Overland Expands Yukon Zinc-Lead Resource

VANCOUVER — As Overland Resources (OVR-A) pursues an updated economic study of the Andrew zinc project, 300 km northeast of Whitehorse, Yukon, it has significantly boosted the project’s tonnage.

A 2008 resource compliant with Australia’s JORC code had pegged the project’s Andrew deposit at 5 million tonnes grading 7.5% zinc and 1.7% lead in the measured, indicated and inferred categories.

But a new JORC-compliant resource estimate puts the combined measured, indicated and inferred categories at 9 million tonnes grading 6.3% zinc and 1.2% lead. The bulk of the resource falls in the indicated category.

Overall, the new resource calculation boosts tonnage by 77%. However, considering a modest dip in grades, contained zinc and lead only increase by 50%.

Driving the increase in tonnage was Overland’s first resource calculation for the Darcy deposit, a satellite deposit 600 metres southeast of Andrew.

The new resource is to form the basis of an updated economic study of the Andrew project, expected shortly. In a release, the West Perth, Australia-based company did not specify what kind of study it will be releasing, though it has previously said it is working towards a feasibility study.

A 2008 scoping study outlined a zinc-lead mine that would cost US$59.8 million to build. The study envisioned an open-pit mine with a 4.5-year mine life that would process 678,000 tonnes of ore per year at a cost of US$79 per tonne.

Overland projected run-of-mine ore would weigh in at 2.9 million tonnes grading 5.9% zinc and 3.3% lead with silver and germanium credits. The waste-to-ore strip ratio would be 6.2:1 and Overland estimated prestripping would take about three months.

Overland says that since mineralization is coarse-grained, only simple crushing and flotation would be required in terms of processing. Metallurgical tests demonstrated recoveries of 96% for zinc and 98.5% for lead.

The two primary minerals making up the Andrew and Darcy deposits, both open at depth and along strike, are sphalerite and galena.

To get concentrate to market, Overland says it would ship it through the port of Skagway, Alaska.

The scoping study, completed when zinc and lead prices were substantially higher than they are today, was based on US$1.13-per-lb. zinc and US$1.49-per-lb. lead. At those metal prices, the Andrew zinc project fetched an internal rate of return of 114% and a net present value of US$217 million.

Clearly with today’s lower zinc and lead prices in mind, Overland says the forthcoming study of the project will incorporate “new economics.” Overland also says it will consider an underground component to the mine for the first time.

The project is a fairly recent development. A prospector discovered mineralization at the Andrew deposit in 1996 using the Yukon government’s stream-sampling data for the area.

The prospector’s work soon gained the interest of Noranda, which took over tenure of the project in 2000 and drilled it for the first time in 2001. Although it hit significant mineralization, Noranda dropped its rights to the project in 2003.

Overland picked up where Noranda left off. In 2007, it earned a 90% interest in the project from a private company. Overland paid a total of US$300,000 and issued 5 million options exercisable over five years at A20¢ and agreed to fund all costs associated with developing the Andrew project.