Teck joins Solitario in Lik exploration

Solitario Zinc Corp. April 3 announced that Teck Resources Ltd. will be co-funding the 2018 exploration program at Lik, marking the first time Teck has been directly involved in advancing the zinc project in Northwest Alaska.

Teck has long held a 50 percent interest in Lik, a promising zinc-lead-silver project about 14 miles northwest of Red Dog, a world-class zinc mine operated by the Vancouver, B.C.-based miner.

Zazu Metals, which owned the remaining 50 percent of Lik until bought by Solitario in 2017, had solely funded exploration of the project under an agreement that would have increased its interest to 80 percent if the company met spending requirements.

While Zazu never reached the spending requirements to become a majority owner of Lik, its exploration did outline a promising zinc mine project that hosts 17.3 million metric tons of indicated resource averaging 8 percent zinc, 2.7 percent lead and 51 grams per metric ton silver; and 2.9 million metric tons of inferred resource at 8.6 percent zinc, 2.6 percent lead and 37 g/t silver.

A preliminary economic assessment completed for Zazu in 2014 outlines plans for developing an open-pit mine at Lik that would produce 234,000 dry metric tons of zinc concentrate and 55,800 dry metric tons of lead concentrate annually over an initial nine-year mine life.

Colorado-based Solitario acquired Lik as part of its strategy to take advantage of a strong zinc market.

Now 50 percent owner of Lik, Solitario is leveraging Teck's thirty years of successful exploration and operational experience in the world-class Red Dog mining district.

"We clearly see project benefits in utilizing Teck's long-term experience in the Red Dog zinc district and are excited about working with Teck to advance the Lik project at a time of encouraging zinc and lead prices and supply-demand fundamentals," said Solitario President and CEO Chris Herald.

The proposed work program, which will be operated by Teck, is expected to include surface geologic, geophysical and environmental work, as well as Lik camp rehabilitation.

Geophysics, which has been an important tool in identifying buried zinc deposits in other parts of the Red Dog District, will be a major component of the program at Lik. Teck and Solitario are planning to carry out a gravity survey over a substantial part of the 6,075-acre Lik property block. The partners also plan to compile and merge data from induced polarization geophysical surveys previously conducted at Lik.

The geophysical work will be coupled with geologic mapping to better understand the stratigraphy and structure of the property to aid in the development of drill targets.

The companies will also relog Lik core, an exercise that will allow Teck's technical team to compare Lik to deposits in other parts of the prolific Red Dog Zinc District.

With an eye on future programs and the potential development of a mine at Lik, the partners will assess previous environmental work to determine what additional studies are required as the project advances, as well as rehabilitate the camp to support increased activity.

"The 2018 work program is designed to be the first-step in identifying new drilling targets and assessing the path forward for project development," said Herald.

Working together, Solitario and Teck are also hoping to rework the complicated and dated joint venture agreement for Lik.

The terms for a Lik joint venture were outlined in a 1983 agreement between Houston Oil & Minerals Exploration Company and GCO Minerals Company. Through a series of third-party transactions, Teck gained ownership of Houston Oil & Minerals' 50 percent interest in Lik, and Solitario owns the other half of the zinc project through its acquisition of Zazu Metals.

Solitario and Teck are negotiating a new joint operating agreement that will update and clarify the original agreement and potentially modify its commercial terms.

–SHANE LASLEY