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Fireweed Zinc sitting on a massive resource in Yukon with plans to unlock further value

Snapshot

The company boasts a huge land package of over 544 square kilometres (sq km) at its flagship Macmillan Pass property

Fireweed Zinc Ltd -

Quick facts: Fireweed Zinc Ltd

Price: 0.94 CAD

TSX-V:FWZ
Market: TSX-V
Market Cap: $50.58 m
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  • Huge footprint in Yukon
  • A robust maiden preliminary economic assessment
  • Good access to Asian market

What Fireweed Zinc does:

Fireweed Zinc Ltd (CVE:FWZ) (OTCMKTS:FWEDF) is a junior explorer building a district-scale zinc deposit in mining-friendly Yukon province, Canada.

The company boasts a huge land package of over 544 square kilometres (sq km) at its flagship Macmillan Pass property, which is host to the Tom, Jason, Boundary Zone and End Zone zinc-lead-silver deposits.

Tom and Jason already boast a combined resource of 11.21 million tonnes (Mt) of higher confidence indicated resources at 9.61% zinc equivalent (ZnEq) and 6.59% zinc, 2.48% lead, 21.33 grams per ton (g/t) silver, and there is potential to expand this further. The Boundary zone, Tom North zone and End zone have significant zinc-lead-silver mineralization drilled but are not yet classified as mineral resources.

Notably, an existing camp, road access and a government airstrip are already in place.

In 2018, an attractive preliminary economic assessment (PEA) was published, which indicated a long mine life of 18 years, and showed a pre-tax net present value (NPV) of C$779mln, using an 8% discount rate, with an internal rate of return (IRR) of 32%. The report demonstrated that Macmillan Pass was not just viable at the zinc, lead and silver prices levels contemplated in the study, but highly robust.

Highlights included forecasts of 32.7 Mt of mineralization mined at an average processing rate of 4,900 tons per day; 1.54 Mt of zinc, 0.88 Mt of lead, and 37mln ounces of silver in concentrate shipped; and average yearly contained-metal production of 85,000 tonnes zinc, 48,000 tonnes lead and 2mln ounces of silver.

The company used base case metal price forecasts of US$1.21 per pound for zinc, US$0.98 per pound for lead and US$16.80 per ounce for silver.

In 2018, Fireweed also closed its previously announced acquisition of the Nidd property with Teck Metals Ltd, a subsidiary of Teck Resources Ltd. Nidd lies on the western extension of the Macmillan Pass and covers 7,393 hectares in 372 mineral claims, expanding the firm's claims to 544 sq km.

With the addition of Nidd, Fireweed now has all four known large zinc mineralized systems in the region – Tom, Jason, Boundary Zone and End Zone – as well as many other zinc exploration targets including the entire highly prospective “fertile corridor”, extending from Tom to the Boundary Zone and beyond.

How is it doing:

This year started with Fireweed revealing its plans to drill at Boundary toward an initial NI43-101 resource estimate after impressive drill assays in 2019, which showed wide zones of potential open pit mineralization and assays included 100 metres (m) of 7.94% zinc from surface.

In September, it revealed that 'significant' near-surface zinc-lead mineralization has been found west of the Boundary zone, with the new target found via drilling  360 metres (m) west of previous drilling.

Drilling continues with three rigs at the Boundary Zone, Boundary West, and Tom areas at the project and 1,500m of core drilling and 300m of reverse circulation (RC) drilling have been completed so far in 12 holes. The firm is awaiting assays for all holes, it told investors.

Fireweed added that it planned to drill the 240 Mile Target later this season, marked by a large gravity anomaly that may indicate buried mineralization between the Tom and Jason deposits.

Earlier in the year, it hired financial and mining industry veteran Peter Hemstead as its finance chief. The spring also saw the group report a potential major boost to the property, as the Yukon government and the Ross River Dena Council (RRDC) First Nation reached an agreement in principle on a C$71 million plan to upgrade roads in the area.

The work includes bridge replacement and safety improvements on the North Canol Road and resurfacing of 59.5km of the Robert Campbell Highway. The North Canol Road is the access to Macmillan Pass, while the Robert Campbell Highway is part of the route from the site to a shipping port.

On August 27, it announced a non-brokered private placement to raise up to C$2 million to be used for the exploration and development at Macmillan Pass and for general working capital.

What the broker says:

Haywood Securities analyst Pierre Vaillancourt continues to rate the shares a 'Buy', according to The Globe and Mail paper on September 23.

The analyst cites the firm's growth potential in a "recovering" zinc price environment and raised the target price to C$1.50 from C$1.25 following a recent meeting with the Vancouver-based company. The shares stand at the time of writing at C$0.85.

In the Eye On Equities column, Vaillancourt is quoted as saying in a note: "Fireweed is in a strong financial position to execute on its plan, we look for drilling results from prospective targets to continue to drive the stock (up three times since March, 2020). We are also encouraged by a government commitment of $71-million to help upgrade the Canol Road to site, which will help to reduce capital costs for infrastructure and improve project economics."

Inflection points:

  • Further drilling results
  • Zinc and lead price moves

What the boss says:

In the firm's latest statement, the group's CEO Brandon Macdonald said: "We are very pleased to see early indications that Boundary Zone-style mineralization could be far more extensive than originally thought. Whether this new zone discovered is an extension of Boundary Zone, a fault offset, or a new zone, we don’t know yet.

"Further drilling will tell. Being able to move so quickly from a gravity survey to drilling the resulting anomaly really highlights the agility and ability of our technical team. With mineralization demonstrated west of Boundary, we now eagerly await assay results."

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Watch

Fireweed Zinc wraps up 2020 season the company describes as "short but intense"

Fireweed Zinc (CVE: FWZ) CEO Brandon Macdonald joined Steve Darling from Proactive Vancouver to bring news the company has completed their 2020 drilling season at their Macmillan Pass Project in the Yukon. Macdonald telling Proactive what the drilling program consisted of and where they were...

2 weeks ago

5 min read