McKenzie Bay proceeds with Lac Dor study

Junior McKenzie Bay International (mkby-o) has commissioned a bankable feasibility study of its Lac Dor vanadium project, 25 km southeast of Chibougamau, Que.

A 4-member committee split equally between McKenzie Bay and Quebec-government owned Soquem will oversee the study, and Soquem’s Serge Nantel has been named project manager.

The Lac Dor project has been in limbo for almost a year, since Cambior (CBJ-T) withdrew from an option agreement owing to its own (unrelated) financial problems.

McKenzie Bay says several factors prompted the renewed activity at Lac Dor:

– a 10-year, guaranteed off-take agreement with the European company MFT Metals & Ferro Alloys Trading for 1.2 million lbs. per year of standard-grade vanadium pentoxide (V2O5);

– development of two new energy-related vanadium technologies requiring large quantities of vanadium oxides; and

– an increase in demand for high-quality, battery-grade (V2O5) and vanadium octoxide (V2O8).

As a result of the latter two factors, McKenzie Bay is raising its sights to become a major producer of battery-grade vanadium oxides as well as the first primary producer of standard-grade V2O5 in North America. The upcoming feasibility will include tests aimed at recovering both kinds of grades from Lac Dor material.

Ilmenite

Lac Dor is North America’s biggest vanadium-titanium deposit and ranks among the largest in the world. It is situated in the Archean-aged Lac Dor layered complex. The vanadium is contained in two types of ilmenite (titanium-ore): exsolution inclusions in magnetite, and individual ilmenite grains. Although the former type is not recoverable by chemical leaching, the latter can be separated to produce a titanium concentrate.

Resources are pegged at 32 million tonnes grading 0.65% V2O5 in the measured category plus 68 million tonnes of 0.49% V2O5 in the indicated category.

Combined, these resources allow for a 40-year operating life at an annual mining rate of 2.5 million tonnes to a depth of 100 metres (T.N.M., Nov. 29/99).

Vanadium will likely be recovered by means of magnetic separation followed by roasting and chemical leaching, though an option would be to refine the V2O5 so as to produce a higher-value ferrovanadium product. This extra step would require additional capital to build a conversion plant.

In 1997, Soquem transferred a 100% interest in the project to McKenzie Bay in return for 1 million McKenzie Bay shares (a 6.6% interest) and 1 million share warrants exercisable at $2 per share. Soquem also placed a director on McKenzie Bay’s board.

As part of the deal, Soquem continues to retain the right to acquire, for 20% of the required capital expenditures, a 20% stake in the entire project within 120 days of the completion of an independent bankable feasibility. In 1997-98, McKenzie Bay spent nearly $1.5 million on exploration and development to confirm and expand on previous work.

McKenzie Bay also operates the only diamond mine in the U.S.: the Kelsey Lake open pit, on the Colorado-Wyoming state line.

In early March, the company’s shares shot up to above US$3, whereas, in December 2000, they were trading at US50.