Superior Lake in $16m zinc deal

Perth-based Superior Lake Resources is selling one of its zinc assets to a Toronto-listed explorer for $16.5 million, and will become a major shareholder of the company.

Superior Lake, formerly Ishine International Resources, had acquired the Pick Lake zinc project when it purchased Superior Mining in 2017.

The past producing project is located in northwest Ontario, in Canada.

It operated briefly in 1998 and produced 173,000 tonnes of zinc ore before operations were suspended in December that year, ultimately due to a poor zinc price at the time.

Superior Lake has since developed the asset, bringing it it to a bankable feasibility study stage last year.

The BFS outlined a highly profitable zinc operation that holds a net present value of $US157 million (today, around $A215.6 million).

The asset is set to produce 325,000t per annum at an average zinc grade of 13.7 per cent.

It is expected to operate at a low cost over an initial nine-year mine life.

CROPS will acquire Pick Lake by issuing 128.9 million shares to Superior Lake subsidiary Ophiolite Holdings, which will become around a 70 per cent shareholder.

CROPS has made an initial cash payment of $C25,000 (around $A26,000) to Ophiolite, and will pay a further $A200,000 cash upon completion of the transaction, which is subject to approval of both CROPS and Superior Lake shareholders.

Superior Lake director Grant Davey said it was an excellent outcome for the company.

He said it allowed “a highly reputable Canadian team with a strong track record in mine development” to develop the Pick Lake asset.

“This transaction enables our shareholders to retain exposure to the project while management turns its focus to adding shareholder value through other development opportunities in the resources sector,” Mr Davey said.

CROPS chief executive Simon Ridgway said the company had exploration geologists on board who knew the Eastern Canadian area well.

“The exploration targets defined by the geophysical and geochemical work completed by Superior Lake represent an excellent opportunity to add years to the mine life defined by the BFS,” Mr Ridgway said.

The transaction is also subject to CROPS undertaking a $C3 million capital raising.

Superior Lake will seek shareholder approval for the sale at a general meeting to be held towards the end of next month.

Its shares closed down 2.7 per cent to trade at 18 cents each.