March 2018. The six former producing mines – ESM #1, #2 and #3, Hyatt, Pierrepont and Edwards – are all within a 30-mile radius of the 5,000 tpd mill.
- Location: Gouverneur, New York
- Ownership: 100%
- Property: 80,000 acres of which approximately 2,700 acres have both fee simple surface and mineral rights
- 1,754 acres near Gouverneur where ESM #4 mine, mill and tailings disposal facility are located
- 703 acres in the town of Edwards, including the Edwards mine
- 242 acres covering the Pierrepont mine
- Primary metal: zinc
- Secondary metals: none
- Type of mining: underground
Following the completion of a Preliminary Economic Assessment in September 2017 (“2017 PEA”) and Titan Mining’s initial public offering (“IPO”) in October 2017, rehabilitation and refurbishment activities began at the ESM #4 mine and the mill, in preparation for the restart of operations in early 2018. It was anticipated that production of zinc in concentrate would recommence approximately five months after completion of the IPO. Mill commissioning was completed and first ore was hoisted in late January 2018. Throughput is expected to ramp up to a rate of 1,800 tons per day (tpd) by the first quarter of 2019.
An updated PEA was completed in May 2018. The current mine plan is based on life-of-mine (“LOM”) average throughput of 1,582 tons per day and average mill feed grade of 9.2% zinc over a mine life of eight years. The after-tax net present value at a discount rate of 8% (NPV8%) is estimated at US$183 million based on zinc prices of US$1.50/lb in 2018, US$1.45/lb in 2019, US$1.40/lb in 2020, US$1.35/lb in 2021, US$1.20/lb in 2022, and US$1.05/lb from 2023 to 2025.
LOM average annual production is estimated at 94 million pounds of zinc in concentrate, average C1 cost at US$0.70 per pound of payable zinc and average all-in sustaining cash cost (AISC) at US$0.79 per pound of payable zinc, positioning the mine to generate significant margins over the expected mine life. Between 2019 and 2023, average annual production is expected to be approximately 100 million pounds of zinc in concentrate, at an average C1 cost and AISC of US$0.65 and US$0.72, respectively, per pound of payable zinc.
The current mine plan does not include additional mineral resources defined since April 2017. In April 2018, Titan Mining reported that the inferred mineral resource had increased by 3.1 million tons at an undiluted grade of 11.88% zinc. In June 2018, the company announced that new zones containing significant historic mineralized material had been identified close to the existing infrastructure at ESM. The additional mineral resources and historic mineralized material will be considered in a new “fill the shaft” life-of-mine plan expected in the first quarter of 2019.
Titan Mining has a three-pronged approach to drive cash flow growth and maximize the value of ESM by levering excess capacity and lowering costs:
• Fill the shaft (3,000 tpd; target 150 million pounds zinc/year) and extend mine life with near-mine mineral resource additions;
• Fill the mill (5,000 tpd; target 225 million pounds zinc/year), supported by district and regional exploration;
• Modernize the operation to improve efficiencies and lower costs