Canadian Zinc steps closer to opening a mine

Canadian Zinc (CZN-T) gets a green light from environmental authorities to go ahead with developing its Prairie Creek mine in the Northwest Territories.

The Mackenzie Valley Environmental Impact Review Board said that building a zinc-lead-silver mine would not have any significant impact on the environment. It also made suggestions on water storage, tailings management, and concentrate containment.

The company says the approval is a major step in the right direction and will look to implement those conditions during the upcoming permitting stage.

“It has been a long and exhaustive process,” said John Kearney, the company’s chairman and CEO in a press release. He added receiving a thumb’s up from the Review Board has been worth the company’s effort.

The Alberta-based company applied for a water license and three Land Use Permits in June 2008, initiating the environmental assessment.

“The project has been around for many years but it has taken a long time to get all the aspects in line and to move through the regulatory process,” adds Alan Taylor, the company’s vice-president of exploration and COO. “It’s a very long process, indeed.”

He explains the reason for the arduous process is partially due to the project’s location.

The project sits in an environmental sensitive area in the Mackenzie Mountains near the Nahanni National Park Reserve, which was expanded in 2009 to surround the property. It is also 43 km from the South Nahanni River and in an area that the DehCho First Nations have claimed as their traditional territory. But no treaty settlement has been made with the federal government.  

Canadian Zinc optioned into the zinc-lead-silver property from Conwest Exploration in 1991, and has since been diligently working to push the previously-permitted project forward.

The company plans to upgrade the existing infrastructure that its predecessors built on the site in the 1980s to put the zinc-lead-silver mine into production. The infrastructure is estimated to worth $250 million, but has never been used.

Canadian Zinc completed an initial scoping study for the project in 2001, and shortly applied for several licences, which it received in 2003.  

But in October 2003, the DehCho First Nations requested a judicial review of the company’s water licence to drill. That licence was then reissued in 2006. In 2006 and 2007 the company says it invested $18.7 million in Prairie Creek, and to date has spent a total of $40 million on the project.   

Currently it is working on a feasibility study. Taylor explains the study won’t be completed until Canadian Zinc has all the parameters that will be issued through the permitting process.

That process will start once the current environmental assessment report is approved by the Federal minister of Aboriginal Affairs and Northern Development, John Duncan. Even with the positive report from the Review Board, the minister can request an environmental impact review of the company’s proposal to start up the mine, which could add another year to the timeline.  

Meanwhile, the company has worked closely with Aboriginal communities in the area and has formalized key agreements to benefit the region. “We feel that there’s an opportunity here not just for the company but for the region to benefit from. This is why we are moving it ahead,” says Taylor.

The agreements offer the locals employment and contract opportunities at the proposed mine. The mine will create 220 direct jobs once in production. The company expects about one-third of its workforce to consist of First Nations.

According to a 2007 technical report, the project hosts a measured and indicated resource of 5.8 million tonnes grading 10.71% zinc, 9.90% lead, 161.12 grams silver per tonne and 0.326% copper. It also has 5.5 million tonnes at slightly higher grades in inferred. Based on the measured and indicated resource the mine could run for 10 years as a 1,000-to 1,300-tonne-per-day operation.

The main focus for the company now is to get through the permitting process.

“We see that there is a light at the end of the tunnel,” concludes Taylor. “Sometime soon there is a distinct possibility that we will be able to obtain a permit and get this operation under way.”

On Dec. 9, the day the news was released, Canadian Zinc closed up 8% to 76¢ on 2 million shares traded.