Vancouver — With Red Dog in northwestern Alaska already the highest-grade zinc mine in the world,
Earlier this year, the major tabled an inferred resource of 17.2 million tonnes grading 15.8% zinc, 4.8% lead and 17 grams silver for the Anarraaq deposit, discovered in 1999. Eight holes were drilled into the 7-by-1-km gravity geophysical anomaly that hosts the deposit. All of the holes cut significant sulphides, with four of them returning impressive zinc grades.
Hole 1114, which was drilled into the north-central portion of the anomaly, 3.5 km north of Anarraaq, yielded the richest grades ever encountered in the area: 23.8 metres of 20.9% zinc and 3.2% lead from a down-hole depth of 991.8 metres. Included in this interval was a 5.2-metre section grading 45.8% zinc and 3.5% lead.
Other results:
– Collared 2 km north of the hot intercept, hole 1120 hit 4.7 metres averaging 21.1% zinc and 1.7% lead from 688.6 metres down-hole.
– Farther north, holes 1109, 1112 and 1113 all hit massive pyrite over widths of 9-25 metres but failed to return significant values.
– Moving 1.2 km south of hole 1114, hole 1116 returned 7.7% zinc, 1% lead and 6.2 grams silver over 7.3 metres from 809.2 metres down-hole.
– Collared some 500 metres south of the Anarraaq deposit, hole 1115 returned 13.7 metres grading 7% zinc, 3.5% lead and 15.6 grams silver from 353 metres down-hole.
– The southernmost hole to test the anomaly, no. 1119, was collared 1.5 km south of the Anarraaq deposit. It cut 4.7 metres of massive pyrite but yielded no significant values.
On the down side, the Anarraaq deposit is more than 700 metres below surface, and so, despite hosting thicknesses and grades similar to those at Red Dog, mining costs would be considerably more expensive than those incurred at the Red Dog open pit. Based on the company’s criterion of a 10% return at a zinc price of US45 per lb., it is far from certain that this deep-seated mineralization can be developed as a stand-alone operation.
Although mineralization was first discovered in the area in 1953, the Red Dog discovery is credited to Robert Baker of Kotzebue, Alaska, and Irving Tailleur of the U.S. Geological Survey (USGS).
In 1968, Baker, a bush pilot, spotted a rusty zone while flying over Red Dog Creek. Tailleur subsequently visited the site and collected samples, which returned 2% lead and 1% zinc. In 1970, these findings were included in a USGS open file, which quickly caught the eye of Cominco. However, native land claim issues prompted the major to cool its heels for several years. Finally, in the early 1980s, Cominco was given permission to move ahead with the project.
The Red Dog mine entered production in 1990. The main deposit is 1.4 km long and varies in width from 60 metres in the north to 450 metres in the central and southern portions. A flat-lying, stratiform zinc-lead-silver body with associated barite marks the mineralization.
Aqqaluk
In 1995, Cominco resumed exploring the area around the mine, which led to the discovery of the Aqqaluk deposit. Situated just across the creek from the main deposit, Aqqaluk holds reserves of 72.9 million tonnes grading 13.6% zinc, 3.7% lead and 65 grams silver per tonne. While outlining the extent of the mineralization, drill crews found yet another deposit, just north of, and stratigraphically deeper than, Aqqaluk. Dubbed Paalaaq, this zone lies 200-350 metres below the surface and hosts an inferred resource of 13 million tonnes grading 15% zinc and 4% lead, plus 90 grams silver per tonne.
Combined, all the deposits at Red Dog proper contain reserves and resources of 142 million tonnes averaging 15.8% zinc, 4.3% lead and 83 grams silver.
By 1999, company geologists and geophysicists employed new interpretations of structure, mineralization styles and launched innovative geophysical surveys. Their efforts led to the discovery of Anarraaq, some 10 km north of the mine site. The discovery was significant because it showed that high-grade deposits are present in the camp beyond the mineral system at Red Dog itself.
The Red Dog mine produced 133,000 tonnes of zinc in concentrate in the third quarter of 2001. Historically low zinc prices resulted in an operating loss of $6 million during the period, compared with an operating profit of $34 million in the corresponding period of 2000. The average zinc price came in at US37 per lb., down from US53 a year earlier.
In other company developments, Teck Cominco has inked a memorandum of understanding with Brazil’s largest non-ferrous metal group to buy all shares in the country’s second-largest zinc producer, Paraibuna de Metais.
In July, government energy rationing (brought on by a prolonged drought) caused Paraibuna’s production to be halved to 47,000 tonnes zinc per year. Soaring energy prices then prompted the company to stop purchasing power from Brazil’s national grid and instead sell part of the power it generates from the Sobragi hydroelectric plant in Minas Gerais state. (Similarly, Teck Cominco has curtailed zinc production from its Trail facility in southeastern British Columbia in order to sell excess power to an energy-starved U.S. market for more than a year.)
Although energy rationing in Brazil continues, the recent drop in oil and gas prices propelled Paraibuna to resume full production rates of 94,000 tonnes per year. In 2001, the company should crank out 74,000 tonnes of electrolytic zinc, virtually all of which is intended for the domestic market.
Teck Cominco has a 60-day due diligence period in which to evaluate the operation and 90 days in which to sign a definitive agreement.
Gold
Looking to regain some of the gold reserves it lost earlier this year, when it sold its interest in Australian-based PacMin Mining in a deal valued at $170 million, Teck Cominco is finding early success drilling its 72%-owned Morelos North Reserve property in Mexico’s Guerrero state.
So far, 36 reverse circulation and four diamond drill holes have defined a zone of gold-bearing skarn mineralization over a 1,000-by-300-metre area. Mineralization is associated with magnetite, pyrrhotite, chalcopyrite and pyrite, which occurs at the contact of a granodiorite intrusion and limestone unit. The northern part of the zone lies near surface, whereas the southern portion occurs at depths exceeding 100 metres.
The company drilled the zone at 100-metre line spacings and has received results for the first 29 holes. Highlights, moving from north to south, include the following:
– hole 15 — 22.82 grams gold over 6.1 metres from surface;
– hole 28 — 15.24 grams gold over 3.1 metres from 184.4 metres down-hole;
– hole 11 — 5.08 grams gold over 41.2 metres from 12.2 metres down-hole;
– hole 7 — 13.02 grams gold over 3.1 metre from 27.4 metres down-hole;
– hole 1 — 5.02 grams gold over 30.4 metres from surface;
– hole 6 — 35.96 grams gold over 3 metres from 4.6 metres down-hole;
– hole 4 — 5.69 grams over 22.8 metres from surface;
– hole 19 — 16.13 grams gold over 12.2 metres from 125 metres down-hole;
– hole 18 — 8.66 grams gold over 7.6 metres from 190.5 metres down-hole;
– hole 23 — 42.6 grams gold over 6.1 metres from 180 metres down-hole and;
– hole 15 — 24.27 grams gold over 6.1 metres from 137.2 metres down-hole.
The mineralization remains open to the south, and the favourable contact zone extends to the east and west. Based on the results, the company has earmarked more funds to the planned $2-million program.
Teck picked up the 260-sq.-km property, 150 km southwest of Mexico City, in 1998, when the Mexican government auctioned off unclaimed parts of the 500-sq.-km Morelos National Mining Reserve. Bidding US$3.1 million, Teck considered the area prospective for skarn-style mineralization similar to its nearby Nukay project, which hosts a resource of 4.4 million tonnes grading 4.47 grams gold in three separate zones, plus an indicated resource of 28.4 million tonnes averaging 1.6
4 grams gold at the Los Filos zone.
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