Cdn Zinc cuts higher grades at Prairie Creek

Vancouver — The final 12 holes of this year’s drill program at the Prairie Creek project in the Northwest Territories have delivered high grades of lead and zinc.

Canadian Zinc (CZN-T) completed almost 6,000 metres (27 holes) of infill and exploration work at the project, situated in the MacKenzie Mountains.

Results from three holes sunk on the Northern Deep Vein are as follows:

— Hole 152 — 3.1 metres (from 472 metres) of massive-sulphide vein material grading 24.1% lead, 30.7% zinc and 1.1% copper, plus 483 grams silver per tonne;

— Hole 156 — 23.3 metres (from 326 metres) of 4% lead, 6.9% zinc, 0.2% copper, and 87 grams silver, including a higher-grade interval of 1 metre grading 28.9% lead, 14.7% zinc and 275 grams silver;

— Hole 159 — 29.5 metres (from 463 metres) of 13% lead, 9.5% zinc, 0.24% copper, and 163 grams silver, including an exceptionally high-grade 11.8-metre interval of 29.7% lead, 21.6% zinc, 0.55% copper and 376 grams silver.

The results indicate continuity to the Northern Deep Vein system, below the 930-metre level, where the series of small, high-grade veins were first encountered. These mineralized intervals are outside the area of underground delineation outlined in the 2001 scoping study.

Vein-hosted mineralization is associated with the north-south-trending Prairie Creek fault, which has been traced for more than 10 km. A dozen separate, veined massive sulphide occurrences have been identified; these consist of quartz-vein systems heavily mineralized with lead, zinc, copper and silver. Underground development on various levels has proved the continuity of one vein along at least 940 metres of strike, and drilling indicates a further 1.2 km of continuation. The vein system remains open northward and at depth.

In 1992, a second type of mineralization was discovered at Prairie Creek: stratabound- or stratiform-type, which generally occurs between depths of 300 and 500 metres below surface. The stratiform massive sulphides parallel bedding and contain zinc, lead and iron sulphides with some silver and minor copper.

The recent drilling has also targeted the Stratabound resource of the deposit. Hole 150 returned 26.4 metres (from 235 metres) grading 2.72% lead, 10.1% zinc and 29 grams silver, including an 11.1-metre interval of 4.8% lead, 17.4% zinc and 53 grams silver.

Mineralization at Canadian Zinc’s wholly owned Prairie Creek project was first discovered in 1928, but the first significant work programs did not occur until the late-1960s, undertaken by Cadillac Explorations. During the 1970s, underground development on the project was conducted on two levels. With silver prices in 1980 reaching almost US$50 per ounce, the Hunt brothers from Texas agreed to finance the mine to production. By mid-1982, the mine was nearing a planned initial operation of 450 tonnes per day, with surface/processing facilities almost 95% complete. Unfortunately for the brothers, and the mine, silver prices collapsed back down to the US$5-per-oz. level.

The company that preceded Canadian Zinc, San Andreas Resources, acquired an option on the project in 1991, and then carried out extensive drilling and rehabilitation of underground workings. In 1998, an independent resource calculation on Zone 3 indicated a geological resource of 11.8 million tonnes grading 12.5% zinc, 10.1% lead and 161 grams silver.

A scoping study in 2001 suggested that the operation could be brought to production at a capital cost of $40.5-million. Annual output was pegged at 95 million lbs. zinc plus byproduct lead and copper concentrates containing significant silver. The project has the benefit of having $100 million worth of mine development, mill and infrastructure already in place from previous owners.

Canadian Zinc has 68.5 million shares outstanding, giving the company a market capitalization of $48 million at the current trading level of 70 per share.