Lundin shrinks Zinkgruvan

Vancouver — An in-house estimate suggests that reserves at the Zinkgruvan zinc-lead-silver mine in Sweden are smaller than previously calculated.

Lundin Mining (LUN-T) reports that the Nygruvan and Knalla deposits have a proven and probable reserve of 8.8 million tonnes grading 9.9% zinc and 4.8% lead, pus 101 grams silver per tonne, compared with previous estimates of 9.5 million tonnes at 9.8% zinc, 4.8% lead and 97 grams silver.

Resources at the two deposits total 2.1 million tonnes averaging 8.6% zinc, 2.5% lead and 58 grams silver in the measured and indicated categories. Inferred resources stand at 8.1 million tonnes grading 9.9% zinc, 4.2% lead and 101 grams silver.

An economic cutoff of 250 Swedish kronor (roughly US$35) was used to convert resources to reserves.

Lundin plans to carry out 20,000 metres of underground drilling this year.

The company acquired the Zinkgruvan operation from Rio Tinto (RTP-N) last June for US$100 million in cash plus payments for working capital and a US$1-million non-refundable deposit.

Lundin also agreed to pay Rio Tinto a maximum of US$5 million in price participation payments, based on the performance of zinc, lead and silver prices, for up to two years.

An economic analysis of the Zinkgruvan operation up to 2018 shows an accumulated after-tax net cash flow of US$209 million.

The mill was built to handle 900,000 tonnes a year, though that production rate has never been reached.

The Zinkgruvan deposit falls somewhere between the volcanogenic and sedimentary-exhalative models. The massive sulphides are associated with carbonates and cherts and extend over 5 km along strike. The deposit has undergone several phases of folding, and the northweast-trending Knalla fault has displaced the deposit, separating it into the Nygruvan and Burkland zones.

Correction

The Bermejal deposit in Mexico, recently purchased by Goldcorp (G-T) and Wheaton River Minerals (WRM-T), has an indicated resource of 93.6 million tonnes grading 0.79 gram gold per tonne, based on a cutoff grade of 0.35 gram gold and a gold price of US$400 per oz.

Incorrect information appeared in our April 1-7/05 issue.