As the latest operating figures show, the Red Dog zinc-lead-silver mine in northwestern Alaska continues to add considerable value to
Between the recent first quarter and the comparable period of 1998, the mine’s operating profit rose to $13 million from $9 million, while costs fell by about 10%. Cash costs are now running at about US32 cents per lb. zinc. In the first three months of 1999, the mine cranked out 232,700 tonnes of zinc concentrate and 33,500 tonnes of lead concentrate.
Reserves and resources are estimated to total more than 143 million tonnes averaging 16.1% zinc and 4.3% lead, plus 83 grams silver per tonne.
In September 1998, the mine achieved a milestone with the culmination of a US$200-million expansion project that boosted annual production of zinc concentrate to 900,000 from 600,000 tonnes; the revised figure is equivalent to 500,000 contained tonnes zinc. The expansion program reduced cash costs by 11% in 1998, while recoveries and concentrate grades met or exceeded expectations.
Last year, Red Dog processed 2.5 million tonnes of ore grading 21.4% zinc, 5.2% lead and 90 grams silver to produce 798,800 tonnes of zinc concentrate and 122,700 tonnes of lead concentrate. This is equivalent to 444,932 contained tonnes zinc and 72,761 contained tonnes lead, based on an average concentrate grade of 55.7% for zinc and 59.3% for lead. Mill recoveries averaged 85% for zinc and 57% for lead.
Red Dog reported an operating profit of $60 million for 1998, down substantially from $102 million in 1997 as a result of lower zinc and lead prices. Sales revenue totalled $350 million in 1998, compared with $346 million in the previous year.
Red Dog’s production accounts for almost half of the total value of the mineral industry in Alaska, which topped US$1 billion in 1998.
The Red Dog open pit is 600 miles northwest of Anchorage and 90 miles north of the village of Kotzebue in the De Long Mountains of the western Brooks Range. The mine is host to four separate deposits at the base of a series of moderately sloping hills ranging in elevation from 260 to 1,200 metres above sea level.
The Main deposit, on Dec. 31, 1998, contained a proven and probable ore reserve of 47.6 million tonnes grading 19.2% zinc, 5.2% lead and 99 grams silver at a stripping ratio of less than 1-to-1.
Mining and milling are carried out year-round. Concentrates are trucked to a port site on the Chukchi Sea, 52 miles from the mine site, and stored until the 3-month summer shipping season when the sea is ice-free. About 30% of the zinc output is shipped to Cominco’s Trail smelter and refining complex in southeastern British Columbia. The remainder is shipped to customers in Japan, Korea and Europe.
The Red Dog property is owned by NANA Regional Corp. and leased to Cominco Alaska, a wholly-owned subsidiary of Cominco. NANA is one of 12 Alaskan corporations formed under the provisions of the Alaska Native Claims Settlement Act of 1971. NANA is paid a 4.5% net smelter return royalty until Cominco recovers its capital investment, interest and the advanced royalties paid to NANA. Once those amounts are recovered, NANA will receive 25% of the net proceeds, increasing by 5% every five years until Cominco and NANA share the proceeds on a 50-50 basis.
Construction of the mine was completed in late 1989 at a cost of US$317 million. The road and port facilities were financed by the state of Alaska through the Alaska Industrial Development and Export Authority at an additional cost of US$150 million. Cominco is repaying the state’s investment plus interest through an annual user fee.
Red Dog had its share of startup problems in the early years relating to metallurgical recovery problems, as well as mechanical and material handling problems. These resulted in below-capacity production.
The mine finally reached design capacity in the first quarter of 1994 after operational changes were made to the grinding circuit following intensive metallurgical studies of the complex ore types within the deposit.
A US$21-million grinding circuit expansion was completed by late 1994. The installation of two new ball mills, a tower mill, a new power plant and other process changes resulted in zinc concentrate production exceeding original design levels. Red Dog recorded an operating profit for the first time in 1995.
A 2-year, US$200-million expansion project to increase mill capacity by 40-50% was initiated in 1996. This project was commissioned, on time and on budget, in the second quarter of 1998, enabling the mine to achieve full design capacity on a sustainable basis in September.
History
Mineralization was first reported in the area in 1953. It was noted again in 1968 by Bob Baker, a veteran Alaska bush pilot, who observed rust-coloured hillsides while flying over the area. Baker brought this to the attention of Irving Tailleur of the U.S. Geological Survey (USGS), who, at the time, was mapping the geology of the De Long Mountains.
Tailleur investigated the site and noticed abundant barite, black chert, siliceous sinter and iron oxide staining. Grab samples graded more than 2% lead and 1% zinc. One stream-sediment sample yielded 10% lead. Tailleur’s findings were documented in a USGS open file report published in 1970.
The passage of the Alaska Native Claims Settlement Act of 1971 resulted in certain lands being withdrawn from staking and selection, including the Red Dog area.
In 1975, the U.S. Bureau of Mines was directed to conduct a mineral assessment in northwest Alaska. Watts Griffis & McOuat, under contact to the U.S. Bureau of Mines, examined the Red Dog area and spent two weeks conducting mapping and sampling. They recognized that much of the valley was underlain by lead-zinc-barite mineralization.
The Bureau of Mines released details of the findings in September 1975, and these attracted the attention of Cominco and others, who proceeded to stake hundreds of thousands of mining claims in the De Long Mountains. With the passage of the 1980 Alaska National Interest Lands Conservation Act, NANA selected a 120-sq.-mile block of land, including the Red Dog area, as part of its land claim settlement.
Conflicting claims to the Red Dog deposit were finally resolved in 1982 when Cominco and NANA agreed to a lease arrangement with wide-ranging terms.
The main Red Dog deposit is a flat-lying, stratiform zinc-lead-silver deposit with associated barite. It is more than 4,400 ft. long and varies in width from 200 ft. in the north to 1,400 ft. in the central and southern portions, with a maximum thickness of 500 ft.
The Hilltop deposit sits a half-mile to the south, where an indicated resource is estimated at 9.6 million tonnes grading 17.8% zinc, 5.5% lead and 117 grams silver.
The main mineralized area occurs in a shallow valley within the De Long Mountains, which are characterized by eight stacked and folded thrust blocks containing sedimentary and igneous rocks ranging in age from Devonian to Cretaceous. The Red Dog deposits occur in the second-lowest thrust block, hosted by black siliceous shale and chert of the Mississippian-to-Pennsylvanian-age Tuna Formation.
The Main deposit is a package of interstacked lenses composed of differing proportions of sulphides, quartz and barite. Sulphides are generally fine-grained, though coarse-grained sphalerite occurs in feeder veins at the base and on the periphery of the deposit. Sulphide minerals in decreasing order of abundance consist of sphalerite, pyrite, marcasite and galena. Silver is associated with both the zinc and lead sulphides, whereas significant amounts of cadmium occur in the sphalerite.
Deposit-scale structures mimic the structure of the De Long Mountains. The Red Dog deposit consists of two major thrust plates and a minor one; they are separated from underlying Cretaceous-age clastic sedimentary rocks by a tectonic melange zone. Restoration of the two main mineralized plates to their relative pre-thrust positions indicates that the Red Dog deposit was composed of a central core enriched in zinc and lea
d with a relatively iron-enriched halo. A thick accumulation of the siliceous and sulphide-bearing barite of the Ikalukrok unit caps the sulphide deposit locally.
The deposit is believed to have been formed during the early stages of a long-lived starved sedimentary basin, probably by a combination of sediment replacement and deposition on the sea floor.
With the turnaround in performance at the Red Dog mine, Cominco resumed exploration drilling in 1995 and discovered the neighbouring Aqqaluk deposit, sitting right across the creek from the Main deposit. Project Geologist Scott Jennings says the find was made on the basis of mapping, geophysics and a few earlier drill holes.
Aqqaluk is estimated to contain a possible reserve of 72.9 million tonnes grading 13.6% zinc, 3.7% lead and 65 grams silver at a projected stripping ratio of 1.3-to-1. In addition, there are about 30 million tonnes of low-grade mineralization grading less than 5% zinc.
During definition drilling of the Aqqaluk deposit in 1995, three diamond drill holes penetrated a separate zone of sulphide mineralization, dubbed “Paalaaq,” at a depth of about 200 metres. One of the holes intercepted 24 metres averaging 27% zinc, 6.5% lead and 154 grams silver.
In 1996, six additional holes intercepted the Paalaaq zone. Two of the best intercepts were 60 metres averaging 12% zinc, 3.9% lead and 82 grams silver, and 33.5 metres averaging 20.7% zinc, 4.2% lead and 116 grams silver. The Paalaaq deposit lies north of, and structurally below, Aqqaluk.
The deposit sits anywhere from 500 to 1,000 ft. below surface; it gets deeper as it goes to the north.
The internal stratigraphy of the Paalaaq deposit repeats that of the main Red Dog deposit and Aqqaluk in that mineralized barite caps the deposit and overlies silica rock and silicified carbonaceous shale. Sphalerite-galena-pyrite-quartz veins crosscut the silicified Ikalukrok shale to form the bulk of the known resource. Massive sulphides, which are defined at the mine as greater than 70% sphalerite and/or galena, are a lesser component. This style of mineralization resembles that seen at the base and at the periphery of both the Main and Aqqaluk deposits. The Paalaaq deposit appears to be truncated beneath Aqqaluk by a northwesterly trending thrust fault.
Paalaaq contains an inferred resource of 13 million tonnes grading 15% zinc, 4% lead and 90 grams silver and remains open on the northern and western sides.
In 1998, a deeper body was intercepted by three holes. One of the holes intersected 9% zinc over 118 ft. “It’s quite deep, down below 2,000 ft.,” says Jennings. “It sort of sits under, and a little bit west of, Paalaaq.” He adds that, for the moment at least, the new zone is too deep to worry about.
The distribution of the four deposits and the new deeper zone is controlled by a series of low-angle, post-mineral thrust faults.
“They are set in there like a tipped-over stack of dominos lying on top of each other,” says Jennings.
With 40,000 ft. of drilling budgeted for 1999, Cominco is moving out into the district to drill-test several geophysical and geological targets. Showings are scattered over a fairly large area of 100 sq. miles. The undeveloped Su-Lik deposit sits 14 miles northeast of Red Dog. Su-Lik, which was discovered before Red Dog, is held 50-50 by Cominco and GCO Minerals and is reportedly host to a 40-million-tonne resource running in the order of 7% zinc.
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