Ishine International Resources (ASX: ISH) has announced its intent to takeover Superior Mining which owns 70% of the Pick Lake zinc project in Canada.
Under the agreement terms, Ishine has a 14-day period to carry out due diligence and will pay a A$250,000 option fee via the issue of 22.7 million fully paid share at A$0.011 each.
Once due diligence has been completed, Ishine will issue 263.6 million shares at A$0.011 each to acquire Superior Mining’s entire issued capital.
The agreement remains subject to Ishine securing A$2.5 million in a capital raising as well as regulatory and shareholder approvals.
In 1998, Inmet Mining Corporation mined Pick Lake for less than 12 months, producing 173,000 tonnes of zinc before suspending operations due to lagging zinc prices, which were about US$0.42 per pound.
The 57.5 square kilometre project has a historic resource estimate of 1.46 million tonnes grading 15.06% zinc, 0.84% copper, 36.8 grams per tonne silver and 0.49g/t gold.
Because it was mined previously, there is existing infrastructure including road and power. Pick Lake is 200km east of Ontario’s Thunder Bay which has a skilled workforce and is a regional centre for many other mineral explorers in the province.
Pick Lake also has access to rail and the capability to export through Thunder Bay’s port.
If the takeover is successful, Ishine will also own several other prospects near Pick Lake including Joe Creek, Ellis Lake and Victoria Lake, which boosts Ishine’s total claim area to more than 17,000 hectares.
Due to a widening supply gap, the zinc market is enjoying a renaissance with the metal trading at US$1.47 per pound on 4 December – 250% higher than 1998 price when Pick Lake was previously mined.
One of the world’s largest zinc miners Teck Resources anticipates zinc production will not be able to keep up with consumption till at least 2020.
The miner claims more than 4.3 million tonnes per annum of additional zinc output was required to meet consumption by 2025. According to the miner, the current zinc project pipeline is insufficient to meet this need.
At close of trade, Ishine was up 59% at A$0.035.