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Company: Constantine Metals Resources LTD (TSX-V:CEM, QTCQX: CNSNF)
Headquarters: Vancouver, BC, Canada with offices in Haines, Alaska, USA
Number of projects: 5
President and CEO: Garfield MacVeigh
VP, Exploration: Darwin Green
On June 3, Constantine Metal Resources Ltd. (Constantine), an advance stage, base and precious metals exploration company, reached a significant milestone when it released its Preliminary Economic Assessment (PEA) for its flagship Palmer Project in Southeast Alaska. “This PEA demonstrates a high-quality project with strong economics and a progressive, environmentally conscious mine design,” shares Constantine President and CEO Garfield MacVeigh. “Quality North American development-stage zinc-copper projects are in scarce supply, particularly projects with high operating margins and resilience to low metal price environments as demonstrated by the Palmer PEA.”
Highlights from the PEA indicate that Constantine, and specifically the Palmer Project has a Pre-Production Capital Cost of US$278 million. Factor in the after-tax Net Present Value (NPV) at 7 per cent for a total of US$266 million. The internal Rate of Return (IRR) sits at 21 per cent and the payback period is 3.3 years. All-in sustaining cost (AISC) for zinc is $0.11/lb net of by-product credits. “We are confident these numbers are a realistic reflection of the potential costs and ultimate return on this project.”
Constantine started 2018 with an 8-million-tonne resource in Palmer. A year later, the company’s resource base totals 14 million tonnes, reporting an impressive 75% increase. “The last 12 months have been busy for us,” says Darwin Green, the company’s VP of Exploration. “Palmer is an advanced exploration zinc-copper project and we’ve been very successful in growing the size of the resource and making new discoveries. There is great additional exploration upside in the Palmer vicinity and broader district.”
A key factor in this success is the strategic partnership Constantine formed with Japan’s Dowa Metals Mining (Dowa) – the operator of Japan’s largest zinc smelter. The terms of the partnership required Dowa to pay US$22million in exchange for a 49% interest in the Palmer Project in 2017. Constantine is still the majority partner with 51% ownership. “We have a partner with deep pockets, and a deep understanding for this type of deposit. We will produce a copper concentrate with gold and silver, a zinc concentrate, and a barite product, however Dowa’s main focus is to secure a long-term source of zinc concentrate that is in short supply globally. This partnership is a huge endorsement for our team and the project.” MacVeigh adds, there is more to the Palmer Project that makes it a unique and worthwhile investment. “What sets us apart from our peers is excellent access by paved all-season highway and secondary roads, close proximity to an existing Pacific port ore terminal, reasonable and manageable capital costs and significant district-scale upside for additional mineral resources.” Palmer is located within 60 kilometres of a deep-sea port, and two of Alaska’s six operating mines are fed by the same massive sulphide belt.
Meanwhile, Green cites another factor that makes the Palmer project stand out – a free mineral credit. “It comes with an industrial commodity called barite (25%) which is listed as its chemical equation BaSo4 in the report and in our mineral resource technical reports. This commodity is used in the oil industry as a weighting agent for drilling. Since it’s part of our mineralized resource and we have to mine it anyway, the cost will be very low. Most barite comes from India, China, some from Mexico. I know they have cheap labour but it’s hard to beat free.”
Constantine also owns four other gold-bearing projects – the Johnson Tract Project in Alaska as well as the Munro Croesus, Golden Perimeter and Golden Mile Projects in Timmins, Ontario. “We’ve got a solid portfolio of gold assets that we’ll be spinning out into a separate company, so it’s a very good time for investors to take a serious look at getting involved with Constantine. If you buy shares of Constantine now and prior to the share distribution record date, you will have shares in both companies following the spinout.”
Combined, the team at Constantine has decades of experience within the mining industry. “As a group we do bring a lot of technical expertise. We’ve had the good fortune to build a good internal group, which has proved itself with the Palmer discovery. We brought Dowa into the deal when it was a 4-million-tonne deposit. It’s now at 14 million tonnes and we believe there is more to be found.”
Asked to summarize why now is the time to invest in Constantine, Green offers these three reasons:
- The issuance of a PEA confirms what we’ve expected for some time – The Palmer Project in Alaska is a low cost, high return play.
- Constantine has been moving the Palmer project towards development with partner Dowa of Japan, a company well motivated to put this project into production as timely and efficiently as possible to provide zinc concentrate to their smelter in Japan
- At the time of the gold properties spinout (to be called HighGold Mining), Constantine shareholders of record will be given shares in HighGold. It’s an excellent deal as these projects have not been awarded any value inside Constantine given that the focus is on the development of the base metal Palmer project, so shareholders will realize value in those gold projects via the spinout shares.