The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Scoping study shows strong financials, upside to zinc project North of 60 Mining News – June 19, 2020
A diagram of the 11,250-metric-ton-per-day processing facility, camp and other infrastructure proposed in a preliminary economic assessment for developing a mine at Pine Point.
Ore for the mill would be delivered from 47 open pits and eight underground mines spread out over a 50-kilometer (31 miles) trend of zinc-lead mineralization at Pine Point.
Reestablishing a mine at Osisko Metals Inc.'s Pine Point zinc-lead project in Northwest Territories could be profitable, according to the preliminary economic assessment released on June 15.
The PEA outlines a mine that would produce an average of 327 million pounds of zinc and 143 million lb of lead annually over an initial 10-year mine life.
At an average zinc price of US$1.15/lb and lead averaging US95 cents/lb, this operation has been calculated to produce an after-tax net present value (8% discount) of C$500 million and an internal rate of return of 29.6%. It is expected to take 2.8 years to pay back the C$555 million in initial capital costs to develop the mine.
"I am very pleased with the PEA study showing an impressive after-tax IRR of 29.6% and after-tax NPV of C$500 million," said Osisko Metals Executive Chairman and CEO Robert Wares. "On a zinc-only basis, Pine Point could potentially, if it entered into production, become a low-cost zinc-lead producer ranking fourth largest in the Americas and ninth in the world, yielding an exceptionally clean and high-grade zinc concentrate."
This would not be the first time Pine Point hosted significant North American zinc mine. From 1964 to 1988, Cominco (now Teck Resources) produced roughly 14 billion lb of zinc and 4 billion lb of lead from around 64 million metric tons of ore averaging about 10% zinc-equivalent.
Cominco, however, left plenty of quality zinc mineralization over a 50-kilometer- (31 miles) trend on the property.
According to a calculation updated for the PEA, Pine Point hosts 12.9 million metric tons of indicated resource averaging 4.56% zinc and 1.73% lead, which equates to 6.29% zinc-equivalent; plus 37.6 million metric tons of inferred resource grading 4.89% zinc and 1.91% lead, which equates to 6.8% zinc-equivalent.
This includes 12.9 million metric tons of surface mineable indicated resource averaging 4.56% zinc and 1.37% lead, or 5.48% zinc-equivalent; 27.2 million metric tons of surface mineable inferred resource averaging 4.11% zinc and 1.73% lead, or 6.29% zinc-equivalent; and 10.5 million metric tons of underground inferred resource averaging 6.93% zinc and 3.3% lead, or 10.23% zinc-equivalent.
The mine outlined in the PEA envisions delivering 11,250 metric tons of ore per day from 47 open pits and eight underground mines to a central processing facility.
"The current PEA concept is a large-scale operation, where the mineral resource mined would be sourced mainly from small, near-surface open pits with additional contributions from eight high-grade, shallow deposits mined by underground methods from the West and Central Zones," said Osisko Metals President and CEO Jeff Hussey. "The PEA considers historical data from the Cominco Ltd. era and incorporates significant technological improvements in the mining industry since the closure of the Pine Point operation in 1988. While the PEA already outlines a base-case for a potential top-ten zinc producer of high-quality clean concentrate, we foresee several areas for improvement as we continue to optimize these great initial economic metrics and move towards initiating a feasibility study."
Areas being considered for optimization include:
• Expanding the open-pit resources.
• Optimizing the dewatering management plans.
• Metallurgical testing to optimize recoveries.
• Material sorting optimization.
• Geotechnical testing to reduce pit wall angles and strip ratios.
• Incorporation of automation to reduce personnel requirements.
While the mill, town and other facilities from the Cominco-era mining at Pine Point were removed, the commercial grade electrical infrastructure, haul roads, highway access to a railhead at Hay River, which lies 60 kilometers (37 miles) to the west, remain.
The property also has the advantage of open pits from previous mining, which provides a place to put the tailings, which will be covered by waste rock and overburden.
With the positive PEA results, Osisko plans to work on optimization plans and continue to upgrade and expand the zinc-lead resources at Pine Point in preparation to advancing the project to the feasibility level.
"With several deposits open, I am particularly excited to continue exploring and expanding the resource base across the project," said Wares. "We strongly believe in the Pine Point Project and Osisko Metals will continue developing this asset within the context of improving global zinc markets."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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