Under the direction of new management,
The junior company (formerly known as San Andreas Resources) has spent the better part of a decade promoting the project, which at last report hosted geological resources of 11.8 million tonnes grading 12.5% zinc, 10.1% lead and 0.4% copper, plus 161 grams silver per tonne, as calculated by MRDI, a division of AGRA-Simons.
In May, mining engineer Malcolm Swallow was appointed president and chief executive officer, replacing Alan Taylor who remains with the company as manager of exploration. John MacPherson was appointed chairman and Robert Gayton came on-board as vice-president of finance. In addition, Hugh Morris, David Shaw and Wayne Lenton were added to the board of directors.
The company subsequently raised $1.5 million through two private placements. Yorkton Securities took down 1.8 million flow-through shares at 42 each to raise $756,000, while Clubb Capital of London subscribed to 1.5 million units priced at 50 for an additional $750,000. Canadian Zinc currently has 26.3 million shares outstanding, or 29.3 million fully diluted.
This past summer, the company initiated a scoping study to determine possible production levels, capital requirements and operating costs, while addressing transportation, metallurgical and environmental considerations. The completed study is due in January 2001.
“It’s a real high-grade resource, with a real mill sitting on it,” says Swallow. Construction of the 900-tonne-per-day grinding-and-flotation mill is about 95% complete.
Prairie Creek, known formerly as the Cadillac property, was financed in the early 1980s to within months of startup, largely by Procan Exploration, a private company owned by the Hunt bothers of Texas. Owner Cadillac Exploration suspended construction activities in May 1982 after it ran out of money following a collapse of the silver price. Silver had hit a short-lived high of US$50 per oz. in late 1979 and early 1980, when the project was given the green light. Cadillac was forced into bankruptcy after incurring about $64 million in expenditures on the property.
Existing facilities at the site include: a lined tailings pond; camp accommodation for 200 personnel; maintenance, office and warehouse shops; four 1.1-megawatt diesel-powered generators and two smaller standby generators; and fuel storage tanks.
The equipment is well-preserved, partly because of the dry arctic climate and partly because nothing had ever been turned on. “It is bizarre to be given $100 million worth of equipment that nobody ever actually used,” says Swallow.
When the project was halted, more than 4,000 ft of underground drifting and crosscutting had been carried out on three levels. At the time, resources consisted of 1.8 million tonnes grading 11.75% zinc, 10.3% lead, 0.42% copper and 182 grams silver.
The Prairie Creek project, indeed all the assets of Procan, were tied up in litigation until 1990. San Andreas optioned the property in 1991 from Nanisivik Mines. San Andreas was renamed Canadian Zinc in 1999, and it now owns 100% of the project, subject to a 2% net smelter return royalty held by Titan Pacific Resources and capped at $8.2 million.
Under a 1996 development co-operation agreement, the Nahanni Butte Dene band will receive a 5% after-tax net profits interest. The band will also have the one-time right to buy either a 10% or a 15% stake in the project within three months of receiving permitting approval, in return for a cash payment of either $6 million or $9 million.
The Prairie Creek property is 210 miles north of Fort Nelson, B.C., the nearest railhead, and 300 miles west of Yellowknife, in the Nahanni region. Year-round access is provided by charter aircraft to a 1,000-metre gravel airstrip adjacent to the camp. A 170-km-long winter road, which extends to the Liard Highway, was built in 1980.
The main property holding comprises eight mining leases covering an area of 35.4 sq. km. Five additional claims totalling 41.3 sq. km were staked to the north, and a further 37.4 sq. km of ground, represented by the four Gate claims, were staked in 1999.
The Prairie Creek project is in the southern portion of the Mackenzie Mountains, which are underlain by Lower Paleozoic carbonates of the Mackenzie shelf, plus associated basin limestones, dolostones and shales. The project lies on the eastern margin of the Prairie Creek Embayment, which consists primarily of Lower Ordovician Whittaker Formation dolostones, Silurian Road River Formation shales and Cadillac Formation thinly bedded dolostones.
North-south oriented faulting and folding have exposed windows of older Road River and Whittaker rocks along the core of the main anticline.
Mineralization was first discovered at Prairie Creek in 1928, with only limited work conducted until Cadillac Exploration acquired the property in 1966. Most of the dozen or so quartz vein massive sulphide showings found on the southern end of the property occur in the Road River shales, along a 10-km area close to the axial plane of the tight north-south-plunging anticline.
The most extensive known vein occurrence is in Zone 3, where underground development has proved 940 metres of strike length. From 1991 to 1995, San Andreas completed more than 40,000 metres of surface diamond drilling. This work added a further 1.2 km to the strike length of the Zone 3 vein.
The final stepout hole, 95-125, intersected three mineralized vein structures, returning:
3.2 metres of 13.7% zinc, 18% lead, 1.1% copper and 368 grams silver at a down-hole depth of 745-748.2 metres;
6.3 metres of 18.7% zinc, 7% lead, 0.8% copper and 239 grams silver at 759.9-766.2 metres down-hole; and
1 metre of 31.6% zinc, 16.9% lead, 1% copper and 325 grams silver at 772.9-773.9 metres down-hole.
The Rico showing is 4 km north of the last drill intercept, directly in line with the strike of the vein.
Mineralization within the steeply dipping veins consists of massive-to-disseminated galena, sphalerite, lesser pyrite and tennantite-tetrahedrite in a quartz-carbonate matrix. Silver is present in both galena and tennantite-tetrahedrite. Vein widths are variable, ranging from 2.4 to 8.5 metres thick.
The mineralization within the vein is best developed where the vein cuts the Whittaker and Road River formations.
San Andreas first discovered a second style of deeper stratiform sulphide mineralization in 1992 at a depth of 200 metres below the lowest level in the existing mine. Up to six stratiform lenses have been intersected in three stratigraphic horizons of the Upper Whittaker Formation over a strike length of 1.5 km. Widths vary from less than 1 metre to several metres of thickness, and the thickness of the stratiform zone can reach up to 28 metres. Previous results included secondary stratiform mineralization grading 11.39% zinc and 5.68% lead over 25.61 metres, and primary stratiform grading 29.2% zinc, 12.7% lead, 0.1% copper and 2.2 grams silver.
The stratiform mineralization is generally fine-grained and banded-to-semi-massive. It consists of fine-grained grey sphalerite, framboidal reddish-brown and coarse-grained yellowish sphalerite, coarse-grained galena, and disseminated-to-massive pyrite.
Owing to its depth and location, the stratiform mineralization has been difficult to drill. It makes up about 10% of the resource estimate. The other 90% of the mineral resource is quartz-vein mineralization.
David Shaw, a company director and structural geologist, concludes that the deeper stratiform mineralization is the probable source of the crosscutting vein material.
Metallurgical tests prior to 1982 showed that high-grade zinc and lead concentrates could be produced from the vein deposit by using a conventional grinding-and-flotation plant.
The stratiform mineralization exhibits metallurgical characteristics somewhat different than those common to the vein material. However, Canadian Zinc says the basic lime-cyanide process for floating a lead concentra
te has been found to work for both forms of mineralization. Zinc concentrate can be produced by conditioning galena tailings with copper sulphate and lime.
Tests indicate that a primary grind of 75% 200-mesh is suitable for all samples. The results of regrinding the lead rougher concentrate are varied; in pilot plant testing, a partial regrind was optimal. Regrinding the zinc rougher concentrate shows that it is effective in improving zinc recovery.
Further tests will determine final grades, recoveries and optimization of the reagents. High mercury levels in the concentrates have posed problems, and solutions are being sought. Roasting tests on the zinc concentrate have demonstrated that mercury levels can be reduced by up to 92%.
U.K.-based North East Minerals recommends the installation of a gravity separation plant between the crushing and grinding processing stages. This equipment would allow the existing ball mill to treat more than 1,500 tonnes per day by rejecting almost 40% of the harder waste material early in the milling process. At the same time, higher head grades would be produced for grinding and flotation.
The original plant was designed to produce a bulk copper-lead concentrate, which was subsequently separated. Recent tests by Canadian Zinc show that a sequential copper and lead flotation circuit could produce “reasonable-quality concentrates.” The tests also show that a reverse zinc flotation circuit, subsequent to lead-cleaning, could produce a clean concentrate. Tests are also planned for the oxides that occur in both the vein and stratiform zones.
“We’re looking at pushing the throughput of the mill up to 1,500 tonnes per day,” says Swallow, “and we’re looking at improving the metallurgy of the ore.” He wants to keep the milling process simple and make it work as a flotation mine. “We recognize that there are penalty elements on the zinc concentrate for mercury,” Swallow adds, but he is prepared to absorb those penalties. He says trial marketing in the past has indicated that the zinc concentrate is salable.
On the lead side, tests indicate a clean lead concentrate, whereas, on the copper side, most of the value is lost to penalty elements despite the sliver credit.
The stratiform mineralization is low in mercury, so it can be back-mixed with the vein material to reduce penalties.
On the back end of the proposed operation, the tailings will be disposed underground as paste backfill.
Swallow says it will take $40-50 million to put the mine into production, including the upgrade of the 170-km winter road to all-weather status. Next year, on the back of the scoping study, the company intends to drive a 500-to-600-metre-long decline over the top of the stratiform mineralization to provide a better drilling platform. This will enable the company to increase its confidence level in both the vein and stratiform resource.
Canadian Zinc also plans to run a 1-tonne-per-hour pilot plant next year, using surface stockpiled material, along with some fresher vein material taken from the decline. This will provide the company with a more accurate metallurgical picture, as well as samples to shop around to the smelters.
Regional exploration in the area has been limited. The recently acquired Gate claims were staked over prospective areas of similar geology and close to the existing road. The Whittaker and Road River formations underlie most of the claims, which are cut north-south by reverse faults. A mineralized quartz vein showing was discovered late last year, with select samples assaying 10.6% zinc, 16.6% lead, 3.5% copper and 820 grams silver.
Geochemical sampling 5 km south of the new showing indicated a large zinc anomaly defined by values greater than 1,000 parts per million in soils. The zinc anomaly extends over a surface area of 800 by 500 metres and may represent a near-surface stratiform-style target.
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