Tinka Resources - Undervalued Zinc Developer Boasts PEA for Flagship Ayawilca Zinc-Tin-Silver Project

• Tinka Resources is a TSXV-listed zinc explorer/developer with the significant Ayawilca project in Peru
• Recent PEA shows robust economics with 21-year mine life, $434M post-tax NPV, 26% IRR, and 2.9 year payback
• Plans to advance to pre-feasibility study and de-risk project over next 12 months with infill drilling
• Led by experienced geologist Graham Carman, sees potential to expand resource and get acquired by majors
• Emphasizes importance of social license, has good community relations, benefits from excellent infrastructure

Tinka Resources (TSXV:TK) is an exploration and development company focused on advancing one of the world's most significant undeveloped zinc projects. With a recent robust preliminary economic assessment (PEA) and plans to further de-risk and expand the resource, Tinka offers a compelling opportunity for investors to gain exposure to a scarce, high-quality base metals asset as the zinc market enters an expected supply deficit.

Flagship Ayawilca Project Shows Excellent Economics

Tinka's flagship asset is its 100%-owned Ayawilca zinc-tin-silver project, located 200 km northeast of Lima in the prolific central Peru polymetallic belt. A 2024 PEA demonstrated strong project economics, including:

• A 21-year mine life for a 2.0 million tonnes per annum (Mtpa) zinc-silver-lead operation with 15 years of tin production at 0.3Mtpa.
• Average annual metal production of 200 million pounds of zinc (90,000 tonnes Zn), 3.26 million pounds of tin (1,500 tonnes Sn), 560,000 ounces of silver and 5.7 million pounds of lead (2,950 tonnes Pb).
• After-tax NPV (8%) of US$434 million and IRR of 25.9% using conservative metal price assumptions
• Average cash cost of US$0.55/lb and All-In-Sustaining-Cost (AISC) of US$0.68plb zinc.
• Initial capex of US$382 million with rapid 2.9 year payback period

"The $434 million NPV is for a project with half the mine life based on Inferred resources," explains CEO Graham Carman. "There's substantial potential to expand the resource and extend the mine life. At the $1.45/lb zinc price used in South32's recent Hermosa PEA, Ayawilca's NPV would be over $600 million."

Interview with Dr. Graham Donald Carman, President & CEO of Tinka Resources

Upcoming PFS to Further De-Risk and Optimize Project

Tinka plans to advance Ayawilca to a pre-feasibility study (PFS) over the next 12 months. Key de-risking initiatives will include:

• Infill drilling to expand Indicated zinc and tin resources, targeting an additional 10-15 Mt
• Further metallurgical testing and optimization, especially on the newer tin and silver zones
• Geotechnical and hydrogeological studies
• Initiating the permitting process and environmental baseline studies
• Acquiring surface rights from local communities

s"We're extremely excited to further prove out the economics at a PFS level," says Carman. "There's still immense exploration upside, especially in the tin zone which is wide open at depth. We'll also be drill-testing some compelling copper-gold targets on the property. But the main focus is continuing to de-risk and add value to this scarce asset."

Experienced Team Backed by Major Shareholders

Tinka is led by Dr. Graham Carman, a geologist with over 30 years experience in multiple discoveries across South America. Tinka's strategic shareholders include zinc mining heavyweights Buenaventura and Nexa Resources, which both operate mines within 40 km of Ayawilca.

"We have an exploration background but have the right shareholders to help move this into production," explains Carman. "Buenaventura and Nexa see the potential here. Ultimately, we think Ayawilca is a strategic asset that will get acquired. The more we can advance and de-risk the project, the more value we can create for shareholders."

Excellent Infrastructure and Community Relations

Despite its large size, Ayawilca benefits from excellent infrastructure, including:

• Access road and power lines running directly over deposit
• Abundant water supply and large flat areas for mine facilities
• 220 kV substation already built 5 km from project

Tinka has spent years building strong relations with the local community. Agreements are in place for employment, procurement, and sustainable development programs.

"Social license is absolutely critical to advance any mine in Peru," says Carman. "The vast majority of the community wants to see this project developed to provide jobs and economic opportunities. We'll be working closely with them, including moving to filtered dry-stack tailings which is important for responsible water management."

Conclusion

As Tinka continues to expand and de-risk the world-class Ayawilca zinc project, the company appears significantly undervalued compared to the NPV, especially considering the exploration upside. With an experienced team, strong financial backers, and a disciplined plan to advance the asset, Tinka is well-positioned to re-rate towards its underlying value as key de-risking milestones are achieved.

In a market facing limited new zinc supply as several major mines deplete, Ayawilca represents a scarce potential source of future production. Its location in the heart of Peru's zinc belt, proximal to operations of strategic shareholders Buenaventura and Nexa, make it a prime acquisition target as the PFS further demonstrates its economic and technical viability.

The Investment Thesis for Tinka Resources

• Exposure to one of the largest undeveloped zinc resources in a stable mining jurisdiction
• PEA demonstrates robust economics with large additional optimization and exploration upside
• Significantly discounted valuation with catalysts as project further de-risked towards PFS and permitting
• Potential acquisition target for mid-tier/major zinc producers as looming zinc supply deficit highlights scarcity value
• Strong management team with backing of major zinc miners as strategic shareholders

The looming zinc supply deficit should put a spotlight on high-quality, advanced-stage zinc assets like Ayawilca, providing a further catalyst for the company. As CEO Dr. Graham Carman sums it up:

"These assets are scarce, right? These assets are absolutely scarce, and we are one of maybe two or three others in the world where we have this kind of size and grade of base metal project that is eminently developable."

With several potential catalysts on the horizon, including exploration results, metallurgical optimization, and delivery of the PFS, Tinka offers a compelling risk-reward proposition for zinc-bullish investors.

Macro Thematic Analysis

The outlook for zinc appears extremely bullish based on the supply side, where significant mine depletion is set to create a growing deficit as demand steadily rises. The world's largest zinc producers, including Glencore, Teck, and South32, are all projecting a growing supply gap starting in the mid-2020s due to limited new mines coming online and reserves depleting at major operations.

"The key driver is really the supply side," explains Carman. "The demand is gradually increasing and will continue to increase but it's the supply side where we're going to be heading towards a deficit. That is because there's been very limited exploration for zinc over the years and a lot of the old zinc mines are dropping in grade or having their reserves depleted in a significant way."

This pending supply crunch has the potential to significantly lift zinc prices, which are currently around $1.10/lb - a level at which many zinc producers struggle to make money. Incentive prices to stimulate new production are estimated at $1.45/lb zinc or higher based on recent studies.

"Zinc is going to have a re-rating and is going to become like copper," states Carman. "Everyone's talking about copper, but zinc is in the same space for similar reasons - the supply is not going to be there to meet demand."

This impending supply gap is likely to increase the strategic value of scarce, advanced-stage zinc development assets like Tinka's Ayawilca, which is one of the largest new zinc discoveries globally in the past decade. As the zinc market moves into undersupply, Ayawilca represents an attractive potential future production source for mid-tier and major zinc miners.