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Although it was discovered in 1928, Prairie Creek only began to take its current form in the mid-1960s, when Cadillac Explorations trenched zones 3, 7 and 8. Underground development, bulk sampling and metallurgical testing on the largest of the three zones, no. 3, followed in 1970, under a short-lived deal with Penarroya Canada.
In the 1970s, Cadillac carried out further exploration on the 870- and 905-metre levels, before convincing the Hunt brothers of Texas to finance a 1,000-tonne-per-day milling operation in 1980. However, by mid-1982, with $64 million spent and 95% of the surface facilities completed, silver prices collapsed, forcing the company into bankruptcy and casting the project itself into legal limbo.
In 1991, Conwest Exploration emerged as the new owner and dealt an option for 60% to San Andreas Resources, since renamed Canadian Zinc. The earn-in requirements have been satisfied, and the remaining stake will be transfered once $8.2 million in royalties are paid.
Resources stand at 11.9 million tonnes grading 12.5% zinc, 10.1% lead and 0.4% copper, plus 161 grams silver per tonne. Most of the material was delineated in the mid-1990s and is classified as inferred.
In 2001, an independent scoping study called for the project’s redevelopment as a zinc operation using existing workings and facilities. The study incorporated almost 4 million tonnes of vein mineralization and 1.3 million tonnes of stratabound mineralization.
More recently, Canadian Zinc has been refining the study in order to increase silver production. The company believes it can produce 7 million oz. in the first three years alone by driving a decline in a high-grade section of the deposit.
Toward that end, the company asked for, and was recently granted, permission to drive a ramp from the 905-metre level and operate the mill at the hourly rate of 1 tonne. However, a subsequent legal challenge against the water licence has since put the project in doubt.
The Nahanni Butte Dene Band, Pehdzeh First Nations and Deh Cho First Nations claim that the approval board ignored recommendations from the MacKenzie Valley Environmental Review Board and the minister of Indian Affairs and Northern Development. They want the permit revoked and a new process begun whereby theirs and past recommendations are incorporated.
“This request for a judicial review is a further step in the permitting process toward the development of the Prairie Creek mine,” states John Kearney, chairman of Canadian Zinc. “We are confident this will be dealt with in good time for the company’s planned 2004 underground development and metallurgical testing programs.”
By then, Canadian Zinc hopes to have had its application to develop a winter-access road approved. An official response, in the form of a permit or request for additional studies, is expected by mid-November.
Funding for the programs will mainly come by way of net proceeds from the brokered private placement. The company now expects to raise $7.05 million by selling 11.6 million units and 2.5 million flow-through shares at 50 apiece. The goal was 2.5 million units and an equivalent number of flow-through shares, also priced at 50 each.
A unit still consists of a share and half a warrant, with two full warrants entitling the holder to buy an additional share for 18 months after the deal’s close, at 60. If all the warrants are exercised, this would net Canadian Zinc $1.74 million more in proceeds. Haywood Securities and McFarlane Gordon are underwriting the deal. Canadian Zinc has $1.6 million in working capital.
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