Teck eyes open-pit potential of San Nicolas

It was standing room only at Teck’s (TEK-T) recent annual meeting in Vancouver, with shareholders gathered for the announcement of preliminary minable reserve numbers for the San Nicolas polymetallic deposit in the central Mexican state of Zacatecas.

What they heard was that the deposit’s Main (or Upper) zone is estimated to contain a reserve amenable to open-pit mining of 72 million tonnes grading 2.27% zinc, 1.35% copper, 0.53 gram gold and 30 grams silver per tonne. The deposit is described as bowl- or trough-shaped, and lies beneath 160 metres of volcanics and conglomerates. The Main zone exhibits a physical zonation of metals, including sub-zones of higher-grade zinc, mixed copper-zinc and copper-rich mineralization. A low-grade copper-zinc unit within the Main zone was found to be sub-economic, so it was not included in either the minable reserve or resource calculations.

Teck assumed a 45% pit slope, leading to an overall waste-to-ore stripping ratio of 7.8 to 1. Pre-stripping of 100 million tonnes of waste at US70 cents per tonne is required.

The project economics are said to be enhanced by the high-grade zinc zone, which sits atop the Main zone. The upper zinc zone contains 19 million tonnes grading 6.15% zinc, 0.79% copper, 1.32 grams gold and 73 grams silver. The balance of the minable reserves are hosted in the mixed zone, at 15 million tonnes grading 1.9% zinc, 0.72% copper, 0.57 gram gold and 24 grams silver, and the copper-rich zone, at 37.9 million tonnes grading 1.89% copper, 0.46% zinc, 0.11 gram gold and 11 grams silver.

Teck President Norman Keevil told shareholders that drilling continues to intersect mineralization below the initial pit outline, so the ultimate resource has yet to be established.

An additional resource of copper-enriched mineralization occurs in the Lower zone; it totals 11.4 million tonnes grading 1.62% copper, 0.48% zinc, 0.06 gram gold and 8 grams silver.

The preliminary reserve and resource calculations are based on results from the first 34 drill holes. Drilling is continuing to delineate the deposit’s limits on 100-metre stepouts, while nine infill holes have been completed on 50-metre centres for geotechnical and geostatistical purposes. A total of 50 holes have been drilled to date.

Initial metallurgical testwork suggests recoveries in the order of 86% for zinc and 63% for copper in the high-grade zinc zone. Recoveries in the mixed zone are 73% for zinc and 60% for copper, whereas copper recovery of 84% is estimated for the high-grade copper zone.

The preliminary testwork yielded disappointing (20%) recoveries for the precious metals in all three sub-zones. The precious metals that were recovered came out of the pyrite concentrate. Further metallurgical work is planned to improve metal recoveries.

Based on recoveries to date, the Main zone contains 1.68 billion lbs. of recoverable copper and 2.69 billion lbs. of recoverable zinc, for a gross metal value of US$2.6 billion based on current metal prices of US77 cents per lb. copper and US47 cents per lb. zinc.

Glenn Brown, an analyst with Canaccord Capital, suggests in a recent report that Teck may be interested in purchasing the nearly depleted Real de Angeles mine, which lies just 15 km from San Nicolas. Real de Angeles has a flotation plant capable of processing 18,500 tonnes per day. “Such an acquisition would accelerate the project, save on the capital expenditure and provide a used pit for a disposal site for the tails,” Brown writes.

San Nicolas is part of the El Salvador project, a 55-45 joint-venture between Teck and Western Copper Holdings (WTC-T). The massive sulphide deposit lies in the western portion of the project, on ground optioned from Luismin, a Mexican mining company. On completion of a feasibility study, Luismin has the option of participating at 25% by arranging its share of production financing, or it can dilute to a 15% interest.

Teck has the right to acquire an additional 10% interest if it chooses to arrange Western Copper’s share of production financing, and can buy a further 5% from Western Copper based on the project’s net present value at feasibility, using a 15% discount. If Teck fully vends, Western Copper’s interest in San Nicolas will be reduced to 22.5%.

The partners released results for five additional diamond drill holes — SAL-59, 60, 62, 64 and 65 — which tested the southern end of the San Nicolas deposit. Of particular significance is hole 62, a southwestern stepout, which encountered a deep, high-grade intercept in the Lower zone.

Beginning at a depth of 594.9 metres, a 34-metre intercept averaged 4.87% zinc, 0.83% copper, 2.51 grams gold and 98.6 grams silver. The partners believe the intercept may represent an earlier and deeper cycle of mineralization similar to the zinc-rich unit in the upper Main zone. The Lower zone remains open to the west.

Stepping back 100 metres to the east, hole 60 intersected 121.1 metres grading 1.09% copper, 0.05% zinc and 0.97 gram silver, starting at a 443-metre depth.

Hole 59, collared on the southeast edge of San Nicolas, hit a 2.4-metre interval grading 2.03% zinc, 1.47% copper, 0.66 gram gold and 17 grams silver, starting at a depth of 249.1 metres. Hole 64, collared to the southwest of hole 59, cut 46.2 metres grading 6.28% zinc, 1.32% copper, 1.78 grams gold and 90.8 grams silver at a depth of 180.5 metres.

Stepping out farther to the southwest, hole 65 hit 1.9 metres grading 0.83% zinc, 0.24% copper, 2.75 grams gold and 99.2 grams silver, starting at 359 metres.

Three other holes drilled outside of the main deposit — SAL-61, 63 and 66 — encountered no significant values.

Exploration drilling also recently tested two prospective targets to the southeast and southwest of San Nicolas, but no details of that program have been released.