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Callinex Corporate Presentation - July 2019
- 1. A L e a d i n g Z i n c e x p l o r a t i o n a n d D e v e l o p m e n t c o m p a n y TSX-V: CNX I OTC: CLLXF
- 2. This presentation contains certain forward-looking information and statements. Such forward-looking information and statements are based on the current, estimates and projections of the Company or assumptions based on information currently available to the Company. Such forward- looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. The Company cannot give assurance to the correctness of such information and statements. These forward-looking information and statements can generally be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use terminology such as “targets”, “believes”, “expects”, “aims”, “assumes”, “intends”, “plans”, “seeks”, “will”, “may”, “anticipates”, “would”, “could”, “continues”, “estimate”, “milestone” or other words of similar meaning and similar expressions or the negatives thereof. By their nature, forward-looking information and statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements that may be expressed or implied by the forward-looking information and statements in this presentation. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, the Company’s actual financial condition or results of operations could differ materially from that or those described herein as anticipated, believed, estimated or expected. Any forward-looking information or statements in this presentation speak only as at the date of this presentation. Except under the applicable securities laws, the Company does not intend, and expressly disclaims any obligation or undertaking, to publicly update, correct or revise any of the information included in this presentation, including forward looking information and statements, whether to reflect changes in the Company’s expectations with regard thereto or as a result of new information, future events, changes in conditions or circumstances or otherwise on which any statement in this presentation is based. Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these forward-looking statements. The technical content of this presentation has been reviewed and approved by JJ O’Donnell, P.Geo, a consultant to the Company, and a Qualified Person as defined by National Instrument 43-101. FORWARD LOOKING INFORMATION2 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 3. Callinan Mines, founded by Jack Callinan in 1927, has had a major presence in the Flin Flon mining district in Manitoba, Canada 777 VMS Mine, discovered on Callinan claims, commences production and royalty payments begin Callinan Mines splits into two entities: Callinan Royalties and Callinex, which holds the exploration portfolio today Callinex renews exploration focus on zinc and copper-rich VMS deposits Callinex acquires a portfolio of zinc assets with zinc prices near five year lows Announces major expansion of the Nash Creek Deposit and maiden PEA 1927 2011 OUR HISTORY 2014 2016 2018 2004 To discover and develop base and precious metal rich deposits within established Canadian mining districts OUR MISSION FOCUSED ON BASE METAL DISTRICTS 3 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 4. Corporate overview 59% 21% 20% retail investors institutions insiders & close associates capitalstructure enterprisevalueownershipbreakdown - Resource Capital Funds - Delbrook Capital Advisors Shares Outstanding 8.6M Options Outstanding* 600k($3.40 VWAP) Warrants Outstanding 400k($7.50 VWAP) Market Cap $4.3M Debt $0 Cash $2.6MAs of 3/31/2019 4 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 5. recenttradingshareperformance Closing Price (7/3/2019) $0.50 52-Week Range $0.45 - $2.55 Average Daily Volume (1 - mo) 8,675 TSX-V: CNX I OTC: CLLXF 5 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 6. portfolio of zinc assets • Portfolio of advanced stage zinc rich VMS deposits located in established Canadian mining jurisdictions • All mineral resources start at or near surface • Deposits located near processing facilities and essential mining infrastructure • Provides exposure to rising metal prices with deposits containing sizeable zinc, gold and silver resources Buchans District Bathurst District Flin Flon District 6 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 7. bathurst overview Quebec N Bathurst NEW BRUNSWICK Caribou Mine Mill Brunswick Mine #12 Brunswick Mine #6 Heath Steele Mine SUPERJACK HEADWAY NASH CREEK 20 km LEGEND Processing Facility Lead Smelter Power Station Power Rail Station Rail Deep Water Port Mine Road City 7 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 8. bathurst MINING District Modified from Goodfellow, 2003Clusters of deposits make up the Bathurst Mining District CLUSTER EFFECT VMS DEPOSITS PRODUCTION HISTORY One of the largest volcanic-hosted sulphide belts in the world with more than130Mtoforeproduced,commonly Zn-Pb-Cu-Ag-Au GEOLOGICAL ENDOWMENT Over 45 volcanic-hosted massive sulphide deposits including the 230Mt Brunswick No. 12, 70 Mt Caribou Mine and 69 Mt Heath Steel Mine MINING INFRASTRUCTURE Great access to power, water, roads and processing facilities in a major mining district 30 20 10 5 3 1 0.1 1 10 100 1000 Pb+Zn(wt.%) Million Tonnes Caribou BMS #12 Superjack Nash Creek 8 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 9. Quebec N • 2018 PEA outlines outlines a 10-year, 3,900 tpd open pit mining operation with a dense media separation (“DMS”) plant and 1,950 tpd conventional flotation mill • Indicated resource containing 963 million pounds of Zn Eq. contained within 13.6Mt grading 3.2% Zn Eq. and an Inferred resource containing 407 million pounds of Zn Eq. contained within 5.9Mt grading 3.1% Zn Eq. • World-class infrastructure with highway and transmission lines 1 km from deposit; seaport, smelter, railway and power plant 25 km by road • District-scale, 150 km2 land package hosting the Nash Creek deposit that extends for +2 km and is open along strike in both directions nash creek project SUPERJACK NASH CREEK Caribou Mine Brunswick Mine #12 Brunswick Mine #6 Heath Steele Mine Bathurst 25 KM N 20 km LEGEND Processing Facility Lead Smelter Power Station Power Rail Station Rail Deep Water Port Mine Road City HEADWAY 9 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 10. Infrastructure Advantage at Nash Creek 10 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 11. District-scale Potential BASE CASE SCENARIO maiden pea results 14.4 Mt @ 3.7% MINED MINERALIZATION (DILUTED ZN EQ.) $80.13 NET SMELTER RETURN ($/T OF DMS FEED) $168M PRE-PRODUCTION CAPEX $230M / $128M PRE-TAX/AFTER-TAX NPV (8%) ~96M Pounds AVERAGE ANNUAL PRODUCTION (ZN EQ.) $30.94 TOTAL OPERATING COST ($/T OF DMS FEED) 2.8 Years AFTER-TAX PAYBACK 34% / 25% PRE-TAX/AFTER-TAX IRR • Located in emerging mineral belt adjacent to traditional “Bathurst” area • Robust track record of resource growth with additional drilling • Several high-grade mineral occurrences with no known previous drilling VERSATILE: POTENTIAL TO INCREASE SCALE OR FOCUS ON A SMALLER, HIGHER MARGIN TOLL MINING OPERATION (1) See news release dated May 14, 2018. Base case parameters assume a metal prices of US$1.25/lb Zn, $1.10/lb Pb and $17/oz, and an exchange rate (US$ to C$) of 0.77. All currencies are reported in Canadian dollars unless otherwise specified. The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. 11 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 12. Production Schedule overview Year 1 Year 5Year 2 Year 6 Year 9Year 3 Year 7 Year 10Year 4 Year 8 Year 11 3.68 % Zn 2.27 % Zn 2.75 % Zn 2.83 % Zn 2.67 % Zn 2.76 % Zn 3.08 % Zn 2.78 % Zn 2.49 % Zn 3.08 % Zn 6.38 % Zn $80.0 $M OPERATING CASH FLOW $40.0 $70.0 $30.0 $60.0 $20.0 $50.0 $10.0 Opportunity to increase IRR and NPV with additional exploration that could allow for higher grade material after year one of the mine plan OPERATING CASH FLOW AND ZINC GRADES 12 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 13. District scale land package N 3.5% Zn, 2.5% Pb and 1,500 g/t Ag 5.5% Cu and 3.4% Cu 9.1% Zn and 2.1% Pb 8.1% Zn and 10.9% Pb 5 km0 LEGEND CNX Claim 2018 IP Survey Metal Occurrences Provincial Highway 11 Major Transmission Line Railway Deep Water Port Power Station Brunswick Smelter 13 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 14. nash creek deposit correlation with 2011 ip survey 1 km LEGEND Drill Holes IP Chargeability (15-25 mv) IP Resistivity (50-65 ohms) Mineral Resources Provincial Highway 11 Major Transmission Line N Nash Creek Deposit Correlation with 2011 IP Survey 25 km to Smelter, Deep Sea Port Railway 1.2KM TO HW Y • The 2011 IP survey was integral to Callinex’s initial 2017 exploration campaign that led to a major expansion of the Nash Creek Deposit • All drilled tested IP targets have intersected base metal mineralization or alteration related to the Nash Creek Deposit • Only 2 km of the 20 km trend has been subject to any significant exploration, which led to the delineation of the Nash Creek Deposit • The 2018 IP Survey will span a linear 16.5 km northwest-southeast trend with line widths up to 4.7 km 14 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 15. nash creek preliminary results of 2018 ip survey • Preliminary results have identified a targetareathatspansapproximately 1,900m by 400m • Two drill holes to test conductive targets intersected various amounts of sulphide mineralization with potential to host zinc and lead mineralization • The target area will be drill tested in an upcoming drilling program • The footprint of this target area compares favorably to the IP signature of the Nash Creek Deposit 1 km LEGEND Drill Hole IP Chargeability (7-25 mv) IP Resistivity (50-65 ohms) Mineral Resources Provincial Highway 11 Major Transmission Line N Nash Creek Preliminary Results of 2018 IP Survey 1.2KM TO HW Y 25 km to Smelter, Deep Sea Port Railway 15 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 16. 2018 IP survey at nash creek project LEGEND CNX Claim 2018 IP Survey Mineral Occurrences Provincial Highway 11 Major Transmission Line Railway N 5 km0 Deep Water Port Power Station Brunswick Smelter 3.5% Zn, 2.5% Pb and 1,500 g/t Ag 9.1% Zn and 2.1% Pb 8.1% Zn and 10.9% Pb 2018 IP Survey at Nash Creek Project 5.5% Cu and 3.4% Cu 16 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 17. Potential to Expand • The Nash Creek Deposit is open for expansion in several directions • The Company’s initial drill program in 2017 led to an increase in indicated Zn Eq. pounds by 74% and Inferred Zn Eq, pounds increased by 385%* • VMS deposits almost always occur in clusters; however, Nash Creek is the only known VMS deposit in the area • Primary north-south corridor has several high- grade mineral occurrences up to 19% Pb+Zn at surface with very limited historic drilling • Potential for new discoveries within a 150 km2 land package *See News Release dated April 16, 2018 2018 MINERAL RESOURCE ESTIMATE N DRILLING BY YEAR Pre-Callinex 2017 Callinex 500 METRES 17 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 18. • Small, high-margin starter pit included within the 2018 PEA • Near-surface Inferred resource of 3.2Mt grading 4.6% Zn Eq. containing 328 million pounds of Zn Eq. • Located 15 km from the ‘supergiant’ Brunswick #12Mine,recentlyoneofthelargestunderground zinc mines in the world • Project covers the Caribou and Brunswick horizons which hosts on average 15-20Mt geologic deposit • Plans to follow up on a 2017 near-surface zinc discovery that is wide open for expansion superjack project Quebec N SUPERJACK NASH CREEK Caribou Mine Brunswick Mine #12 Brunswick Mine #6 Heath Steele Mine Bathurst 25 KM N 20 km LEGEND Processing Facility Lead Smelter Power Station Power Rail Station Rail Deep Water Port Mine Road City HEADWAY 18 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 19. New zinc discovery • A new high-grade, near-surface massive sulphide zone that is open for expansion • Discovery was sandwiched between a formational conductor and subsequent borehole and large ground electromagnetic survey identified targets for follow-up drilling 3D View Looking Southwest of the Superjack A, B, C and D Zones LEGEND Drill Hole Deposit Geophysical Plate 2.7m of 6.2% Zn Eq. 1.9m of 8.0% Zn Eq. 2.9m of 5.6% Zn Eq. ‘D’ Zone ‘A’ Zone ‘C’ Zone ‘B’ Zone BPEM plates associated with the ‘D’ Zone BPEM plates associated with the ‘B’ Zone 19 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 20. Headway Project • The high-grade project is located adjacent to the world-class Brunswick No 12 Mine, where production totaled 137 million tons grading 8.74% Zn, 3.44% Pb, 0.37% Cu, and 102 g/t Ag from 1964-2013 • The project hosts the Headway and Pabineau deposits located along the prolific ‘Brunswick Horizon • The Headway deposit is reported to be 950m long, 160m deep and up to 15m thick • Callinex plans to complete a surface induced polarization survey and drilling in the future. Deposit Callinex Mineral Claim Osisko Mineral Claim 3rd Party Mineral Claim Road Power Rail N 2 km 20 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 21. N Flin Flon Project Flin Flon Pine Bay Project 777 Mine Processing Facility LEGEND Deposit Historic Mine Pine Bay Shaft Callinex Claims Callinex Mining Lease HudBay Claims Paved Road Power Rail Flin Flon District Overview kilometers 21 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 22. • Explored by Placer Dome during the 1990s, where they had a mandate to discover a 30 Mt VMS deposit • Covers one of the largest felsic rock packages within the belt, the primary host rock for VMS deposits • Large alteration zone spanning 1,100m long and up to 700m wide has been overturned and is facing to the west, adjacent to three VMS horizons • Three stacked horizons host five mineralized zones including the Pine Bay Copper deposit PINE BAY project POTENTIAL FOR A LARGE VMS DEPOSIT + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 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+ + + + + + + + Baker Patton Felsic Complex Road Power LEGEND N 22 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 23. high-grade potential at pine bay Hole From (m) To (m) Interval (m) Zn Eq (%) Zn (%) Au (g/t) Ag (g/t) Cu (%) Pb (%) 284-3-93-DPN 998.80 1010.26 11.46 12.23 5.61 1.65 56.38 0.68 0.35 Including 999.26 1009.59 10.33 13.06 6.00 1.78 60.39 0.71 0.35 Including 999.80 1004.00 4.20 20.77 11.82 2.43 73.77 0.70 0.73 Including 999.80 1002.50 2.70 26.35 16.37 2.57 79.21 0.86 0.98 Cabin VMS Horizon Baker Patton VMS HorizonPine Bay VMS Horizon New Discovery – 10.3m of 13.1 Zn Eq. • Callinex discovered 10.3m of 13.1% Zn Eq. (6.0% Zn, 1.8 g/t Au, 60.4 g/t Ag, 0.7% Cu and 0.4% Pb) by extending a previous Placer Dome drill hole by 38m • Hole intersected most significant gold and silver results from 625 holes drilled from over 80 years of exploration at the project • Nature of mineralization suggests the VMS system is long-lived and the intersection occurs at the edge of the system 23 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 24. • Plans to complete an IP survey over key stratigraphy at the Company’s Pine Bay Project located in the Flin Flon Mining District of Manitoba. • The objective is to model lowly conductive pyrite that has the potential to host high-grade zinc, copper, gold and silver mineralization to a depth of 580m • Previous exploration discovered multiple pyrite-rich massive sulphide intersections that are very poorly conductive and as a result traditional electromagnetics has been an ineffective vectoring tool in this geological environment • Potential to follow up on new drill targets in 2019 2019 IP Survey at Pine Bay • Plans to complete an IP survey over key stratigraphy at the Company’s Pine Bay Project located in the Flin Flon Mining District of Manitoba. • The goal of the survey is to model lowly conductive pyrite that has the potential to host high-grade zinc, copper, gold and silver mineralization to a depth of 580m • Previous exploration discovered multiple pyrite-rich massive sulphide intersections that are very poorly conductive and as a result traditional electromagnetics has been an ineffective vectoring tool in this geological environment • Potential to follow up on new drill targets in 2019 2019 IP Survey at Pine Bay 27 CallinexCorporatePresentation TSX-V: CNX I OTCQX: CLLXF 24 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 25. Inferred Mineral Resources* Indicated Mineral Resources* Project Cut-off (Zn Eq) Tonnes Zn Eq. (%) Zn (%) Pb (%) Ag (g/t) Au (g/t) Cu (%) Zn Eq. (M Lbs) Nash Creek 1.5 13,592,000 3.21 2.68 0.58 17.8 n/a n/a 963 Total 13,592,000 3.21 2.68 0.58 17.8 n/a n/a 963 Project Cut-off (Zn. Eq) Tonnes Zn Eq. Zn (%) Pb (%) Ag (g/t) Au (g/t) Cu (%) Zn Eq. (M Lbs) Point Leamington 4.0 14,093,000 6.15 1.88 0.02 17.1 1.1 0.42 1,910 Superjack 1.5 3,211,015 4.63 3.01 0.78 29.5 n/a 0.27 328 Nash Creek 1.5 5,929,000 3.11 2.68 0.47 13.9 n/a n/a 407 Total 23,233,015 5.20 2.23 0.24 17.99 0.7 0.29 2,645 Total mineral resources • Large inventory of zinc resources within established Canadian mining jurisdictions totaling 963 million pounds of Zn Eq. in the Indicated category and 2.7 billion pounds of Zn Eq. in the Inferred category. Numbers may not add due to rounding. See News Releases dated November 9, 2016 and April 16 2018. 25 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 26. INVESTMENT SUMMARY PROJECT PORTFOLIOSTRONG TEAM TIGHT CAPITAL STRUCTURE 2018 PEA outlines a strong economic return with a pre-tax IRR of a 34.1% and a pre-tax NPV8% of $230M District-scale land package spanning 150 km2 with several untested high-grade occurences Technical team involved in the discovery and development of several major base metal deposits in Canada 26 CallinexCorporatePresentation TSX-V: CNX I OTC: CLLXF
- 28. T S X - V: C N X | OT C : C L L X F 604.605.0885 info@callinex.ca www.callinex.ca Corporate Head Office 1555 - 555 West Hastings Street Vancouver, BC Canada V6B 4N4 President and CEO: Max Porterfield Corporate Counsel: Northwest Law Group Auditors: PwC