Recent exploration at the Prairie Creek mine, located within the Nahanni National Park Reserve, shows the potential for mining operations to last much longer than originally identified in an early pre-feasibility report.
Drilling samples taken from a quartz vein by the Canadian Zinc Corp. (CZN) over several years have revealed the project could last for at least two decades, doubling the expected mine life.
“We had a mineral resource estimate done in 2012 and it’s been three years since we did an update,” said Alan B. Taylor, vice-president of exploration and the director and chief operating officer of CZN. “We included that exploration work between 2012 and 2015 to do an update on our resources and it shows that the resource has expanded significantly and can support a longer mine life. The pre-feasibility in 2012 gave the mine an 11-year life. That’s just based on specific ore-grade categories. We now have indications through wide-spaced drilling that we can probably easily double that.”
In the most recent exploratory drilling initiated in March, the company ran underground drill stations on a 1.5-km extension of a mineralized quartz vein, completing a total of around 6,000 metres of diamond drill coring over 21 holes.
At the same time, CZN updated the Prairie Creek mineral resource estimate based on drilling conducted between 2012 and 2014 using new engineering tactics. Measured and indicated resources at the site previously totalled around 6.59 million tonnes up from 5.43 million, averaging about 10.2 per cent zinc, 9.5 per cent lead and 147 g/t silver. Inferred resources now sit at around 7.09 million tonnes, averaging 11.7 per cent zinc, 9.6 per cent lead and and 177 g/t silver, while proven and probable reserves remain unchanged.
With these numbers shifting, CZN is also readjusting its financial needs.
“We’re upgrading that pre-feasibility study to more detailed engineering and trying to determine hard numbers from actual tender bids on equipment packages and construction activities so that we know exactly how much money we need to raise,” Taylor said. “Then we can go to the financial institutions and show them why we need that certain amount of money. That takes a bit of time. This is why we’re doing underground (exploration), trying to establish the actual mining costs that are going to happen, and at the same time on surface, determine exactly what needs upgrading.”
Taylor expects a report on this information to be released sometime this year.
“With the (underground) work we’re doing right now, we’ll be doing another update in a month or two,” Taylor said. “It looks like there will be more resources defined and that will help our economics, because the longer the life of the mine, the better the economics.”
Preparing for the long-haul
So far, CZN has signed impact benefit agreements with the Nahanni Butte Dene and Liidlii K’ue First Nation in Fort Simpson for the Prairie Creek project. It has also secured a socio-economic agreement with the GNWT, a memorandum of understanding with Parks Canada and numerous environmental assessments necessary for the completion of the five-year regulatory process to secure operating permits.
Now, CZN is requesting permits for the installation of a year-round road into the mine, running in from the Liard highway, 82 km into the park.
“We just put our development assessor’s report in,” Taylor said. “We have a permit for the winter road but we need to upgrade to an all-season, so that’s included in the environmental assessment stage. We hope to move that along because it’s a very important link to provide to the mine. That’s with the Mackenzie Valley review board right now.”
The company is also in the process of clearing up a $6-million debt to the GNWT regarding land and water use permits, listed at $3 million each.
“There’s a misunderstanding about the liabilities associated with cleanup of the present site,” Taylor said.
“There was a handover of site cleanup costs associated to Indian and Northern Affairs back in 1982,” he said, when the mine was run by Cadillac Explorations Ltd. “Basically it boils down to, we’re responsible for the cleanup associated with our present surface lease which we own and operate on, which is much less than ($6 million).”
The decision over the historical liabilities of the project is ongoing. CZN recently submitted a letter to the water board, which is being considered at this time.