BASE METALS — Redfern Resources gearing up to develop Tulsequah Chief deposit

Having been granted the legal right to begin developing the past-producing Tulsequah Chief polymetallic mine, Redfern Resources (RFR-V) is gearing up for a 2-year development and construction program.

Tulsequah Chief is situated on the east bank of the Tulsequah River in northern British Columbia, 14 km north of the river’s confluence with the Taku River. The project is about 100 km south of Atlin, B.C., and about 64 km northeast of Juneau, Alaska.

Discovered in 1923, the deposit saw limited development and production during the 1930s. Meanwhile, on the west side of the Tulsequah River, the Polaris-Taku gold mine (now Canarc Resource’s New Polaris project) was active through the 1930s and 1940s.

Cominco acquired Tulsequah Chief in 1946 and leased the Polaris-Taku mill to process its ore. Production began in 1951, but ended six years later when metal prices dropped.

The property lay dormant until Redfern began its work in 1987.

Redfern holds a 100% interest in 53 mineral claims and 25 Crown-granted claims, for a total of 16,590 ha.

After completing an extensive drilling program and incorporating Cominco’s database, Redfern estimated that Tulsequah Chief contained a resource of 8.9 million tonnes grading 6.61% zinc, 1.31% copper, 1.24% lead, 2.53 grams gold and 107.56 grams silver per tonne.

Rescan Engineering conducted an independent feasibility study, pegging the diluted minable reserves at 7.9 million tonnes grading 6.35% zinc, 1.23% copper, 1.18% lead, 2.42 grams gold and 100.9 grams silver.

Tulsequah Chief is a volcanogenic massive sulphide deposit associated with felsic volcanics of Mississippian age. These rocks are part of the Mount Eaton Group, which are predominantly mafic volcanics and volcanic-derived sediments. The group has been stratigraphically subdivided into lower, middle and upper divisions. The lower division contains the felsic rocks that host the known massive sulphide resource.

The sulphide lenses which form the deposit occupy stratiform horizons near the base of rhyolitic volcanics and tuffs. Strong alteration is associated with the host rocks and continues into the mafic volcanics of the footwall.

The contact between the uppermost sulphide lens and the felsic volcanics of the hangingwall is sharp and relatively unaltered. Consequently, the hangingwall contains negligible sulphides.

The existing mine workings, developed by Cominco during the 1950s, occupy ten levels. The two lowest levels were rehabilitated by Redfern and used for exploration access.

Redfern has planned a 2-year pre-production development schedule that will focus on completing underground mine infrastructure, an underground mill and an access ramp. The ramp will be constructed in the non-acid-generating rocks of the hangingwall. Mine development will extend from the plus-60 level down to the minus-700 level.

About 700,000 tonnes of material will be mined in the first year of production, rising to 900,000 tonnes (2,466 tonnes per day) by year three.

Material will be crushed underground and transported by hoist and/or conveyor to the grinding mill.

Acid-generating waste will be stored temporarily on surface in a lined waste pile and returned to secondary stopes in the new mine as they become available.

Longhole stoping and sublevel longhole stoping will be the mining techniques employed.

Backfill will be used to improve ground support, ore recovery, and disposal of tailings and acid-generating waste.

The mill and processing circuits will be designed to handle 900,000 tonnes per year. Three concentrates will be produced: zinc, copper-lead and gold.

The grinding and gravity-concentration equipment will be located underground and the other circuits will be on surface.

Gravity separation should recover about 29% of the gold prior to the flotation circuit. Once the ground ore is sent through the flotation circuit, a bulk copper-lead concentrate will be produced; copper and lead recovery from the concentrate is expected to be 90%. Most of the remaining gold and silver will also stay with the copper-lead concentrate.

Further flotation will recover a high-grade zinc concentrate (in excess of 58% zinc) from which a 90% zinc recovery is anticipated. Tailings will be processed in a pyrite flotation circuit to remove sulphides.

Tests of final tailings showed less than 1% total sulphides. Redfern will add limestone from a local quarry to ensure the chemical neutrality of the tailings.

Water used in mine processes will be reclaimed from the tailings disposal facility. Any excess water will be treated in a separate water treatment plant to precipitate dissolved metals. The water will be filtered and discharged.

The metal bearing precipitate will be pumped back to the backfill plant for underground disposal.

The water treatment plant has been designed to handle, treat and discharge tailing pond water at an acceptable water chemistry quality. Treated water was tested on rainbow trout and Daphnia magna, an aquatic micro-organism.

Both tests resulted in a 100% survival rate.

Redfern estimates that about 7.9 million tonnes of ore will be mined over the projected 10-year mine life. About half of the tailings will be disposed of in the mine as backfill; the remainder will be stored in a surface tailings pond.

With the height of its dam averaging 13 metres, the tailings pond will hold about 2.7 million cubic metres of material. Flood protection and excess water storage capacity will be built into the design. An impervious liner will also be installed to minimize any seepage during the initial years of production, and overflow spillways will be constructed to avoid dam rupture under extreme conditions. Under normal conditions, no water will be released from the tailings pond directly into the environment. Studies predict no net loss of productive fish habitat.

Water quality monitoring will include regular upstream and downstream sampling. Metal concentrations in various types of vegetation will be analyzed periodically, from construction to closure.

Air-quality samples will also be collected from the diesel generators to ensure they are operating efficiently.

A 160-km-long, single-lane, all-weather access road to the mine will intersect Hwy. 7 north of Atlin, from which point trucks will continue on to Skagway, Alaska, for storage of concentrate prior to shipment. Road traffic will be limited to mine vehicles and legitimate tenure holders. Most of the traffic will be concentrate trucks.

An airstrip large enough to accommodate DC-4 aircraft will also be constructed on site to provide mine personnel with air travel options.

Once in operation, the mine will employ 199 people directly and provide 60 contract trucking jobs. Due to rotation schedules, only about 131 employees will be on site at any given time.

At closure, all infrastructure will be removed, surface stockpiles will be reclaimed and the site will be re-contoured. On the access road, all culverts and bridges will be removed. The cut and fill areas will be re-contoured and the road will be re-vegetated.

Redfern recently commissioned an independent financial consultant to analyze the economics of the mine. Three different metal-price scenarios, an exchange rate of 70 cents for each US$1 and a debt-to-equity ratio of 63 to 35 were used in the calculations.

Results for the lowest metal-price scenario (US80 cents per lb. copper, US25 cents per lb. lead, US50 cents per lb. zinc, US$300 per oz. gold and US$6 per oz. silver) indicated an after-tax rate of return of 13.2% and a cumulative 9-year operating profit of $349.4 million.