PNX Releases Preliminary Feasibility Study

By Trevor Hoey. Published at Jul 12, 2017, in Mining

PNX Metals (ASX: PNX) has released an impressive Preliminary Feasibility Study (PFS) confirming the potential for its Hayes Creek project located in the Northern Territory to be developed into a low cost, high margin zinc and precious metals mine.

With the zinc price having surged more than 15% in the last month, this is a timely development for PNX, and it isn’t surprising to see its share price up 30% in morning trading.

Of course share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

Having a dual precious metals exposure provides healthy diversification in an industry where cyclical changes come with the territory. The PFS indicates annual production of 18,300 tonnes of zinc, 14,700 ounces of gold and 1.4 million ounces of silver, representing a combined total of 39,100 tonnes of zinc equivalent.

Resource returns from Hayes Creek

The project is forecast to generate net smelter revenues of $628 million over a 6.5 year mine life. However, this doesn’t take into account the prospect for expansion of the projects mineral resource, a scenario which would appear quite likely given the company’s exploration success to date and the highly prospective nature of near mine and regional exploration targets.

Burnside and Hayes creek projects map

Other key takeaways from the PFS include the generation of pre-tax cash flow of $266 million over a 6.5 year period which should translate to an internal rate of return of 73%. Development costs are expected to be $58 million.

Commenting on the outcome of the PFS, PNX’s Managing Director James Fox said, “The completion of this PFS is a significant milestone for the company, confirming the strong potential for the Hayes Creek project to become a low cost, high margin zinc and precious metals mine with a low upfront capital requirement of less than $60 million.”

Fox pointed to the relatively moderate capital investment and rapid investment payback (15 months) as significant for a junior developer. Indeed, the low-risk nature of the project should assist the company in raising capital to not only fund its development, but also to assist in financing ongoing exploration.

PFS appears conservative ahead of 2018 Definitive Feasibility Study

PNX has taken the decision to immediately commence a Definitive Feasibility Study (DFS) which it expects to complete in 2018.

Management confirmed that completion of the DFS will require, and is subject to further funding with the company evaluating a number of options in this regard.

Considering the low-risk nature of the project it would appear that PNX should be able to partly debt fund the project with the prospect of an equity raising, which on balance could be struck at a reasonable placement price given likely institutional and retail shareholder support.

It is also important to note that based on current commodity prices and broker projections, the DFS could surprise on the upside.

Although it should be noted that that broker projections are only estimates and may not be met and commodity prices do fluctuate and caution should be applied to any investment decision here.

The PFS indicates that zinc accounts for 43% of net revenue. The calculation of income and rates of return from the project were based on a projected zinc price of US$2570 per tonne and a AUD/USD rate of US$0.73.

This implies an Australian dollar zinc price of $3520 per tonne. Based on the current zinc price of circa US$2820 per tonne and the current AUD/USD rate of approximately US$0.76 PNX would be receiving a price of $3710 per tonne.



S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!