Infrastructure biggest challenge for Izok Lake

A fleet of Siberian icebreakers could provide the key to economic development of the Izok Lake zinc-copper deposit, one of four projects that Metall Mining (TSE) expects to bring into production in the 1990s.

Undeterred by Izok Lake’s remote arctic location, the 59% owned subsidiary of German metals giant Metallgesellschaft AG has agreed in principle to pay Minnova (TSE) $15 million for 40% of the Northwest Territories project. With estimated capital costs of $300 million, it is by far the most challenging property in a portfolio that includes the Copper Range copper mine in Michigan, and the soon-to-be developed Bougrine zinc-lead project in Tunisia.

Although reserves stand at 13.4 million tonnes of grade 14.4% zinc, and 3.2% copper, Echo Bay (TSE) and Texas Gulf walked away from Izok Lake before Falconbridge sold the project to Minnova earlier this year.

But Metall President Klaus Zeitler says large vessels capable of breaking through ice, 1-metre thick and topped by 40 cm of snow, will free up enough time to ship concentrates out to destinations in Japan and Europe. Believing that Izok Lake will be a low-cost producer of about 400,000 tonnes of concentrates annually, Zeitler is preparing to open talks with Siberian shipping company Murmansk. Estimated costs are US30 cents per lb. zinc. Zeitler says Murmansk’s 30,000-tonne Siberian ships can plough through the frozen arctic for about a month longer than vessels operated by Canadian firm Canarctic to transport materials from the Nanisivik and Polaris mines. “We think that when everything is worked out and the puzzle is put together, we will use a trans-loading system involving icebreakers and cargo ships,” says Zeitler who claims that a 2-3 month shipping season will be adequate. “A lot of experience has been gained from other remote mines like Red Dog and Polaris,” he adds.

The logistics involved in building a large seaport at Coppermine and drawing up a bankable feasibility study could delay initial production at Izok Lake until 1997, making it the last of four new projects on Metall’s schedule. The other projects are the Bougrine zinc-lead project in Tunisia and the Dikili gold and Cayeli copper-zinc projects in Turkey. Together, they will require Metall to contribute about $100 million toward total capital costs. Recently, Metall and a consortium of companies raised US$50 million to finance the 45% owned Bougrine project where minable reserves stand at five million tonnes grading 11.7% zinc and 2.6% lead.

With construction of both underground and surface facilities under way, Metall and partners International Financing Corp. and the Tunisian government hope to have Bougrine in production next year. At full capacity, it is expected to produce 70,000 tonnes of zinc and 14,000 tonnes of lead concentrates.

Dikili and Cayeli are slated for production in 1994 and 1995 respectively. Held 66.67% by Normandy Poseidon of Australia and 33.33% by Metall, Dikili hosts two million tonnes of proven and probable reserves grading 9.9 grams gold. It is expected to produce 100,000 oz. (3,000 kg) annually for eight years.

With preliminary reserves of 10.6 million tonnes grading 4.7% copper and 7.3% zinc, the Cayeli project is a joint venture involving Metall (49%), Etibank (45%) and Gama Endustri (6%). Annual estimated output is 100,000 tonnes copper and 70,000 tonnes zinc concentrates.

As Metall sees a least a 2-year gap between startup at Cayeli and Izok Lake, the company is looking around for another project to fit into that slot, Zeitler told The Northern Miner.

With about $100-million cash, Metall is also negotiating with Rio Tinto Zinc subsidiary Kennecott in a bid to fill vacant capacity at the 43,000-tonne-per-year Copper Range mine in Michigan. The two companies are talking about custom-milling of Kennecott’s Ladysmith copper-gold project in Wisconsin at Copper Range.