Good grade is the key for new nickel mine

Canada’s newest nickel mine, in northern Manitoba, will be the first brand-new underground nickel mine in the country for close to a decade — and the third for Manitoba in the past 26 years.

In an upbeat move for what has recently been a generally depressed base metals sector, Hudson Bay Mining and Smelting, and partner Outokumpu Mines say they will start producing nickel in the fourth quarter of 1988 at a new mine at Namew Lake, in northern Manitoba.

There has not been a new underground nickel mine in Canada since the opening in 1979 of the Fraser mine of Falconbridge Ltd. in the Sudbury district of Ontario, and the opening in 1971 of Falconbridge’s relatively small Manibridge mine, in the Wabowden district of Manitoba. (It closed in 1977, produced about nine million lb nickel a year).

Just about 10 years before that, Inco Ltd. put Manitoba firmly on the nickel map with the opening of its big nickel producer at Thompson. That mine, (including output from the new open pit), last year produced about 121 million lb of nickel out of a total of 357 million lb that Inco turned out in the year.

(Falconbridge in 1986 produced a total of about 116 million lb nickel and nickel in ferronickel, from its Canadian and Dominican Republic operations.)

The new Hudson Bay/Outokumpu mine will be on a much more modest scale but, as analyst Ray Goldie of Richardson Greenshields sees it, it has “real potential as a low-cost producer.”

Hudson Bay President Lloyd Nilsen tells The Northern Miner the new Namew Lake mine will produce about 17 million lb of nickel annually, as well as about six million lb of copper, from proven reserves of about 2.82 million short tons, assaying 2.44% nickel and close to 1% copper.

It’s that nickel grade, which is almost twice that of the nickel ore being mined by Inco and Falconbridge at their Sudbury mines, which has Mr Nilsen convinced that the new mine will be viable, particularly now when, as he says, the nickel price has been strengthening.

“That nickel grade is very attractive,” he said, “compared to the average grade of nickel producers in Western countries.” Both Inco and Falconbridge weigh in at grades of from 1.4% to 1.5% nickel, at their Sudbury operations.

Mr Nilsen said the new mine is expected to produce about 525,000 short tons of ore annually, to yield 68,000 short tons of nickel concentrate, with minor amounts of platinum and palladium and 13,500 short tons of copper concentrates.

Capital cost of the mine and associated plant, including a 2,100-short- ton-per-day concentrator, will be in the order of $68,000,000, the Hudson Bay president said. The concentrator is being designed and constructed by the engineering division of Outokumpu.

The nickel-copper concentrate will likely be shipped elsewhere for refining, a move Mr Nilsen said has yet to be finalized.

Hudson Bay holds a 60% interest in the project and is operator, with Outokumpu holding the remaining 40%. Mr Nilsen said Hudson Bay would finance its share of the capital cost with internally generated cash.

While the life expectancy of the new mine is from five to six years, he said he is “reasonably optimistic” that further reserves will be developed, particularly depending on underground development and the results of deeper drilling.