Rio, Exxon team up in Wisconsin

Toronto-based major Rio Algom (TSE) and an Exxon Corp. subsidiary have joined forces to advance permitting of a 30-million-ton classic massive sulphide deposit in the north-central U.S.

The deposit, near Crandon in northern Wisconsin, grades 9.4% zinc, 0.4% copper and recoverable grades of lead, silver and gold. A copper-rich zone was also identified in drilling by Exxon, whose discovery hole in 1975 was followed up with nearly 200 drill holes and a start on permitting. Weak metal prices in the mid-1980s halted further work.

“We’ll focus on the zinc-rich portion to start with,” said Kelly O’Connor, Rio’s vice-president of exploration. “Down the road, we can assess the copper-rich portion.” (The cost of Rio’s 50% participation was not disclosed.) Current development plans include a 5,500-ton-per-day underground mine. The co-venturers predict a 15-year life for the zinc-rich part of the orebody. J.D. Goodrich, Jr., president of the joint-venture company called Crandon Mining, said the 25 million tons of copper-bearing ore could extend mine life another 10 years.

The total orebody strikes for about one mile and measures up to 197 ft. wide. Buried under up to 150 ft. of overburden, it extends to a depth of 2,800 ft. Final engineering has yet to be completed, but metallurgical tests suggest good recoveries, O’Connor said.

Regarding confidence in the reserve figure, he said: “We got enough holes without hitting blanks; and notwithstanding they were widely spaced (200-400 ft.), the continuity has been consistently determined.”

Environmental, engineering, financial, marketing and staffing aspects have all been reviewed by both partners. It is permitting that comes front-and-centre now.

Wisconsin has a reputation for strict environmental controls. Noranda, for example, abandoned a deposit on which it had worked for years, largely because of the environmental hurdles it continually had to jump. According to J.W. Bragg of Crandon Mining, the Rio-Exxon deposit had already reached final permitting back in 1986. Sagging metal prices prevented the next step, which was hearings.

“Throughout that process,” Bragg said, “Exxon did not discover any environmental issues which the Lynne project ran into.” (Lynne was the exploration property Noranda had given up.)

The only objections raised at the Crandon press conference announcing resumption of the project came from native Americans who expressed concern over archeological aspects of the site. No objections were heard from environmental groups.