Primary lead deposits are rare, but rarer still are companies whose main asset is a lead mine that processes oxidized ore using conventional flotation techniques. Toronto-based
Magellan is expected to become the world’s fifth-largest lead producer in 2006, once the open-pit mine reaches its full production rate of about 100,000 tonnes of lead per year. This represents about 3% of total world production.
Canadian senator and chairman of Ivernia, Trevor Eyton, and Alan Carpenter, Western Australia’s minister of State Development and Energy, presided over the opening ceremony, which included remarks by an elder from a nearby aboriginal community.
Eyton described Magellan as a “successful venture” between Western Australia and Ivernia, placing both in the “international lead-mining spotlight.” He noted that while global demand for lead had increased steadily in recent years, supply has not kept pace “due to significant under-investment.”
That’s an understatement, given that lead has attracted little attention since usage in paints and gasoline was curtailed because of environmental considerations. The subsequent overhang of stock and scrap kept prices low and out of sync with zinc (its historic price peer) for decades.
Prices have since increased to about 44 per lb., more than double the price just five years ago. As with other base metals, new demand comes mostly from Asian economies — notably China’s rapid growth of the automotive sector — with lead-acid batteries accounting for about 75% of usage.
In a prepared statement, Minister Carpenter complimented Ivernia’s impeccable timing.
“With lead now in short supply and analysts’ forecasts predicting continued growth in demand, the Magellan project should become a vital player in the world lead market,” he said.
Ivernia acquired rights to the project in 1999, almost a decade after the initial discoveries were made, at the urging of Executive Vice-Chairman Kenneth Sangster. He not only believed lead prices were poised to rebound, but also understood the unusual nature of the Magellan project, which has similarities to carbonate deposits found in places such as Spain, Morocco, Iran, and Africa’s copper belt.
“Magellan was originally a Mississippi Valley-type deposit,” Sangster explains, “except that the zinc and other sulphides were subsequently leached by heavy rainfall. The lead was more stable and precipitated onto the carbonate host rock.”
Australia’s geological climate then changed into the arid conditions seen today, resulting in oxidized deposits hosted in a silicified, dolomitic, collapse breccia. Lead carbonate (cerussite) is the predominant lead mineral, along with lead sulphate and various minor minerals. No sulphides are present.
The mill features a conventional flotation circuit, however the ore is first subjected to “controlled potential sulphidation” before flotation.
“This tricks the collectors and makes the surfaces of the lead mineral particles behave as if they were sulphides,” Sangster says. “They respond to the normal flotation collectors and reagents in the usual way. Another advantage of the deposit type [and lack of sulphides] is that we produce an extremely pure concentrate.”
The recovery rate at Magellan is expected to average 80%, yielding an approximate 70% concentrate grade.
Ivernia spent between A$40-A$50 million (US$30-US$38 million) to develop the 4,100-tonne-per-day mine and conventional mill at Magellan. The first shipments of concentrate were made this summer, about two years after a final feasibility study was completed for the project. While cash cost estimates are preliminary, previous studies indicate that lead can be produced for about US20 per lb. in the first five years.
The state of Western Australia assisted with infrastructure to develop the mine, and is also working with Ivernia to fast-track construction of a new pipeline linking the mine site to a nearby gas-transmission line. At present, electricity is generated on-site using diesel fuel.
Mine construction was completed in eight months, based on total reserves of 16.2 million tonnes grading 6.2% lead within the Magellan and Cano deposits (two of three main deposits). Measured and indicated resources (including reserves) within the Magellan, Cano and Pinzon deposits stand at 18.6 million tonnes grading 5.9% lead. Inferred resources add another 13 million tonnes grading 4.3% lead.
The deposits are friable rock requiring minimal drilling and blasting. The strip ratio averages about 2.5:1 waste-to-ore.
Ivernia expects to release updated resource and reserve estimates later this year.
Sangster says most of the drilling in the past few years has been infill drilling, rather than stepout drilling.
“We still have a lot of targets to test, but like everyone else, we’ve had difficulty getting enough rigs to carry out all the work we’d like to do,” he explains.
Proven and probable reserves are sufficient for at least 10 years, but the company hopes to upgrade additional resources to sustain a mine that would operate for 15 to 20 years.
Local support is strong, and the company worked closely with the Wiluna community to preserve the local heritage and ensure that high environmental standards are met.
By 2007, Ivernia plans to complete a refinery that would process concentrates to produce lead metal for export to Asian markets.
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