Black Hawk bids for Knox permit

Now that a new set of mining regulations has been approved by the State of Maine, Black Hawk Mining (TSE) is attempting to become the first mining company in over a decade to obtain a mining permit there.

Although BHP Utah International and Boliden Canada have advanced projects under way, Black Hawk’s Knox nickel-copper-cobalt project is the first to enter the permitting stage since Black Hawk and Kerr Addison Mines (TSE) closed their Blue Hill zinc mine in 1975.

Black Hawk Chairman Gordon Bub says the new regulations are stringent by North American standards, but he claims they contain no unpleasant surprises and he expects to be in production a year after the permits are obtained. Among other things, the new regulations require mining companies to place a double liner underneath proposed tailings disposal areas and to conduct base line studies over a 12-month period.

Approved by state authorities July 31, they also require would-be miners to post a letter of credit to cover reclamation costs before mining operations commence.

“The relatively high-grade and low-cost nature of the Knox deposit will enable the company to absorb the high cost of complying with the regulations,” said Bub. At the company’s annual meeting last month, Bub said a near-surface deposit containing probable reserves of 2.5 million tons grading 1.39% nickel, 0.63% copper and 0.12% cobalt could be developed at a capital cost of US$40 million and mined at an operating cost of US$1.90 per lb. nickel.

If the permitting stage is completed within about 18 months, and everything else goes according to plan, Knox is expected to produce 7.5 million lb. nickel, 4.4 million lb. copper and 350,000 lb. cobalt annually for at least six years. At full speed, Black Hawk will mine the deposit via open pit and underground techniques at the rate of 420,000 tons annually and employ 80 personnel.

“Once we have finished mining, we will put everything back in the open pit and underground workings and restore the surface area to its original contour,” Bub told The Northern Miner.

Meanwhile, exploration at Black Hawk’s Minago nickel project in Manitoba will remain on hold until it can cut an acceptable deal with any of the majors it has talked to recently. The latest reserve estimate for the property is 11.6 million tons (possible and probable) grading 1.19% nickel to a vertical depth of 1,800 ft. But Bub says his company needs $10-15 million to conduct a detailed underground study and doesn’t have the financial resources to do so at present.

However, he said Black Hawk may consider doing some exploration on other parts of the property.