Sudbury, Ont. — It’s a long, circuitous journey along the ramp that leads from the bottom of the Lockerby shaft at 1,300 metres underground to the production level at 1,900 metres — and not the most efficient way to transport ore, waste and personnel.
That’s why
“With more reserves, we’ll be able to justify a capital expenditure program to improve infrastructure, whether that means extending no. 3 shaft or no. 2 shaft,” First Nickel’s chief operating officer, John Haflidson, told analysts visiting the mine in late October.
First Nickel bought the Lockerby mine at the southwest rim of the Sudbury basin from
The mine has three shafts. The first two run from surface to 1,300 metres depth, providing access for miners and material and hoisting ore and waste to surface. A third, internal shaft runs from 1,200 metres to 1,550 metres, and was used by Falconbridge to skip ore and waste.
Haflidson says it would make sense in the long term to extend shaft no. 2 so that ore, personnel and ventilation could be transported directly from surface to the production level and back. But the capital cost would be high — at least $15 million.
The second option, extending shaft no. 3, would be much less expensive upfront, but more costly from an operating standpoint. First Nickel would have to haul ore over to the no. 1 shaft for transport to surface after it was crushed.
“If we were to acquire the Crean Hill Deep zone (an underground deposit owned by
Two underground diamond drills are currently outlining reserves at Lockerby: one on the Depth zone and another on the East zone about 1,500 metres to the east and accessible via ramp from the main workings. Together, the two orebodies contain measured and indicated resources of 174,000 tonnes grading 2.6% nickel and 1.3% copper and inferred resources of 892,000 tonnes averaging 2.2% nickel and 1.4% copper. Both are classic Sudbury Igneous Complex (SIC) contact deposits.
To justify extending the no. 2 shaft, resources and reserves would need to be in the range of 4-5 million tonnes. A decision to extend the no. 3 shaft would require less ore — somewhere in the order of 1.5 million tonnes.
Without further information about the dimensions and nature of the orebodies, the mining method also remains uncertain. First Nickel is currently using long-hole drilling at the first stope of the Depth zone. But cut-and-fill may turn out to be the better option at the East zone, where Haflidson suspects there may be multiple lenses of ore.
The current 2-year mine plan calls for production at a rate of 700 tonnes per day by the first quarter of 2006. Gross revenue from mining over this period is expected to be $160 million. From that amount, Falconbridge will subtract $44 million to treat and refine the ore at its Sudbury smelter to leave $116 million to cover mining, custom milling and transport charges and generate cash flow of $15-20 million.
But Haflidson is confident that the production rate will increase as First Nickel’s mine geologists prove up more ore.
Getting a handle on the depth and lateral potential of the Depth zone is their first priority. Drill intersections below the zone’s current mining level at 1,900 metres are sparse, says Phil Vicker, the company’s new area exploration manager, who has worked at Falconbridge’s projects within the Sudbury basin and in northern Quebec for the past decade. But there is enough evidence to suggest the orebody extends to at least 2,200 metres and, in some areas, widens to about three times the current mining width.
There is potential to go even deeper than that at Lockerby, though ventilation becomes more of a challenge at greater depths. Inco is mining at about 2,400 metres at Creighton, the deepest mine in the Sudbury basin.
At the East zone, which lies at about 1,000 metres depth, First Nickel is focusing on drilling between previous pierce points to outline more resources. Vicker says the zone, which was likely discovered during basic reconnaissance drilling by Falconbridge, needs a lot more exploration and detailed data compilation before its true potential, including known high-grade mineralization in the footwall granites, can be determined.
The third area of potential for outlining more reserves is within the Conwest zone, which sits above the East zone. First Nickel has the option to acquire a 70% interest in Conwest from
This shallow deposit (100-300 metres) was estimated to have a mineral inventory of 4.3 million tonnes of lower-grade nickel- copper resources (not compliant with National Instrument 43-101 standards) in the 1960s, but First Nickel will focus on areas of higher-grade mineralization (for example, 2.35% nickel and 0.35% copper over 15.5 ft.).
An aggressive exploration program at Conwest includes deep-penetration, induced-polarization (IP) surveys from surface, detailed mapping of the target breccia and a review of previous drilling to identify high-grade areas within the zone that would be accessible by ramp from surface.
The company also has three other exploration projects at the North Range of the basin along the coveted SIC contact: Foy Mouth, Bowell and Morgan-Lumsden.
The Bowell property, where First Nickel recently cut 23 metres grading 2.21% copper and 1.2% nickel in footwall mineralization, is the most advanced of the three, and may be amenable to open-pit mining methods. To earn a 100% interest from Falconbridge, First Nickel must make a $2-million cash payment, spend $1.5 million on exploration and complete metallurgical, engineering and environmental studies and a feasibility study on the deposit within 12 months.
First Nickel stands to benefit from the proposed friendly merger between Inco and Falconbridge because it may give the junior access to the Crean Hill Deep zone and other pockets of mineralization owned by Inco that could be accessed either from surface or from underground workings at Lockerby.
The junior could also tap into any skilled labour made redundant by the merger, a competitive advantage in the current tight job market. First Nickel plans to “distinguish itself as an employer” in the camp by offering incentives such as stock option plans, says president and CEO Elizabeth Kirkwood. “We want Lockerby to be a place people are happy to work in.”
— The author is a freelance writer specializing in mining issues, and principal of Toronto-based GeoPen Communications (www.geopen.com)
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