New developments at Bathurst Inlet in the Northwest Territories have induced Kit Resources (KIT-T) to acquire the nearby Izok Lake polymetallic property from owner Inmet Mining (IMN-T).
Kit, which owns the George Lake property, 230 km to the east, signed a letter-of-intent with Inmet to buy the project for US$40 million. Upon signing, the company paid US$100,000 and will pay a further US$900,000 in 30 days. The deal requires that financing for the remainder be arranged by May 31, 1998.
Izok Lake is touted as one the largest underdeveloped base-metal deposits in North America, hosting reserves of 16.5 million tonnes grading 11.4% zinc, 2.2% copper, 1.1% lead and 60 grams silver per tonne. Although the project was determined technically feasible by Inmet in 1994, transportation costs were considered too high for a stand-alone operation (a reflection of insufficient regional infrastructure). Subsequently, the company took a writedown last year of $76 million.
Recently, however, the Canadian Hydrographic Service charted a navigable route for deep-draft vessels to a proposed port site at the southern end of Bathurst Inlet. The site lies 243 km from Izok Lake and is expected to lower operating costs significantly.
“This changes the whole north,” says Kit’s director of investor relations, Kerry Knoll. “It also allows us to share infrastructure costs between the George and Izok Lake projects.”
George Lake comprises six properties that, together, comprise 138,181 acres and host resources of 4.54 million tonnes grading 13.71 grams gold, equivalent to 2 million contained ounces. The company is preparing a feasibility study on the project under the direction of consulting firm H.A.
Simons. (T.N.M., Nov.3/97).
In anticipation of purchasing Izok Lake, Kit has completed a prefeasibility study that it describes as positive. The company expects to complete a full feasibility study six months after making its second payment.
Mining will occur by open-pit and underground methods, with the bulk of the reserves contained in a pit having a stripping ratio of 3.6- to-1. Inmet determined a mine life of 15 years, with an estimated annual milling rate of 1.1 million tonnes.
Reserves consist of 4.1 billion lbs. zinc, 800 million lbs. copper, 400 million lbs. lead and 32 million oz. silver.
As part of the option agreement, Kit acquires the nearby Hood River and Gondor properties. The former hosts resources, in three zones, of 3.2 million tonnes varying in grade from 3.2% to 4.4% zinc and 1.4% to 4.1% copper, while resources at the latter are pegged at 7.3 million tonnes grading 4.8% zinc and 46 grams silver.
The Hood River deposit may add another two years of life to Izok Lake.
Gondor’s resources are currently insufficient for any potential mining operation.
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