Solitario Zinc Corp. is pleased to announce that drilling will commence within the next several days on its Florida Canyon zinc project in northern Peru. Two core drilling rigs with helicopter support have been mobilized to the site.
The Florida Canyon Project is held in a joint venture between Solitario (39%) and Nexa Resources (61%), the world's fourth largest zinc miner. All permits required to begin drilling have been received and a new 39-month community agreement has been signed. Nexa is the manager of the project.
The program consists of drilling 41 core holes totaling approximately 17,000 meters (56,000 feet) designed to test highly prospective resource expansion opportunities identified by deposit modeling during preparation of the 2017 Florida Canyon PEA. Proposed drilling is focused on significant gaps and offsets within and around the drill pattern defining the known high-grade zinc-sulfide resource. Drilling is expected to continue until all 41 core holes are completed, but, depending on this year's weather pattern, the rainy season may interrupt the program. The rainy season generally occurs from December through March.
Significant progress in interpreting Florida Canyon mineralization was made in 2018 with the relogging of all previously drilled core totaling approximately 117,000 meters in 487 core holes. An informative video found here describes the conceptual drilling program and the local and property-wide exploration potential within and surrounding the Florida Canyon deposit. Drilling will test for extensions of high-grade zinc-sulfide mineralization in four different areas of the deposit. (Map link to North Areas) (Map link to San Jorge).
Chris Herald, President and CEO of Solitario, commented, "This drilling program is the culmination of an intensive 18-month effort to better understand the geometry of Florida Canyon mineralization and the potential scale of the project, which we believe is significantly larger than is currently defined. The objective of this drilling campaign is to add significant new resources to the existing Florida Canyon resource base. Every drill hole is designed to intersect high probability extensions to known high-grade zinc mineralization. We are excited about the impact this drilling could have on project economics. We are very pleased with the cooperation and support that the local communities have confirmed with the signing of a new long-term community agreement. This agreement ensures employment opportunities for local residents and provides for construction of road access to important community centers and project work areas."
Mr. Walt Hunt, COO for Solitario Zinc Corp., who is a qualified person as defined by National Instrument 43-101, has reviewed the technical information contained within this release.
Terms of the Florida Canyon Joint Venture and Funding of the 2018/2019 Drilling Program
Solitario and Nexa have agreed to jointly fund the cost for the 2018/2019 drilling program with Nexa contributing 70% and Solitario funding 30%. Funding that Solitario contributes towards the drilling program will be fully credited towards repayment of a construction loan facility Nexa provides to Solitario for project construction (see below).
Solitario owns a 39% interest and Nexa owns a 61% indirect interest in the Florida Canyon project. Nexa can earn a 70% interest in the Florida Canyon 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%, and at the request of Solitario, Nexa has further agreed to finance Solitario's 30% participating interest for construction through a project loan. Solitario will repay the loan facility through 50% of its net cash flow distributions from production.