Junior
ZincOx was established in 1997 as a vehicle devoted exclusively to the global search for zinc-oxide deposits. ZincOx’s board comprises former directors of Reunion Mining, which
Skorpion contains proven and probable reserves of 21.6 million tonnes grading 10.57% zinc, equivalent to 2.3 million tonnes of contained zinc.
Anglo American discovered the deposit in 1976. Reunion Mining later earned a 60% interest by conducting a feasibility study which demonstrated that Skorpion had the potential to rank among the world’s lowest-cost zinc producers. Following completion of the study, Anglo American took over Reunion, thereby assuming total control of the project. The decision to begin constructing the US$454-million project was made in September 2000.
The ore contains zinc silicate oxide, which will be leached under atmospheric conditions. The resultant leach solutions will be purified and concentrated using a novel solvent extraction technique prior to electrowinning and the production of zinc metal. The operation will comprise an open-pit mine and plant, and produce 150,000 tonnes of zinc metal per year over a life of 15 years. Cash costs are projected to average US18 per lb., and startup is slated for the fourth quarter of 2002.
Although most zinc is derived from ore containing the zinc sulphide mineral sphalerite, there are also occurrences characterized by non-sulphide minerals, such as zinc-oxide, zinc-carbonate and zinc-silicate. These oxides are susceptible to attack by dilute sulphuric acid, which releases the zinc into solution, along with numerous other elements. Following treatment by certain processes, it may be possible to purify the solution to the extent that it can be processed into high-grade zinc metal by means of electrowinning.
Since direct leaching involves fewer process steps than conventional sulphide treatment and eliminates the added costs of transport and smelter charges, such operations tend to be among some of the world’s lowest-cost producers. However, the necessity of building a combination mine and refinery on-site leads to high capital costs, compared with a similar-sized conventional stand-alone operation. For this reason, the minimum-sized target for a direct leach operation tends to be larger than for a conventional sulphide mine.
ZincOx’s largest shareholder is
Redhawk, a Vancouver-based junior led by Kristian Ross and Frederick Davidson, has its eye on the zinc-oxide potential of the past-producing Reeves MacDonald and Annex mine properties (now known collectively as Remac) in southeastern British Columbia, and the Torlon prospect in the western highlands of Guatemala.
Like Remac, the Torlon project does have a mining history, with much of the historical work directed toward carbonate-hosted, narrow-sulphide, lead-silver veins. A surrounding envelope of zinc-oxide mineralization has been largely ignored because of the inability, historically, to turn these oxides into zinc metal. Torlon is 140 km northwest of Guatemala City and 30 km (by road) northwest of Huehuetenango.
ZincOx has a 3-year option to buy the Torlon mineral and land titles for a total of US$386,000, of which US$80,000 has been paid to date. Redhawk has taken out a 30% option on the property by spending US$350,000 on exploration over two years. ZincOx would then be required to spend US$5 million over the next four years to retain its 70% stake.
The Torlon prospect is hosted in a large down-faulted block of the Esperanza Formation, a Permian-age sequence of interbedded limestones and shales. The main area of interest is exposed in outcrop and talus on the eastern slope of Torlon Hill. Early this year, Redhawk conducted a 7-week field program of mapping and channel sampling on the main surface showings and underground workings. The work centred on a 170-metre-long portion of the mineralized zinc-oxide corridor, which strikes north-northwest. In the central Santa Rosa workings, the mineralized system extends 115 metres downdip and across true widths of 20-30 metres.
“We got a lot more information that we anticipated because we managed to get much better access to artisanal and old workings,” Redhawk’s President Kristian Ross tells The Northern Miner. “That allowed us to see through the system going into the mountain in more detail.”
The mineralized corridor is bounded by two parallel high-grade zinc rusty sheet structures, one of which is exposed on the mountainside. These structures, dubbed N-1 and N-2, dip moderately to the east and are separated by 13-18 metres of variably mineralized dolostone breccias. At higher elevations, these breccias typically grade less than 1% zinc. However, with increasing depth, breccia grades in the Santa Rosa workings improved to 8% zinc across 18 metres (true width). The high-grade N-1 zone returned surface grades of 28.5% zinc across 9 metres (true width) at the Bulge outcrop, whereas underground sampling on the N-2 zone yielded a representative 11% zinc across 4 metres (true width).
The mineralized breccia between the two high-grade structures is further enhanced by west-northwest-striking sheets that are rich in zinc mineralization (for example, 8.5% zinc over 3 metres).
Zinc-oxide boulders
Redhawk has also discovered a flat-lying, zinc-rich rusty manto structure (8.5% zinc across 1 metre) sitting on the floor of the corridor, right above the contact with the underlying barren serpentinite.
The potential of the area is further enhanced by the discovery of several large high-grade zinc-oxide boulders on the western face of the mountain, which is obscured by overburden. The boulders were found beside old collapsed mine adits. Grab samples returned 27.8% and 5.2% zinc. These adits lie 150 metres west of the mineralized corridor.
The zinc-oxide corridor is believed to extend at least 500 metres in a north-south direction, based on underground work done by the U.S. Geological Survey (USGS) during the Second World War, when the area was assessed for its lead potential. Ross says the USGS gained access to many adits but that these have since collapsed. “We have zinc assays and notations about zinc-oxide from various adits over that 500-metre distance.”
He adds that “nobody has really looked at this for zinc before we and ZincOx came along, and it’s quite stunning to see the numbers that we’re pulling.”
The next step at Torlon is drilling. Redhawk is required to spend an additional US$225,000 to earn its 30% interest, which Ross says would allow a 1,500-metre drilling program. Like many juniors these days, Redhawk is strapped for cash and needs to raise financing before it can resume work on the property. Redhawk is trading at the bottom end of a 52-week range of 70-35. The company has 6.7 million shares outstanding, or 9.1 million fully diluted. ZincOx holds a 16% stake of Redhawk, plus 500,000 warrants exercisable at 60. The warrants are due Feb. 15, 2002.
Remac
In related developments, ZincOx is completing metallurgical tests in conjunction with scoping studies and conceptual mine planning for the Remac project. There, ZincOx can earn a half-interest from Redhawk by spending $3 million over four years.
Mineralization at Remac consists of a series of carbonate-hosted base metal deposits known to extend over a distance of 3 km. The sulphide portion of these zones was mined for 25 years before the operation was closed in 1975. Last year, trenching and drilling targeted the oxidized upper portions of these deposits. Drill Highlights include 5.4 metres (true width) of 15.4% zinc, 12.2 metres of 8.7% zinc, 15 metres of 14.6% zinc and 11.6 metres of 8.2% zinc.
ZincOx has conducted metallurgical tests on 1.5 tonnes of oxide material representing six different zones of mineralization. Not only has the company been working on turning the zinc-oxide into zinc metal; it has been looking at ways to upgrade the resource. Ross says ZincOx has done a lot of work in reducing the threshold for a viable operation by eliminating the need to build an electrowinning plant on-site.
ZincOx has been considering conventional flotation, which would instead produce a concentrate. The zinc-oxide concentrate would then have to be shipped to a smelter. The Remac project is only 35 km south of Teck Cominco’s metallurgical complex at Trail.
Definition drilling is planned so as to upgrade the material to the status of resources and reserves.
ZincOx is in year two of the option agreement and has spent about $750,000 to date.
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