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Lik Zinc Project – Alaska

Introduction

On April 26th, 2017 Solitario and Zazu Metals Corp. (Zazu) signed an Arrangement Agreement through which Solitario acquired all outstanding shares of Zazu.  Zazu’s principal asset was a 50% interest in the high-grade surface-mineable Lik zinc deposit.  Lik is located about 90 miles from Kotzebu, Alaska and 14 mi. from the world class Red Dog zinc deposit owned by Teck American, Inc. (Teck). The deposit is 12 mi. from the 52-mile ore transport road which provides access for the Red Dog mine to a port facility with ore concentrate loading facilities.  Both the road and port are owned by the state of Alaska.  Solitario’s 50% interest in Lik is held in a Joint Venture with Teck.  Solitario is the operator of the Joint Venture.

Initially discovered in 1970, several companies conducted early exploration programs over the Lik Deposit.  From 2007 to 2011 Zazu Metals completed a delineation drilling program that provided the basis for the current mineral resource.  In 2014 Zazu published a Preliminary Economic Analysis (PEA) of a stand-alone mining operation with an open pit mine, an onsite processing facility with conventional milling and floatation circuits and a dedicated tailings facility.  Potentially underground minable resources were not considered in this analysis.  The following table summarizes the 2014 resource.

Total Mineral Resource Estimate, December 31, 2013, Zazu Lik Deposit

Notes:

  1. CIM Definitions were followed for Mineral Resources.
  2. Mineral Resources are estimated using an average long-term zinc price of $2.65/kg, lead price of $2.65/kg and silver price of $0.95/g.
  3. A density value of 3.5 g/cm3(0.109 tons/ft3) was used.

 

Mineral resources that are not mineral reserves do not have demonstrated economic viability. It includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized.

The 2014 PEA was prepared by JDS Energy and Mining Inc. in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects.  The PEA results showed that Lik has potentially economic viability using conservative metals prices:  Zinc: $1.00/lb., Lead: $1.01/lb. and Silver: $19,43/oz.  The economic analysis using these price assumptions modeled an NPV/after-tax NPV of $150.5 million/$83.0 million respectively.   The PEA assumed that the Lik deposit would be constructed as a self-contained operation so no benefits from nearby mining infrastructure were considered.

Ownership, Location and Access

The Lik property comprises a contiguous group of state mining claims located in the Northwest Arctic Borough of Alaska.  The geographical coordinates of the Lik deposit are about 163º 12’ W and 68º 10’ N and the mineral property covers an area of 2,225 hectares. The following figure illustrates the general location of the Lik property.

Lik is located in the world class Red Dog Zinc District which is dominated by the Red Dog mine owned by Teck.  Red Dog began production in 1989 and has been the largest zinc producer in the world most years since that time.  The town of Kotzebue, which is located about 90 miles from the deposit, is a seaport and is serviced by a regular air service from Anchorage.

Regional Geologic Setting

The regional geology of the Western Brooks Range area is structurally complex. The sedimentary rocks of the area have been disrupted by thrust sheets or allochthons. The Lik property and the other zinc-lead deposits of the Brooks Range, including Red Dog, are hosted in the Paleozoic (Carboniferous) Kuna Formation of the Lisburne Group. In the Western Brooks Range, the Lisburne Group includes both deep and shallow water sedimentary facies and local volcanic rocks.  The deep-water facies of the Lisburne Group, the Kuna Formation, are exposed chiefly in the Endicott Mountains and the structurally higher Picnic Creek allochthons.

In the Red Dog plate of the Endicott Mountains allochthon the Kuna Formation is divided into two units, the Kivilina and the Ikalukrok Units and consists of at least 122 m of thinly interbedded calcareous shale, calcareous spiculite and bioclastic supportstone overlain by 30 m to 240 m of siliceous shale, mudstone, calcareous radiolarite and calcareous lithic turbidite. The Ikalukrok Unit in the Red Dog plate hosts all of the massive sulfide deposits in the area.

Property Geology

At the Lik property, the immediate host rocks are carbonaceous and siliceous black shale, with subordinate black chert and fine-grained limestone. These rocks strike broadly north-south and dip at about 25º to 40º to the west. The massive sulfides are overlain conformably by rocks of the Siksikpuk Formation. The sequence is overridden by allochthonous rocks that form high hills north and west of the deposits.

Mineralization

The Lik deposit is a syn-sedimentary stratiform zinc-lead-silver deposit. The deposit is continuous outside the Lik property onto the adjacent Teck property to the south. The southern continuation of the Lik deposit is referred to as the Su deposit, lying on the Su property owned solely by Tech.

Within the Lik property, the deposit is divided into two parts by the Main Break Fault. The main part of the deposit within the existing claims is referred to as the Lik South deposit. As presently tested, the Lik South deposit’s longest axis is about 1,100 m long and about 600 m wide. It has been tested down dip to a depth of about 150 m to 200 m. North of the Main Break Fault, the Lik North deposit is about 700 m long and about 350 m wide. It has been tested down dip to a depth of about 300 m.  The following typical cross section shows the geometry of the deposit showing intercepts of lead(%), zinc(%), silver(g/t) and thickness(m).

The deposit strikes broadly northerly and dips westerly at about 25º to 40º. The mineralization comprises stratiform lenses. The mineralogy of the sulfides is simple and is comprised of pyrite, marcasite, sphalerite, and galena, with rare tetrahedrite, bournonite and boulangerite. Gangue minerals include quartz (as chert), clay minerals, carbonate and barite. Typical grades of mineralized intersections within the Lik deposit are listed in the table below:

Typical Mineralized Intersections

Sulfides were deposited in four distinct cycles. The cycles are better developed close to the likely hydrothermal source of the mineralizing fluids. Individual cycles may be quite thin near the margins of the deposit with the thickest accumulation in a single cycle noted to date is about 13.7 m. The base of a sulfide cycle begins abruptly with the deposition of sphalerite, galena and pyrite. Typically, the highest grades are found at or within a few metres of the base of a sulfide cycle. Massive or finely bedded sphalerite and galena decrease in grade upward within a cycle. Pyrite increases relative to sphalerite and galena, forming bands of massive or colloform pyritic sulfides. Higher in the cycle, pyrite decreases and forms nodular or colloform semi-massive pyrite layers interbedded with black chert or strongly silicified black claystone. The tops of the cycles generally contain the highest marcasite concentrations. Locally, another cycle begins before the earlier cycle is finished. Lateral variations appear to mimic the vertical variations. Primary breccia textures in sulfides are common in high-grade areas but do not form a large percentage of the overall sulfide mass.

Metallurgical Testing and Processing

There have been five metallurgical testwork reports issued to date on the Lik ores. The most recent and comprehensive processing and metallurgical testing programs include work performed by G&T Metallurgical Services Ltd. (G&T) in Kamloops, BC, Canada, and by SGS Mineral Services (SGS) in Vancouver, BC, Canada.

Samples collected during drilling in 2007 and 2008 were composited into one Master Composite for testing at G&T in 2008, and later testing by SGS was carried out in 2010 on the remainder of the Master Composite.These key testing results have formed the basis for the economic evaluation of the Lik Deposit.Results are summarized in Table 1-2.

Table 1‑2: SGS 2010 and G&T 2008 Test Results

The metallurgical flowsheet for this PEA includes conventional crushing, grinding, and flotation processing methods. Run-of–Mine (ROM) ore will be delivered to a primary crushing plant and stored in a coarse ore stockpile awaiting reclaim into the grinding circuit. Crusher ore will be reclaimed and delivered to a two-stage grinding circuit equipped with a Semi-Autogenous Grinding (SAG) mill and a ball mill in closed circuit with cyclones.

Recoveries from these modeled methods and metallurgical testing conducted to date are anticipated to be 85% of zinc to the zinc concentrate and 70% of the lead to the lead concentrate. Silver is also recovered and payable at times in the zinc concentrate and more significantly in the lead concentrate.

Mining Methods

The Lik Deposit’s southern portion (Lik South) is the focus of the PEA and will be mined using open pit, truck/shovel, and/or truck/loader mining methods. Pit optimization was carried out on the model and forms the basis to support a 5,500-metric ore tonnes-per-day open pit mining and milling operation. JDS estimated the optimized, mineable open pit Mineral Resources to be 17.1 million tonnes at estimated grades of 7.7% zinc, 2.6% lead, and 47.5 g/tonne of silver.

Recent Developments

On April 3, 2018 Solitario and Teck announced the approval of a jointly funded budget for a new work program on the Lik zinc project in Alaska. This is the first time that project work has been jointly funded.   Zazu Metals, acquired by Solitario in July 2017, had sole-funded the project as part of an option earn-in agreement.

To leverage Teck’s thirty years of successful exploration and operational experience in the Red Dog district, Solitario and Teck agreed that Teck will act as project operator for this 2018 program.  The proposed work will begin once appropriate permits are obtained and will consist of surface geologic, geophysical and environmental work, as well as Lik camp rehabilitation.  Specific activities include:

  • Geologic mapping of the property block to better understand the stratigraphy and structure and to aid in the development of drill targets.
  • A geophysical program will consist of a new gravity survey over a substantial part of the Lik property block.  Other geophysical work consists of compilation and merging of past Induced Polarization geophysical surveys.  Teck has had success in the greater Red Dog zinc district using geophysical tools to detect moderately to deeply buried zinc deposits.
  • Relogging of Lik core will compare Lik to deposits in other parts of the Red Dog Zinc District.
  • Camp rehabilitation is necessary for future use of the established infrastructure.
  • An assessment of previous environmental work will determine what additional studies are required as the project advances.

 

The 2018 work program is designed to be the first-step in identifying new drilling targets and assessing the path forward for project development.

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This web site also contains information about adjacent properties on which we have no right to explore or mine. We advise U.S. investors that the SEC’s mining guidelines strictly prohibit information of this type in documents filed with the SEC. U.S. investors are cautioned that mineral deposits on adjacent properties are not indicative of mineral deposits on our properties.