Yukon Zinc applies coal-mining technology

It isn't every day that a junior mining company takes a project all the way to development. In fact, it "rarely" happens, according to Dr. Harlan Meade, president and CEO of Yukon Zinc Corp., the successor company to Expatriate Resources Ltd.

But the Yukon Zinc-Silver Project in southeastern Yukon Territory is well on its way to becoming such a rarity.

Vancouver, B.C.-based Yukon Zinc filed its environmental assessment report for the Wolverine deposit Nov. 3, setting in motion a permitting and public review process expected to lead to Yukon Zinc being granted a mining license for the development of Wolverine in August 2006, the company said. Construction of the mill and a C$2 million, 38-kilometer permanent road to the Robert Campbell Highway would begin immediately.

"I can't think of the last time a junior mining company developed a base metals mine in this country, certainly not in the last 30 years," Meade said in a September interview. "There are no medium-size metals mining companies in the zinc market."

Wolverine discovered in 1994

Meade, who served as vice president of exploration for Westmin Resources when that company discovered Wolverine in 1994, said he was lured back by the exceptionally high grades of ore in the deposit.

The environmental assessment provides an overview of Yukon Zinc's development plan for Wolverine, a 6.2 million-tonne resource in the mineral-rich Finlayson Mining District about 237 kilometers northwest of Watson Lake. The company aims to spend C$110 million in capital to develop a 1,500-1,750 tonne-per-day underground mine to produce 1,250 tonnes per day of feed to mill.

The report describes related facilities and infrastructure at the deposit and provides an evaluation of environmental and socioeconomic factors. It also reflects many years of baseline data and studies done on the zinc- and silver-rich deposit. A proposed development and environmental management plan is being incorporated into Yukon Zinc's feasibility study for Wolverine due for completion in early 2006.

Indicated resource of 4.94 million tonnes

Based on a 1998 estimate, the Wolverine deposit has an indicated resource of 4.94 million tonnes, containing a probable reserve of 3.74 million tonnes grading 12.43 percent zinc, 1.44 percent lead, 1.37 percent copper, 336.6 grams per tonne silver and 1.59 grams per tonne gold. A new resource estimate is due out in early 2006. It will incorporate results from more than 50 new drill holes completed by Yukon Zinc in a $17 million exploration program this year.

First conceived as part of a joint mining project with the nearby Logan zinc deposit, Wolverine's prospects soared when selenium prices roared to life in 2004 and zinc concentrate supplies tightened with skyrocketing demand from China and other Asian countries.

"China is using zinc to build its infrastructure, with 28 percent growth in demand in 2004," Meade told participants at the Opportunities North 2005 Conference in Whitehorse earlier this fall. "That's 10 Red Dogs."

Depletion of zinc mine reserves is becoming a serious problem, and Meade predicts that 40 percent, or 3.2 million tonnes, will be gone by the end of 2008.

"Yesterday, zinc prices hit 63.8 cents a pound," he said Sept. 21. "A year from now, the world will have no zinc inventories left. My guess is we're on our way to $1.20 zinc in the next two years." (Zinc traded at about 77 cents a pound Nov. 17.)

Yukon Zinc expects zinc to produce 54 percent of the net revenues from Wolverine, but byproduct revenues from silver (26 percent), copper (12 percent), gold (5 percent), lead (3 percent) and perhaps selenium, are projected to reduce the cash cost of producing zinc to less than 25 cents per pound. This would make the project one of the lowest cost zinc producers in the world, the company said.

Though high commodity prices are big drivers of development for the Wolverine deposit, Meade believes the mine project should hold its own throughout its projected 10-year-plus lifespan, even if metals and minerals prices take a sudden nosedive.

Dense media separator to process

That's why Yukon Zinc, with the help of an economic development grant from the Yukon government, tested the use of a dense media separator in processing ore from Wolverine. The dense media separator process, traditionally used in coal mining, has been employed successfully in several underground base metal mines, the company said.

In developing a mining plan, Yukon Zinc sent 1,758 meters of large diameter drill core taken from nine holes in the Wolverine deposit August-September 2004 to SGS Lakefield Research Ltd. for metallurgical testing and heavy media separation studies.

Completed last year, the dense media separator study evaluated the use of gravity as a means of separating ore at Wolverine from waste rock. The test results showed the simple technology could provide a very effective pre-concentration step that would produce an ore product containing about 98 percent base metals and 95 percent precious metals.

Meade believes the test results can be replicated in actual operations at Wolverine, thereby dramatically reducing mill processing costs and providing a means of removing waste material from ores prior to processing.

"A little cleanup on the front end will put just ore through the mill," he said. Processing ore with the dense media separator costs $1.25 a tonne, a fraction of the $38 a tonne needed if ore is sent straight to the mill, he estimated.

Applying dense media separation to the mining of thinner ore zones also could convert more resource into reserves and extend mine life, the company said.

Market research, including talks with smelters in Japan and Korea, indicated that Yukon Zinc will be able to sell its ore for attractive prices, Meade said. Ore concentrates would be trucked to a non-union port at Stewart, B.C., and from there shipped to Asia.

Meade said he chose to bypass potential berthing conflicts with cruise ships at the unionized port in Skagway, Alaska.