Lac Dor is North America’s largest vanadium-titanium deposit and ranks among the largest in
the world.
McKenzie Bay has spent the past two years advancing the Lac Dor project with a eye towards turning it into the world’s lowest-cost and second-largest vanadium-pentoxide producer. If developed, the mine will be North America’s only primary producer of vanadium-pentoxide.
Situated in the Archean-aged Lac Dor layered complex, the vanadium-titanium deposit is 16 km long, 50-200 metres wide, near-vertical and northeastly trending. The central portion of the deposit is an elongated hill 120 metres long and 50-250 metres wide. The deposit comprises four magnetite-bearing zones — Eastern, Western, Southwestern and Lac Armitage — in which vanadium has partially replaced iron in the magnetite’s crystal structure.
Petrologically, the deposit is described as a series of alternating layers of solid titanium-bearing magnetite, magnetite-rich gabbro, magnetite-rich pyroxenite, gabbro and anorthositic gabbro. The solid magnetite layers are discontinuous in the same stratigraphic horizon, and range in thickness from 1 cm to more than 1 metre.
Discovered in 1954 by an aeromagnetic survey, the Lac Dor deposit was initially evaluated only for its iron-ore content. Its vanadium content was recognized in 1966 by Gilles Allard, then with Quebec’s department of natural resources and now a McKenzie Bay director.
In 1977, Lac Dor’s mining rights were transferred to Quebec government-owned
Metallurgical work showed that vanadium pentoxide could be recovered from Lac Dor ore by methods similar to those used for South African vanadium ores. While concentrate grades were lower than for the South African ore, the Lac Dor concentrate contained significantly lower amounts of silica contamination.
In 1981, Soquem abandoned the development program, owing to a weakening vanadium market. In 1987, after a few more studies, the company relinquished its claims over the western and southwestern zones but retained 21 claims in the heart of the deposit.
In 1997, Soquem transferred a 100% interest in the remaining claims to McKenzie Bay in return for 1 million McKenzie Bay shares (a 6.6% interest) and 1 million share warrants exercisable at $2 per share. Soquem also placed a director on McKenzie Bay’s board.
As part of the deal, Soquem continues to retain the right to acquire, for 20% of the required capital expenditures, a 20% stake in the entire project within 120 days of the completion of an independent bankable feasibility.
In 1997-98, McKenzie Bay spent nearly $1.5 million on exploration and development to confirm and expand on previous work. The program included line-cutting, a magnetic survey, mapping, stripping and channel sampling that yielded 1,300 samples.
Last year, resources were estimated at 32 million tonnes grading 0.65% V2O5 in the measured category plus 68 million tonnes of 0.49% V2O5 in the indicated category. Combined, these resources allow for a 40-year operating life at an annual mining rate of 2.5 million tonnes to a depth of 100 metres.
In July 1999, McKenzie Bay granted Cambior an option to buy a 40% interest in the Lac Dore property by spending $4 million on a bankable feasibility study due by June 2001.
McKenzie Bay President Gary Westerholm says Cambior, despite being hampered by hedging problems, has not cut back on its commitment to the project. Rather, he says, the company has budgeted $6 million for the Lac Dor project and intends to finish a feasibility study by the end of next year. Drilling, scheduled to begin in January, is designed to prove up several years’ worth of production.
Cambior is completing the assaying of McKenzie Bay’s trench samples.
Regarding processing, vanadium would be recovered from Lac Dor ore by means of magnetic separation followed by roasting and chemical leaching.
The vanadium material contains two types of ilmenite (titanium-ore) mineralization: exsolution inclusions in the magnetite, and individual ilmenite grains. Although the former is not recoverable by chemical leaching, the latter can be separated to produce a titanium concentrate.
Another processing option at Lac Dor would be to refine the vanadium pentoxide to produce a higher-value ferrovanadium product. This extra step would require another $10-15 million in capital spending to build a conversion plant.
McKenzie Bay’s base case for the Lac Dore project is to mine the deposit via an open pit at a daily rate of 10,000 tonnes, generating annual production of 16.3 million lbs. vanadium pentoxide. Cash costs are projected at $1.56 per lb. vanadium pentoxide, before any titanium credits. Pretax break-even cash flow is estimated at US$1.88 per lb. vanadium pentoxide while debt is being serviced, and US$1.37 per lb. thereafter.
The junior’s financial forecasts for the project assume a vanadium price of US$3.50 (the average over the past 15 years) even though vanadium has been trading in the US$1.43-to-US$1.90 range in recent months.
Asked if the project is still economic, Westerholm replies: “Lac Dor won’t be in production until 2002, and we view this price variation as an aberration. A temporary downturn [in vanadium prices] won’t slow the project at all.”
He adds that McKenzie Bay has already lined up one potential customer under a guaranteed offtake agreement for 1.2 million lbs. at the market price less 4%. The deal covers 10 years and includes a potential 10-year extension.
Throughout the past century, vanadium has been mined both as a primary product and as a byproduct of uranium, iron ore and lead-zinc mining. Vanadium is also derived from bauxite residues and ash from fossil-fuel combustion.
Today, Swiss-based Glencore International’s two mines in South Africa are the world’s only two primary vanadium pentoxide producers.
Some 85% of the world’s vanadium production is used by steelmakers to make stronger, lighter, corrosion-resistant alloys. A second, growing, use for vanadium is in long-life vanadium-pentoxide batteries.
Apart from the Lac Dor project, McKenzie Bay is active in the diamond industry through its recent acquisition of
Be the first to comment on "EXPLORATION ’99 – McKenzie Bay, Cambior explore Lac Dor deposit"