Canadian Zinc closer to reviving Prairie Creek

Canadian Zinc (CZN-T, CZICF-O) has secured all but one of the permits it needs to get the Prairie Creek lead-zinc-silver mine, in the Northwest Territories, into production.

The latest permit to be granted, and the sixth of seven needed, is a road permit that will allow the company to get around the higher costs and weather restrictions of air transport.

All Canadian Zinc needs now is a water-use licence, and its plan of reviving a site that was 95% completed in 1982 but never put into production, may be realized.

The land-use permit, granted by the Mackenzie Valley Land and Water Board, gives the company five years — or until April 10, 2012 — to operate a winter road from the Prairie Creek mine site to the Liard Highway.

News of the permit helped lift Canadian Zinc’s shares over 3% or 3 to 89 on the day of the announcement.

With the permit in hand, Canadian Zinc can begin upgrading a road built in 1980 that stretches across roughly 170 km of terrain. While the road hasn’t been used since 1982, the company says it’s in “passable” shape, with minimal work necessary.

The road was used in the construction of the mining facility, which cost about $64 million, in the early 1980s by then-owner Cadillac Explorations. The project was abandoned just as construction was nearly finished, as silver prices went bust and Cadillac went bankrupt.

The project hung in legal limbo for the next 10 years, and while rising mineral prices made Canadian Zinc keen on getting the unused mill turning, the project has been hampered in its permitting process by resistance from a local aboriginal group.

A court ruling, however, sided with Canadian Zinc, and the project has successfully undergone five separate environmental assessments as part of the permitting process.

The permits allow it to carry out surface exploration, underground development and metallurgical test work. Once those activities are done, the company will be able to revise its resource calculations and get a new feasibility study under way.

Canadian Zinc would still need a water-use licence to produce lead and zinc concentrates from the mill; its application is under review.

The company owns 100% of Prairie Creek, a property that hosts a deposit with a historical estimated resource of 3.6 million tonnes grading 11.8% zinc, 9.7% lead, 0.3% copper and 141.5 grams silver per tonne, as well as an inferred resource of 8.3 million tonnes grading 12.8% zinc, 10.5% lead, 0.5% copper and 169.2 grams silver. The company estimates that the deposit contains an in situ 3 billion lbs. zinc, 2.2 billion lbs. lead and about 70 million oz. silver.

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