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Monday, June 19, 2017 Derek Macpherson

TK Site Visit: Just Scratching the Surface of Ayawilca's Potential


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Last week we had the opportunity to visit Tinka Resources Ltd’s (TSXV:TK) wholly owned Ayawilca zinc project, in central Peru. Although still early days, we were impressed by recent drilling success at South Ayawilca, Tinka’s first foray outside of the Ayawilca Zinc Zone, which hosts an Inferred Resource of 18.8Mt at 8.2% ZnEq. Given there are several other coincident geochemical and geophysical targets to be tested on this 15,000 Ha property, we expect Tinka to continue to expand resources and believe potential exists for the discovery of another zone.


South Ayawilca shows promise, more holes pending. Drilling thus far at South Ayawilca has produced some of the best zinc intercepts to date at the Ayawilca Property, including drill hole A17-056 which ran 63.90m @ 5.6% Zn (see Figure 1) and hole A17-057 with 40.10m @ 9.1% Zn. Zinc mineralization is associated with massive sulphides (sphalerite/marmatite) hosted within brecciated Triassic-Jurassic aged Pucará Group carbonates. Preliminary interpretation suggests that the sulphides occur in two thick (30m to 50m) manto horizons, striking northeast and dipping gently to the southeast (see Figure 2). To date, the two units are defined over a strike length of ~200m and appear to decrease in thickness but increase in grade along strike in both directions (i.e. northeast and southwest). Clearly, more drilling is required to more fully define the South Ayawilca target and results from several holes are still pending. We believe South Ayawilca is likely to increase existing zinc resources at the Ayawilca project.



Property Wide Targets and Potential: Beyond South Ayawilca a number of areas remain to be drill tested. Currently, four drills are turning, testing continuity between the West Ayawilca/Central Ayawilca deposits and the Ayawilca South prospect. Further afield, the Zone 3, Chaucha and Valley targets remain to be drill tested. These are all compelling target areas, with elevated zinc-in-soil geochem signatures (see Figure 3) coincident with gravity highs similar to the Ayawilca Zinc Zone deposit.


Community engagement well underway; above average infrastructure. Members from local communities have been employed by Tinka and were observed rehabilitating drill pads and gravel roads (see Figure 7) within the property. Obtaining local buy-in will be an essential prerequisite for advancing the project and we were encouraged by Tinka’s efforts to engage nearby communities. In terms of infrastructure, the 220kVA power line which powers the Antamina mine 100 km to the northwest transects the property (see Figure 6) – ostensibly access to hydro power will not be an issue. However, the existing 50km gravel road which provides access to the property will have to be upgraded for mine construction and operations, which will be a challenge given steep topography.





Site visit supports our view that some upside remains. Tinka currently trades at C$0.03/lbs ZnEq, considerably higher than other explorer/developer peers in the zinc space, which trade at C$0.01/lbs ZnEq. While the current valuation is at a premium to peers, when considering the project’s exploration potential, in our view some upside remains for Tinka shares.


Site visit and note completed by Ed Thorose Red Cloud KS’ resident geologist.

Ed Thorose | VP Corporate Development
Victoria Ellis Hayes | Associate
 
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Tinka Resources Ltd. - TSXV:TK - 1

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