Florida Canyon Zinc Project - Peru

Florida Canyon Update

On February 12, 2018 Solitario announced the planned 2018 work program, additional property acquisitions and newly defined exploration opportunities on its Florida Canyon Zinc Project in Peru. Highlights of the planned 2018 work program include completion of the access road into the mineralized portion of the project area and permitting that will allow new underground tunneling, surface drilling and other activities associated with the future development of the project.

The terrain at Florida Canyon is steep and all previous project access supporting surface and underground work programs was conducted by helicopter. The lack of road access restricted the scope of field activities to further advance the project. With the completion of the road, heavy equipment will be able to enter the project area and allow feasibility related activities to proceed efficiently. Important future activities that will be facilitated by the completion of the road are the construction of an underground tunnel into the Karen-Milagros high-grade zinc zone, detailed underground resource/reserve definition drilling, surface drilling designed to increase the project resource and additional feasibility/infrastructure-related studies. Work is scheduled to begin in May after the rainy season ends and continue until the road is completed.

Approximately 5,400 hectares (13,300 acres) of new concessions covering prospective geology and geochemistry were acquired by Nexa in late-2017 on the northern border of the Florida Canyon claim block. Earlier in 2017 Nexa filed for 6,500 hectares (16,100 acres) of new concessions. The consolidated Florida Canyon land position now stands at 48,700 hectares (120,300 acres). A current property map can be accessed here.

Solitario recently engaged SRK to develop an exploration plan at Florida Canyon aimed at identifying low risk/high-probability of success resource expansion opportunities at Florida Canyon. The study focused on defining significant new high-grade zinc-sulfide mineralization immediately adjacent to the existing defined resource. The study delineated a program that has high-potential to expand the current resource by over 50% with a 41-hole, 17,000 meter drilling program. A link to a video describing the exploration potential within and surrounding the Florida Canyon deposit can be found here.

On August 2, 2017, Solitario announced results from its Preliminary Economic Assessment (“PEA”) for its high-grade Florida Canyon Zinc Project, formerly called the Bongará Zinc Project.

Project and PEA Background Information

During the past eleven years, core drilling, both surface and underground, tunneling, metallurgy, and various other engineering studies were conducted and funded by Solitario’s joint venture partner Nexa Resources S.A. (formerly Milpo/Votorantim Metais).  In 2014 Solitario completed a NI 43-101 compliant resource estimate for the Florida Canyon deposit (see Solitario news release dated June 23, 2014).  The resource estimate was based on 486 core holes totaling approximately 117,280 meters of drilling. 

In November 2016, Solitario announced it would initiate a PEA on the Florida Canyon deposit.  In January 2017, SRK Consulting (U.S.), Inc. (“SRK”), an independent and internationally recognized mining engineering firm, was engaged to complete the PEA.  In April 2017, Nexa elected to participate in funding and preparation of the PEA.

Summary of Key Economic Inputs (100% basis of project)

Mine Plan Resource

The Florida Canyon deposit consists of high grade zinc and lead sulfide bodies with silver credits contained in both flat lying “mantos” and more steeply dipping breccia bodies. The resource has been estimated using 486 surface and underground core holes. Twenty individual domains have been constrained in the resource model by wireframed 3D solids.

The Mine Plan Resource takes into account metallurgical recoveries based on composition. It is neither a Mineral Resource or a Mineral Reserve as defined by CIM guidelines. It is presented to define the material used in the preparation of the mine plan for this PEA.

Although the modeled mineralization is primarily sulfide, oxidation of the ore is also present. Metallurgical testing shows that mixed ore can be economically processed with good recovery of metal. Blocks in each domain in the Mine Plan Resource model have been assigned a grade, density and metallurgical recovery in order to define their net smelter return value. Internal mining dilution of 34% has been applied. These block-by-block NSR values were used to design the mine plan. The average NSR value of the mineable resource is $148.16 per tonne.

Mine Plan Resource (100% basis)

*Net Smelter Return is calculated using variable recoveries based on sulfide/oxide ratios (recovery ranging from 32%-93%), a Zn price of $1.20/lb, a Pb price of $1.00/lb, an Ag price of $17.50/oz. The transportation charge is $70.00/t conc, Zn treatment charge of $115/t conc, Pb treatment charge of $100/t conc, Zn refining charge of $0.115/lb Zn, and Pb refining charge of $0.1/lb Pb. These factors were used for mine planning and vary somewhat from the final economic model.

**ZnEq estimate is based on a NSR value of $19.62 per 1% ZnEq. The $19.62 is calculated using a Zn price of $1.20/lb, a Pb price of $1.00/lb, an Ag price of $17.50/oz. The ZnEq also includes TC/RC and transportation costs and assumes an average Zn recovery of 78.15% which differs somewhat from that presented in the economic model. An example of the NSR to ZnEq calculation is (148.16/19.62)/0.7815.

Conservative Pricing Alternative

Included in the Florida Canyon PEA is an alternative economic analysis of the project using much lower metal pricing to gauge how the project would perform in a lower metal price environment. Prices used in this alternative case scenario were $1.06/lb. zinc and $0.88/lb. lead. The alternative case also used a higher discount rate of 9%. Cost inputs remained the same as in the base case scenario. Under this lower price scenario, the project is still attractive with an after-tax NPV9% of $106 million and an after-tax IRR of 19.1%.

Mine Plan

The PEA envisions the mine as an underground operation utilizing conventional mining methods with an average throughput rate of 2,500 tonnes per day, or approximately 912,000 tonnes per year. Depending upon the geometry of the ore zones, longhole stoping will be used in steeply dipping zones and mechanized drift-and-fill extraction methods in shallowly dipping mantos. Minimum mining heights of drift-and-fill stopes are 3m or 4m depending on the geometry of the ore. Longhole stopes will be developed on 16m sublevels. Stopes of 8m or less in width will be developed longitudinally whereas stopes with thickness of greater than 8m will be developed by transverse stoping.

Cemented paste backfill will be placed underground to increase mining recovery and to stabilize mined-out areas. Adits provide access from the surface to the ore zones in the currently defined mine plan. The mill head grades from the mine do not vary significantly during the first ten years, but the grade in the final three years of the current mine plan is moderately lower.

Processing and Metallurgy

The PEA incorporates a conventional mill design flow sheet with three-stage crushing followed by single-stage grinding to 80% minus 44 microns, with two multi-stage flotation circuits. The first circuit will produce a lead concentrate and the second multi-stage flotation circuit, the zinc circuit, receives tails from the lead circuit to produce a zinc concentrate. Both final concentrates will be transferred to their respective thickeners and then filtered (10m2 filtration area for lead concentrate, and 60 m2 filtration area for zinc concentrate) to approximately 9% moisture before being trucked offsite to smelters. Under average conditions, it is expected that Florida Canyon will produce approximately 287 tonnes per day of zinc concentrate grading 50% zinc and 46 tonnes per day of lead concentrate grading 50% lead.

Tailings from the flotation plant will be thickened to approximately 50% solids by weight. A fraction of the tails representing approximately 60% of the solids will be piped to a filtration plant located by the tailings storage area and then dry stacked at a moisture of approximately 17% by weight. Water recovered in the tails filter will be recycled to the process plant. The remaining 40% of the solid’s stream will be transfer to a backfill plant to be used in the underground operation.

Metallurgical testing has indicated that the ore does not contain penalty elements that would attract extra smelter charges.

Location, Infrastructure and Power

The project is located approximately 8 km from a paved road that connects coastal northern Peru with the Amazon basin. Infrastructure required for mining includes expansion of a local access road network, a mill, new mine development and a dry stack tailings facility. Power will be provided by a hydroelectric facility owned by a third party.

Environmental and Social Considerations

The small footprint of the underground mine design reduces surface disturbance and the use of tailings backfill minimizes the storage requirement for tailings on the surface. Waste rock will be used in tailings facility construction and for underground structural fill, thereby minimizing the need for waste storage on the surface. Low iron sulfide content in waste and ore combined with carbonate host rocks creates a net neutral geochemical environment which minimizes impacts to local water resources. The use of locally produced hydroelectric power will reduce air emissions compared to on-site power generation.


Delineating additional resources is the most promising opportunity to significantly enhance project economics. The most prospective targets include:

1. Extension drilling south of the San Jorge zone and northeast of the Karen-Milagros zones are considered the highest priority to increase high-grade zinc sulfide resources. Both zones are open in the recommended areas of drill testing.
2. Infill drilling several large un-drill tested areas surrounded by mineralized zones within the mineralized footprint has the potential to significantly increase resources.
3. Extension drilling peripheral to the currently defined mineralized footprint.
Further development of drill targets over the 20 kilometer-long northern Florida Canyon mineralized corridor where large areas of strong zinc in soil and rock chip geochemistry indicate the potential for additional mineralized zones.
4. As the mineralization remains open in several directions, it is anticipated that the mine life could be extended with additional exploration drilling. More detailed mine scheduling could optimize revenues in the early part of the mine life and further enhance project economics.

Although metallurgical studies to date indicate excellent zinc recoveries in sulfides (+90%), it is likely that higher average recoveries and a higher concentrate grades can be achieved for the global resource base. More detailed metallurgical optimization tests are required to determine this.

Additional trade-off studies may develop more efficient tailings management to reduce construction and closure costs.

A Technical Report in support of the 2017 PEA prepared in accordance with National Instrument 43-101 Standards for Disclosure for Mineral Projects (“NI 43-101”) will be filed on SEDAR within 45 days of the August 2, 2017 news release. The summary results of the PEA are preliminary.  For the full details and further information with respect to the key assumptions, parameters, and risks associated with the results of the PEA, the mineral resource estimates included therein, and other technical information, please refer to the complete Technical Report to be made available at SEDAR.


In April 2017, Solitario announced that our partner, Nexa Resources S.A. (formerly Milpo/Votorantim Metais), elected to participate in the development and funding of a Preliminary Economic Assessment on the Florida Canyon zinc deposit.

In February 2017, Solitario & Milpo (now Nexa Resources S.A.) significantly increased joint venture property holdings in northern Peru by acquiring 6,500 hectares (16,055 acres) of new mineral concessions in early January 2017. The acquired property fills an ownership gap in our consolidated claim position held by the Florida Canyon and Chambara joint ventures, both of which are mutually owned by Solitario and Nexa (click here).

The newly acquired concessions were previously held by a third party for approximately the past 20 years, but the claims recently expired allowing Milpo (now Nexa Resources S.A.)/Solitario to acquire the property the first day it became available for staking.  With these new mineral rights, the joint ventures have secured the most attractive geologic terrain for the future expansion of zinc mineralization outside of our core Florida Canyon claim group.

The attached map shows the position of the existing Florida Canyon joint venture claims, the Chambara claims and the new Chambara claims.   Although the Florida Canyon and Chambara joint venture agreements with Nexa are similar (see “Terms of the Florida Canyon and Chambara Joint Ventures” below), current participating interests differ significantly with Solitario owning 39% of the Florida Canyon joint venture and 85% of the Chambara joint venture (Milpo 61% and 15%, respectively).

In January 2017, Solitario engaged SRK Consulting to complete a Preliminary Economic Assessment ("PEA") on its Florida Canyon high-grade zinc deposit which is expected to be completed in the second-quarter 2017.

SRK Consulting (U.S.), Inc. ("SRK") is an independent and internationally recognized mining engineering firm with offices in both Peru and the United States, among other international locations. A total of 486 core holes (117,280 meters) have been drilled on the project. Work to date has demonstrated that Florida Canyon is a high-grade zinc deposit with an average resource grade in excess of 12% zinc equivalent, has a relatively large resource base with excellent expansion potential, and produces a clean high-grade zinc sulfide concentrate. SRK previously prepared a NI 43-101 Technical Report on Resources for the Florida Canyon Project in 2014.

Florida Canyon is currently our core asset. It is an advanced exploration stage high-grade zinc project located in northern Peru. We are fully carried to production by our joint venture partner Nexa. We are not required to contribute any funds prior to the completion of a feasibility study and our share of mine construction costs will be funded by a loan from Nexa and repaid from 50% of the net proceeds from production attributable to our 30% interest. Based on the high-grade zinc content of the defined resources, and the fact that the deposit remains open to expansion, we believe it is one of the best undeveloped zinc projects in the world.

Terms of the Florida Canyon Joint Venture with Nexa Resources S.A. (formerly Milpo/Votorantim Metais)

Currently, Solitario owns 100% of the Florida Canyon project.  Since inception of the joint venture in 2006, Votorantim/Milpo (now Nexa Resources S.A.) has funded 100% of project expenditures.  Nexa can earn up to a 70% interest in the project by continuing to fund all project expenditures and committing to place the project into production based upon a positive feasibility study.   After earning 70%, Nexa has further agreed to finance Solitario's 30% participating interest for construction. Solitario will repay the loan facility through 50% of its net cash flow distributions.

On June 23, 2014, Solitario announced the initial NI 43-101 compliant resource estimate for its high-grade Florida Canyon zinc project in northern Peru. The Mineral Resource Statement and Technical Report was prepared on behalf of Solitario by SRK Consulting (U.S.) Inc., an independent and internationally recognized mining engineering firm. SRK verified and validated a comprehensive resource model previously developed by Solitario’s joint venture partner, Votorantim Metais. The full Technical Report has been filed on SEDAR and can be accessed by clicking here.

Highlights of the Florida Canyon Resource Estimate:

  • Measured and Indicated Resources total approximately 2.8 million tonnes grading 13.0% zinc; 1.9% lead and 19.3 g/t silver; or 15.5% zinc equivalent
  • Inferred Resources total approximately 9.1 million tonnes grading 10.9% zinc, 1.2% lead and 12.2 g/t silver; or 12.4% zinc equivalent

The resource was reported using Net Smelter Return (NSR) cutoff grades by material type determined by current metals prices (zinc and lead - $0.95/lb. and silver $20/oz.) and projected mining, processing, transport and smelting costs. The resource reported in this statement is contained within a footprint of drilling of approximately one by three kilometers, with opportunities for expansion through infill and step-out exploration both laterally and vertically.

Zinc mineralization occurs as a Mississippi Valley Type (“MVT”) deposit and is contained in carbonate rocks of the Pucara rock formation, the host-rock for the many of Peru’s zinc mines. Peru is the third largest zinc producing country in the world. The Florida Canyon resource estimate was based on a database that includes drilling campaigns of two different companies. A total of 82 drill holes were completed by Cominco totaling 24,781 meters drilled from 1997 to 2000, and 404 drill holes completed by Votorantim including 92,499 meters drilled from 2006 to 2013. The drill data were verified and validated by SRK in compliance with NI 43-101 guidelines. The Mineral Resource Statement for the Florida Canyon Zinc project is presented in Table 1. Cutoff grades and their derivation are provided in the resource table notes.

An important component of SRK’s Technical Report was to differentiate three types of mineralization present within the Bongará deposit defined to date.  These are sulfide, mixed and oxide zinc mineralization.  Sulfide mineralization dominates the currently estimated resources totaling approximately 63% of the resource, with oxide accounting for 28% and mixed resources making up the remaining 9%.  In addition, SRK has acknowledged a significant amount of technical work completed by Votorantim, which has advanced the Project well into prefeasibility-level of study in some areas of development.

The Bongará Technical Report and Resource Statement was prepared by SRK Consulting (U.S.), Inc. and provides a classification of resources in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves: Definitions and Guidelines, November 27, 2010.

Development Activities

Our joint venture partner, Nexa Resources S.A. (formerly Milpo/Votorantim Metais), has advanced engineering and other development activities during the past several years. Most notably was the completion of a 43-101 compliant resource estimate in 2014 by Solitario, based upon our partner’s detailed resource work.  Another substantial metallurgical study was completed and demonstrated excellent metallurgical recovery averaging 93% for zinc. Additional permitting was undertaken to allow completion of the access road to the Florida Canyon area. To date, approximately 90% of the approximately 40-kilometer long access road has been completed.  Currently, Nexa is permitting additional surface drill sites and negotiating a new agreement with the local community.  Significant progress was also made to further refine the resource estimate.  

2013 Drilling Results

On August 20, 2013, Solitario reported further outstanding drilling results on its high-grade Bongará zinc project in Peru. Included in these results are core holes V-465, that intersected 10.7 meters grading 45.60% zinc, 5.25% lead and 106.71 gpt silver and hole V-433 that intersected 5.0 meters grading 38.22% zinc, 3.89% lead and 60.76 gpt silver.

All of these newly reported drill hole intercepts were underground core holes drilled from the San Jorge tunnel. The drilling program was managed and entirely funded by Solitario's joint venture partner. Better intercepts in this round of underground drilling are presented below. Click here to view the other important mineralized intercepts reported.

Underground drilling began in the first quarter of 2013 and was completed in the second quarter. During this period 24 core holes were drilled from the San Jorge tunnel.

On August 7, 2013, Solitario announced continued outstanding drilling results on its high-grade Bongará zinc project in Peru. Included in these results are core holes V-451, that intersected 30.7 meters grading 13.1% zinc, 5.0% lead and 32.6 gpt silver and hole V-453 that intersected 22.0 meters grading 13.7% zinc, 1.5% lead and 14.5 gpt silver.

All drill holes reported were drilled from the surface in the Karen Milagros mineralized area ("KM-Zone"). The drilling program was managed and entirely funded by Solitario's joint venture partner Votorantim Metais. Better intercepts in this round of surface drilling are presented below.

Both the KM and San Jorge mineralized zones are contained within the Florida Canyon mineralized system which remains open to expansion in all directions. A drill hole map can be accessed here.

Surface drilling began in the first quarter of 2013 and was completed in the second quarter. During this period 61 core holes were drilled totaling 7,545 meters. Four of the holes did not reach the target depth. Of the 58 drill holes that reached their target depth, 40 holes intersected mineralization grading in excess of 2.0% zinc + lead over at least two meters, or equivalent. This latest round of surface drilling was focused in the central portion of the KM-Zone that had previously been sparsely drilled. A complete listing of all KM-Zone surface drill holes reported on August 7, 2013 can be accessed here.

2012 Activity

Exceptional Drilling Results

Underground drilling on the San Jorge zone and surface drilling on the Karen-Milagros zone yielded exceptional assay results presented in the tables below.

The San Jorge mineralized area, and the Florida Canyon deposit in general, remain open to expansion in all directions. Of particular importance is the discovery that zinc grades at San Jorge increase to the south. In fact, the southernmost area tested by the underground drilling program contains some of the highest zinc grades ever encountered on the property. Based on these results, Votorantim has proposed extending the San Jorge exploration tunnel a further 300 meters to the south where high-grade mineralization remains wide open.

Solitario Zinc Corp.
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