US-Solitario Zinc Corp-Alaska
On August 31, 2017, Solitario iinitiated metallurgical testing to determine the potential to recover silver at its recently acquired Lik zinc project in Alaska. The Lik resource, besides being a high-grade zinc deposit, contains a significant silver inventory that averages about 50 grams per tonne silver. Metallurgical testing to date has focused on the recovery of zinc and lead with virtually no work conducted on silver recovery.
In the 2014 Lik PEA, the economic model assumed less than 5% silver recovery in the zinc and lead concentrates combined. With approximately 29.1 million ounces of silver in the Indicated Resource category, and another 6.5 million ounces in the Inferred Resource category, there is potential for a significant benefit to project economics if silver recoveries can be improved. Solitario has engaged RDI Resource Development Inc. to manage the metallurgical test work. This initial phase of test work is estimated to be completed in the fourth quarter of 2017.
Solitario is the operating partner in a 50/50 joint venture with Teck on the Lik. The joint venture agreement was originally drafted in 1983 between two entities no longer involved with the project. The two halves of the agreement survived through multiple entities, the non-operating half eventually bought by Cominco and then inherited by Teck. International Paper held the operating half of the partnership for many years until Zazu purchased it in 2007. The joint venture agreement gives Zazu the one way right to earn an additional 30% interest - for a total of 80% - by meeting spending commitments by 2018. The spending commitments can either be made by Solitario or by a third party acting for the betterment of the project. The amount for the additional earn in is (pre-inflation adjusted) US$25mm. Zazu estimates this amount to be around $45mm by 2018, once adjusted for inflation.