FNX, Dynatec reopen McCreedy West (September 27, 2004)

Levack, Ont. — The owners of the Sudbury Joint Venture — FNX Mining (FNX-T), with 75%, and Dynatec (DY-T), with 25% — recently celebrated the reopening of the McCreedy West mine in southeastern Ontario. McCreedy West is the first of five formerly producing mining properties acquired by the joint venture in 2003 from Inco (N-T).

What makes this unique is the nature of the partnership: a junior with properties linking up with an established mining contractor.

Terry MacGibbon, president and CEO of FNX Mining, could not hide his grin: “Welcome to the first in a series of mine openings in the Sudbury area by the joint venture over the next two years. Inco had the creativity to identify non-core assets and make them available for local development. The first drill hole was in April 2002, commercial production was achieved in November 2003, and a sustained mining rate of 1,000 tons per day was reached by April 2004. Dynatec applied its skills to get the mine going ahead of schedule and on budget.”

Dynatec President and CEO Robert Dengler explained that “in the fall of 2001, this was more of a dream. Terry MacGibbon, Rob Cudney (FNX director), Bill Shaver (senior vice-president, Dynatec Mining Services) and I sat around the table, and that was the birth of the Sudbury Basin Joint Venture. Today we’re opening our own mine . . . little, tiny Dynatec and FNX. We’re only the third company to operate in the Sudbury Basin in the past seventy-five years; this has been the domain of Inco and Falconbridge.”

The Hon. Rick Bartolucci, Ontario’s Minister of Northern Development and Mines, was an enthusiastic guest. “This is the first time an Ontario minister of Northern Development and Mines has opened a mine in nearly seven years,” Bartolucci said, adding “the mine was named after a winner, John McCreedy. He was a top Inco executive who played hockey on two Toronto Maple Leafs Stanley Cup-winning teams in the early 1940s. In fact, he is the only individual to have won a Memorial Cup, Allen Cup, Stanley Cup and World Cup.”

Inco operated the McCreedy West nickel-copper mine from 1970 until 1998, and it was the first property identified by the joint venture as worth looking at, according to Dynatec’s Anthony Makuch, who is vice-president of operations at the mine.

The partners had to regain access to the mine, including rehabilitating the ventilation system, before it could be inspected. Underground exploration was then started, and a mine plan put together.

The initial measured and indicated resource estimate was 5.1 million tons grading 1.9% nickel and 0.9% copper, plus an inferred resource of 1 million tons at 2% nickel and 0.9% copper.

Approval from the government and the two partners was received in July 2002 and, just 14 months later, in November 2003, the mine achieved commercial production.

Ore is driven up the ramp in trucks and crushed on surface, where it is loaded into haulage trucks operated by a contractor. The ore is taken to Inco’s concentrator for custom milling. According to Makuch, there are about 135 employees at McCreedy West plus 30 sub-contractors. At the current rate of production, the mine has enough reserves and resources to last eight years.

Its achievement in April 2004 of 1,000 tons per day of sustained production was the first of three phases of development at the Levack-McCreedy West mine complex that could more than triple the 2004 production totals and reach more than 1 million tons of ore each year.

Phases 2 (the Levack mine) and 3 (the McCreedy West PM deposit) are both undergoing feasibility studies, and may be in production in 2005.

The successful joint efforts of a junior explorer and an experienced contract miner have achieved, within a short time, what neither could have achieved alone: in three years both have become owners of a profitable operating mine. Better yet, the mine has achieved positive operating earnings in both quarters since commercial production began in November 2003. As announced in July, the cash operating margin for the first six months of commercial operations was $9.7 million ($84 per ton). It has not hurt that the joint venture was able to expedite the opening to take advantage of the bull market in nickel and copper.

During the ceremonies, the Sudbury Joint Venture paid homage to Terry Podolsky, a distinguished retired geologist with Inco, by renaming one of its properties the “Podolsky property” (see separate story, page 5).

In a touching response, the wheelchair-bound Podolsky honoured the region and FNX, of which he has been a director since its inception in 1984: “Sudbury is truly a horn of plenty for the Canadian mining industry. It has consistently produced for 125 years and will continue to do so for many years. Then along comes MacGibbon and his little Canadian company, and for the first time in the history of the Sudbury Basin, we have a truly Canadian producer.”

— The author is the editor of Canadian Mining Journal.