Cominco strikes new zone at Red Dog

Exploration drilling on the Red Dog mine property in Alaska has encountered significant new zinc-lead mineralization.

Cominco (TSE) reports that hole 488 intersected 610 ft., from 65 to 675 ft. grading 15% zinc and 3% lead.

Results from three stepout holes drilled 400 ft. north, east and northeast of hole 488 are awaited. Visual inspection of the holes indicates what Cominco describes as “important” zinc mineralization over thicknesses ranging from 365 to 555 ft.

The new zone is 1,500 ft. north of the Red Dog open pit which, at last report, contained a measured and indicated reserve of 60 million tons grading 18.3% zinc and 5.5% lead.

Cominco controls the property under a lease agreement with NANA, a corporation owned by local natives. NANA receives US$1 million per year in advanced royalties towards a 4.5% net profits interest, which increases to 25% after payback. NANA’s interest then rises by a further 5% every five years until it reaches 50%.

Milling problems have plagued Red Dog since startup in late 1989. However, the mill was upgraded in 1993 and 1994, and positive cash was reported in the second half of 1994.

This improved performance contributed to Cominco’s results for the first six months of 1995. Zinc concentrate production from the mine rose by 13%, compared with the same period last year. Total zinc and lead concentrate production was 24% higher than in 1994.

Zinc production and recoveries at Red Dog are expected to improve further in the second half of the year.

For the second quarter, Cominco earned $17.6 million (or 21 cents per share) on sales of $352.8 million, compared with $1.6 million (before unusual items) in the same period last year. And for the first six months, earnings amounted to $43.7 million on sales of $678.3 million, compared with $3.9 million in the first half of 1994.