Yukon welcomes start of operations at lead-zinc mine

Mining may not be welcome in some parts of Canada these days, but this doesn’t appear to be the case in and around Watson Lake, Yukon, where partners Curragh Resources (TSE) and Hillsborough Resources (TSE) have just started up a new underground lead-zinc mine and milling complex. The partners had their share of trials and tribulations dealing with various layers of government and regulatory agencies to get the mine project permitted and off the ground. But once construction began last October, startup of the Sa Dena Hes joint venture — formerly known as the Mt. Hundere mine — began July 20, almost two months ahead of schedule and within 3-4% of budget. “Most people here are very positive about the mine,” said Watson Lake Mayor Barry Ravenhill. He added that the operation’s annual payroll of about $8-10 million will be of considerable economic benefit to Watson Lake, a community of about 1,800, just 70 km from the mine site. The project is operated by Curragh which has an 80% interest, with Hillsborough holding the remainder. It cost about $70 million to bring the mine project on stream, above and beyond the $10 million initial acquisition cost, and about $4 million spent to prove up reserves and for environmental permitting. At last report, proven sulphide reserves stood at 75,000 tonnes grading 18.8% zinc, 16.9% lead and 89 grams silver per tonne. Probable sulphide reserves accounted for an additional 3.86 million tonnes grading 12.7% zinc, 3.9% lead and 58 grams silver, and probable oxide reserves represented a further 500,000 tonnes grading 12.1% zinc, 8.1% lead and 109 grams silver. These reserves are contained within several geologically complex replacement deposits, and when combined with possible reserves, are expected to provide for a mine life of at least 10 years. The operation is sized at 1,500 tonnes per day and has 100 permanent employees. Trucking of concentrates from the mine site to Skagway, Alaska, is contracted, and that involves an additional 50 personnel. Marvin Pelley, Curragh’s executive vice-president of corporate development and engineering, told The Northern Miner that the joint venture is particularly proud of having worked out an agreement that gives local natives preferential rights to business, employment and training opportunities. “So far, it’s working out very well,” he said, adding that natives also appear interested in taking up an option whereby they can buy a 5% equity interest in the project. The joint venture began milling operations by processing lower-grade material. However, a substantial amount of higher-grade reserves from underground and a small open pit have been stockpiled and are ready for processing. The objective is to start the mill at full production with the lower-grade material, and once recoveries are on target, begin processing the higher-grade ore. Before production began, a bulk test was carried out. It confirmed results from diamond drill core testing with respect to grade and recoveries. On the mining side, several methods are used; long-hole stoping, room and pillar, and some cut-and-fill. Pelley said the plan is to keep 12 headings active at all times — even though only two or three are needed for production — in order to minimize dilution (to about 12% on average) while mining the complex and high-grade deposit. Acid mine drainage isn’t a problem because of the limestone hosting the deposit which acts as a buffer. Pelley also noted that ground and water conditions were found to be “better than planned, and about what we expected” considering the nature of the deposit type. “There were no surprises when we went underground,” he said. “We found exactly what was indicated by the diamond drilling.” The joint venture expects to produce 140,000 tonnes of concentrate annually. Two products are produced, a lead sulphide mineral concentrate (about 20%) and a separate zinc sulphide concentrate (about 80%). Although current metal prices for zinc and lead are lower than when mine planning began, and the Canadian dollar continues strong against the American dollar, Pelley said the operation is expected to generate a “good net cash flow.” And Pelley predicts that ongoing exploration will further expand the reserve potential of the property and extend the operating life of the mine. “The deposits are associated with limestone skarns and there are other skarns and exploration targets on the property that haven’t been drill tested,” Pelley said. “We’re optimistic there are further reserves to be found on this property.”