Red Dog mine being expanded by Cominco

Drilling at the Red Dog mine in northwestern Alaska is fleshing out a new zinc-lead deposit for Cominco (TSE) a quarter of a mile north of the current open pit.

When the discovery was made in July, Cominco announced an intersection of more than 610 ft. grading 15% zinc and 3% lead, starting at a depth of 65 ft.

Subsequent drilling on a 400-by-400-ft. grid has outlined an essentially flat-lying deposit measuring about 1,200 by 1,600 ft., with thicknesses of up to 610 ft. in the central part of the zone.

Cominco estimates that the deposit contains at least 72 million tons grading 14% zinc and 3% lead. The company also reports that a substantial tonnage of lower-grade mineralization is associated with the higher-grade zone.

The deposit is near the surface, with a stripping ratio in the region of 3-to-1. Three drill rigs are defining its margins and confirming grades.

At the end of 1994, the main Red Dog deposit contained measured and indicated reserves totaling 60 million tons grading 18.3% zinc and 5.5% lead, as well as 2.7 oz. silver.

George Tikkanen, vice-president of exploration, confirms that Cominco is interested in the possibility of expanding the mining and processing rate at Red Dog in light of the new discovery.

The operation milled just over 2.3 million tons in 1994 at an average grade of 18.8% zinc and 5.7% lead, plus 2.63 oz. silver.

Tikkanen says an expansion would reduce unit costs, adding that the mine is currently breaking even.

Although relatively high-grade for an open-pit operation, the Red Dog mineralization is hard and fine-grained, and this has caused milling problems since startup in late 1989. Cominco has spent a considerable amount of time and money upgrading and fine-tuning the mill over the past few years, and these improvements are evident in the company’s second-quarter results.

Lead and zinc concentrate production was up 24% in the first half of 1995, compared with the same period in 1994, and further improvements are expected.

Mineralization on the new discovery is similar to that of the main deposit, and Tikkanen expects the metallurgy to be comparable.

Any expansion at Red Dog would have to be approved by NANA, a local native-owned corporation which leases the Red Dog property to Cominco.

NANA receives US$1 million per year in advance royalties towards a 4.5% net profits interest, which increases to 25% after payback. NANA’s interest then increases by 5% every five years until it reaches 50%.