Red Dog, Con mine see Cominco action

As anticipated, Cominco has decided to develop the Red Dog deposit in Alaska which will be the largest zinc producer in the western world when it comes on-stream in 1991. The decision coincides closely with the announcement of the sale of its Con mine at Yellowknife to a major U.S. mining concern.

Construction work on the 52- mile access road into the Red Dog property will begin next spring, said Cominco, noting that a barge dock and staging area at the port site were completed in September. This will facilitate road construction into the property from the port facilities which are located about 600 air miles northeast of Anchorage, Alaska.

Detailed engineering will be accelerated at the beginning of 1987 and the project has an estimated mine life of half a century, said Cominco. It will be the first hard rock mine developed in Alaska since the 1930s and concentrates will be sold to Cominco’s Trail smelter and to smelters in the Far East and Europe.

Red Dog’s reserves are approximately 85 million tons averaging 17.1% zinc, 5% lead and 2.4 oz silver.

The Con mine has been sold to Nerco Minerals of Fairbanks, Alaska for approximately $64 million. The sale is part of Cominco’s effort to “improve its financial position,” said its president and chief executive officer, Robert E. Hallbauer, who also noted the final price would depend on the settlement date.

The mine has been operating almost continuously since 1938 and with 320 people on the payroll is a major private sector employer in the region. Nerco, which will assume full operating control in mid-December, said it will be “business as usual” and no changes in staffing levels are planned.

Besides the mining, milling, and refining facilities, the sale includes an arsenic trioxide processing plant, repair, maintenance and warehouse facilities, and a small hydroelectric plant.

Company spokesman John Cummings told The Northern Miner in a telephone interview that some capital improvements will probably be made to the operation and funds will be allocated for exploration in and around the main mine. He also said the company has formed a Canadian subsidiary which will be located in Yellowknife and that the mine’s name will remain unchanged.

Nerco Inc., the parent, has its head office in Portland, Ore., and he described it as a “Fortune 500 company.” This year Nerco expects to produce 4.5 million oz silver and about 75,000 oz gold so the Con mine acquisition will double its gold output. In addition to having gold and silver properties in Nevada, Idaho and Colorado, Nerco also has extensive coal interests.

He said that Nerco started looking at Canada a few years ago, adding that they were particularly “attracted to the north.” This is the first underground mining operation for the company and he expressed complete confidence in the Con mine staff’s ability to make the operation a viable one for its new owner.