Anvil gives Yukon mine new lease on life

From out of the ashes of former owner Curragh Resources, the Faro zinc-lead mine has once again taken flight.

When the mine was forced to close more than two years ago by the creditors of bankrupt Curragh, a severe blow was dealt to the mine’s namesake community, situated 300 km northeast of Whitehorse. And although Anvil Range Mining (TSE) has revived the operation, having purchased the property from Curragh’s receiver last November, the town has yet to show signs of a recovery.

Indeed, on a recent visit to Faro, The Northern Miner found itself in a veritable ghost town. With poplar trees sprouting through the cracks of abandoned apartment buildings, Mother Nature seems intent on laying claim to the small community.

Yet, with the mine up and running, the regrettable disarray into which the town has fallen is sure to be reversed.

Anvil currently employs 375 people at the mine, and this will rise to about 420 once full production is achieved. Production of concentrates began in early August and the company is now up to a design capacity of 12,200 tonnes of ore per day.

At full production, yearly output is expected to average 324 million lb. of zinc and 216 million lb. of lead, plus 3 million oz. of silver and 30-35,000 oz. gold. Cash production costs are forecast at US38 cents per lb. of zinc produced, based on a lead price of US28 cents per lb., a silver price of US$5.25 per oz. and a gold price of US$400 per oz.

Since incorporating in February, 1994, Anvil has raised more than $90 million through the sale of stock, bringing issued capital up to 16.4 million shares (18 million fully diluted).

Moreover, Kurt Forgaard, president of Anvil, expects to be able to carry out full production without having to pay off any long-term debt.

Excluding the acquisition cost, the capital cost ofrestarting the mine was originally estimated at $69.8 million, including: $20.1 million for property startup, mining equipment repairs and replacements; $31.1 million for prestripping; $15 million for work on the mill; $2.1 million for environmental security; and $1.3 million for trucking and port startup.

Forgaard is confident the project will come in under budget, in addition to being three months ahead of schedule. Credit for the smooth startup must be given both to the operating personnel and to the co-operative weather experienced in winter and spring.

Preparations for startup involved a 23-million-tonne prestripping of the Grum deposit, which will be mined in three stages.

Grum the focus

The Faro property is in the Anvil Range zinc-lead-silver district within the Selwyn Basin. Zinc-lead-silver mineralization occurs in sediment-hosted, stratiform, massive pyritic sulphides.

The Grum, which will form the principal source of Anvil’s millfeed, contains an estimated probable reserve of 24.76 million tonnes grading 4.54% zinc, 2.74% lead, 46 grams silver and 0.7 gram gold, based on a cutoff of 5% combined zinc-lead. The overall stripping ratio is 6.13-to-1.

A further proven reserve is estimated at 1 million tonnes grading 4.4% zinc, 3.6% lead, 46.9 grams silver and 0.92 gram gold within the nearly mined-out Vangorda open pit.

Prior to startup, stockpiled material totalled 2.6 million tonnes grading 2.89% zinc, 1.96% lead, 17.9 grams silver and 0.19 gram gold.

The Dy, a nearby underground deposit which is not part of the existing mine plan, contains an estimated probable reserve of 9.39 million tonnes grading 6.62% zinc, 5.5% lead, 80.3 grams silver and 0.82 gram gold.

As Anvil Range’s main priority was getting the Faro mine back on stream, property exploration has been placed on the back burner.

Forgaard says only about 20% of the 160-sq.-mile property package has been explored.

Huge potential

“The property potential is clearly huge,” explains Forgaard, who hopes to allocate some exploration funds once the mine starts to generate cash flow.

Anvil’s mining fleet includes three P&H 2100 shovels and a new Caterpillar 994 loader, eighteen 154-tonne haul trucks and five Caterpillar 776B truck-trailer combinations.

The truck-trailer combinations are used to haul ore 12 km from the top of the Grum pit to the Faro mill.

Meanwhile, Anvil is investigating the feasibility of building a crushing and grinding unit adjacent to the Grum site and transporting the ground ore by slurry pipeline to the mill. Ken Ball, manager of processing, says the economics of doing so look promising.

The proposed site for the plant is 400 metres higher than the existing mill. With friction losses, Ball says, the facility would have to pump only about 35 metres of head.

Preliminary estimates put the capital cost of the slurry pipeline facility in the order of $38 million. With a reduction in operating costs estimated at $3 per tonne, payback could be achieved within 2.5 years.

Forgaard points out that if the slurry pipeline proposal proceeds, break-even cash operating costs would drop to about US34 cents per lb. from the current estimate of US38 cents per lb. of zinc production.

Forgaard expects to present the proposal to the board of directors before the end of the year. Construction could start as early as April, 1996, if the go-ahead is given.

The Faro mill, a standard crushing, grinding, flotation operation, has changed little over the years, explains Bell. Exceptions include the addition of a regrind circuit, column cells and process controls.

High-density conditioners

A more notable exception is the installation of high-intensity conditioners in the zinc circuit. Ball says he knows of no other mines in North America that employ the system.

Simply described, the conditioners are high-speed mixers designed to increase the contact between the flotation reagent and the finely ground ore, thereby aiding the flotation process.

Faro ore is very fine-grained, making recovery a challenge. “We grind the ore to the consistency of toothpaste,” says Ball.

Recoveries for both zinc and lead are running at 80%, and Ball expects to improve on this. Concentrates grade 60-65% for lead and 50-55% for zinc.

Although final deals have not been signed on all of Anvil’s output, Forgaard says all the mine’s production is essentially spoken for.

Concentrate transport is under contract to Lomak North Trucking, which transports the product across 550 km to the port of Skagway in 51-tonne loads.

Including trucking (but excluding ocean freight and smelting charges), cash operating costs for the Faro operation are estimated at $29.76 per tonne of ore.

Typical smelter contracts pay for about 60% of the contained zinc and lead metals.

Forgaard expects the Faro operation to produce about $25 million in cash flow over the next 12 months, based on current metal prices.

In addition to its capital expenditures, which can be written off against future taxes, Anvil inherited $139 million in tax-loss carry-forwards from Curragh, which can be used to offset future profits.