The improvement in copper prices over recent months could be a harbinger of things to come in the base metals sector. Nickel prices are fast approaching US$5 per lb. and even zinc has made a modest comeback and is forecast to go higher.
Some big names in the copper sector, including Cyprus Amax and Asarco, have fallen victim to mergers over the past year, reflecting perhaps an overdue rationalization in this long-suffering sector. Can nickel and zinc be far behind?
What this all means for junior explorers is still a matter of debate, but, with an increasing emphasis on where a company stands on the global cost curve, major companies are setting their standards higher than ever before. They’re looking for mineral deposits that meet much more stringent investment criteria, which, in most cases, is largely about grade.
In the case of copper, Canadian producers are squaring off with Chilean competitors, whose grades are three to four times our averages and who have a competitive cost structure.
Although Canada remains highly prospective for base metals, mineral explorers often feel unwelcome here. And it’s easy to understand why, with premiers such as Newfoundland’s Brian Tobin preventing development of the world-class Voisey’s Bay nickel discovery in Labrador.
On the other hand, Peru has become increasingly attractive for a variety of reasons. The country has moved aggressively to privatize its minerals industry; foreign-exchange restrictions have been lifted; and new incentives have been introduced in an attempt to promote mining investment. Canada is one of the largest investors in Peru’s minerals industry, with the Antamina zinc-copper development alone representing an investment of US$2.4 billion. Ownership of that project is shared by
Vancouver-based
SWG has a high-powered board of directors, some of the world’s most respected mining companies as joint-venture partners, and a balance sheet that would put some major mining companies to shame. Tapping into equity markets when they were hot (if anyone can remember back that far), the company raised a whopping $47.4 million in 1996, ending the year with $52.2 million in its treasury.
While gold and diamonds are major components in the company’s exploration portfolio, copper, lead and zinc are also high on its list. SWG has no less than 22 joint ventures under way, with companies such as
Pasminco, a major zinc miner and refining company, is SWG’s partner in the Accha lead-zinc project in central Peru. A third phase of drilling, scheduled for early this year, will explore four areas of high-grade zinc-lead-silver mineralization previously identified. Rotary drilling has yielded values ranging from 3.6% to 34.5% zinc, and a prefeasibility study is planned for this year.
SWG’s Winter property is immediately adjacent to Southern Peru Copper’s Los Chancas discovery, which has a geologic potential of up to 200 million tonnes averaging more than 1% copper. This year’s drill program at Los Chancas can only add to the potential at Winter. Southern Peru Copper, a subsidiary of Asarco, can earn a 65% interest in SWG’s property.
In Chile, SWG is looking for blind porphyry copper deposits in a belt that hosts the Chuquicamata, Escondida and El Salvador copper deposits. Asarco (which is now part of Grupo Mexico) has defined several porphyry-type geophysical targets in the region, and these will be subjected to follow-up work.
Indonesian prospects
Meanwhile, in North Sumatra, partners
Sedimentary rocks hosting both stratabound shale-hosted sedimentary-exhalative-type massive sulphides and carbonate-hosted zinc-lead mineralization underlie at least 20 sq. km of the main grid on the property. Favourable zinc-lead horizons have been found along 5 km of strike length, and these remain open to expansion. About 1.5 km of the favourable horizon has been tested by drilling, often with spectacular results.
Hole 18D intersected an estimated true thickness of 16.5 meters of massive sulphides assaying 31% combined zinc and lead. This hole is 150 metres south of Hole 1D, which intersected 6.8 metres of 34% combined zinc and lead. Another hole, drilled 250 metres south of 18D, intersected a carbonaceous shale unit associated with a fault structure that may have cut off the zone.
Cominco intends to proceed with the second year of the farm-in and will assume operatorship this April. The company’s second-year commitment includes US$1.8 million for exploration plus the purchase of 750,000 Annax shares at $1 each.
Atna in Yukon
Vancouver-based
The 2000 budget for Wolverine is at least $1.1 million, including additional exploration and a prefeasibility study. Metallurgical tests will evaluate methods of eliminating selenium, arsenic and antimony in order to reduce smelting penalties. Exploration drilling will follow up on two narrow but high-grade intersections in the Sable zone (13.3% zinc 0.8% copper, 0.8% lead, 416 grams silver per tonne and 1.9 grams gold per tonne, plus 15.7% zinc, 0.7% copper, 0.6% lead, 183 grams silver and 2.3 grams gold — all over 0.6 metre).
In February, Atna purchased a 66.7% interest in the Marg property, near Mayo, Y.T., from
Atna is also exploring for base metals in the Schreiber-Hemlo greenstone belt, which hosts two substantial massive sulphide deposits: Geco and Winston Lake. The company has other projects in various stages of exploration in the Yukon, Alaska and the Dominican Republic.
One possible sleeper among all these well-funded explorers is
In December 1999, Quantec Consulting completed a borehole survey that defined significant off-hole responses, which generally coincide with known mineralized horizons extending from surface. Atikokan has been funding most of its recent activities from small flow-through financings.
What was once the largest exploration program of its type in Canada, the South Voisey’s Bay project in Labrador, has fallen on hard times and will need a major transfusion to revive it.
r Minerals
Donner’s president, Harry Keats, has shifted emphasis to the Lac Rocher area in Quebec, where
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