FNX, Dynatec table McCreedy West resource (February 24, 2003)

With production scheduled to begin in weeks, partners FNX Mining (FNX-T) and Dynatec (DY-T) have tabled resource estimates for five of seven known deposits at the past-producing McCreedy West mine in Sudbury.

Measured and indicated resources in the Contact deposits (Inter Main, Upper Main and East Main zones) are pegged at 1.08 million tons grading 2.07% nickel and 0.29% copper per ton. The deposits also host 376,000 tonnes of inferred resources grading 1.75% nickel and 0.4% copper.

Both estimates are based on a cutoff grade of 1% nickel and a minimum true-width of 8 feet.

In the 700 and 950 veins, combined measured and indicated resources stand at 659,000 tonnes grading 2.42% copper, 0.38% nickel and 0.16 oz. platinum-palladium-gold per ton. The deposits are located in the footwall rocks of the Sudbury Igneous complex and are therefore collectively referred to as the footwall deposits.

FNX used a cutoff grade of 0.75% nickel-equivalent for the 950 Vein and 1.5% nickel-equivalent for the 700 Vein. The equivalent grade is based on a nickel price of US$3.75 per lb.; a copper price of US75 per lb.; a platinum price of US$684 per oz.; a palladium price of US$252 per oz.; a gold price of US$350 per oz.; and an exchange rate of US$1 to $1.55.

The minimum width applied to 950 Vein is 8 ft., which includes internal dilution. A minimum of 5 ft. was used for the 700 deposit in order to factor in expected external dilution.

Mining consulting firm Roscoe Postle and Associates has confirmed the in-house estimates and will shortly table a report.

According to the partners, the overall resource can support five years of production at a mining operation rate of 1,000 tons per day. Mining will begin in the 700 vein, at a rate of 200 tons daily, and then expand later in the year to the other deposits, boosting the daily production rate to the targeted 800-1,000 tons.

Inco (N-T) and government regulators must give their approval before mining can begin.

McCreedy West is the most advanced of five properties that FNX acquired from Inco in early 2002. The other properties are Levack, Victoria, Kirkwood and Norman, all of which are past-producers.

According to the deal, FNX must spend $30 million by 2006.

Inco holds a back-in right for 51% in any new discovery that contains more than 599 million lbs. contained nickel. Should it exercise this right, it is required to spend 200% of FNX’s and Dynatec’s costs.

The major also has the right to process all of the concentrate produced by FNX, or, in the event of third-party processing, to collect a 2% net smelter return royalty for nickel, copper and cobalt plus a 2.5-5% NSR for precious metals. Inco also retains a right of first refusal on the sale of any property.

FNX has since dealt Dynatec 25% interests in the properties in exchange for covering $11 million of its required expenditures. Dynatec also will manage the surface and underground mining operations.

Currently, FNX and Dynatec have 11 drill rigs turning, 5 at McCreedy West, 3 at Norman, 2 at Levack and 1 at Victoria. Three of the rigs at McCreedy West are proving up mineralization under ground.

None of the resources include mineralized material in the Boundary and PM zones. The former occurs between the 1,450- and 2,500-ft. levels, is approximately 1,500 ft. wide by 1,500 ft. long and has returned upwards of 10.75% copper, 2.81% nickel and 122 grams platinum-palladium-gold over as much as 126 ft.

Wide-spaced drilling at the PM zone, which was previously mined to the 1,450-ft. level, suggests it extends another 1,500 ft. down-plunge and down-dip towards the property’s boundary. Results from 25 drill holes include 4.68% nickel and 1.08% copper over 8.8 ft. and 0.32% copper and 2.02% nickel over 27.9 ft.