NovaGold offers $12 million for Mount Pleasant tin mine

The mine, 40 miles west of Saint John, N.B., was first brought into production in 1983 as a tungsten producer by Billiton whose original investment is estimated to have been more than $120 million. But falling tungsten prices combined with the deposit’s complex geology and metallurgy led to the mine’s unfortunate closure in 1985.

Mining was carried out by conventional underground methods, with access to the orebody provided by two inclined ramps. Surface plant included a mill, service and shop buildings and warehouse facilities. A 14-year mine life had been expected at a production rate of 2,000 tons per day.

“We’ve gotten ourselves a real bargain,” said Angus MacIssac, corporate secretary for Novagold. “It’s a real plumb of a property,” he told The Northern Miner.

Novagold has signed a letter of intent to purchase 100% ownership of the property, and plans to spend the next 12 months completing a feasibility study using conventional and new technology to test the economic viability of the property.

The focus of the Novagold study will be on metallurgical test work for improving the recovery of tin from the Mt. Pleasant ores.

LAC also spent some $6 million on an earlier feasibility study in 1988, which concluded that the project was not viable at a tin price of $3.50(US) per lb. LAC said a tin price of $5 would be needed to make the project economically viable. New York metal dealers currently quote a price of about $3.50.

But the Halifax-based junior company is undaunted by past failures to mine the Mt. Pleasant deposit. NovaGold hopes to apply new technology to unravel complex metallurgical questions that have been stalling the project.

“We’ve assembled a team of nearly 30 consultants and engineers, including some of the best brains in the country,” said MacIssac. “We’re all very excited about re-examining the Mt. Pleasant project.” The company will employ the services of Lakefield Research, the federal government’s CANMET research facility, as well as Toronto- based consultant Watts Griffis & McOuat, to oversee the feasibility study. More than $1.2 million has been budgeted for research, Novagold said.

To avoid excessive dilution of its existing shareholders, the company said it expects to be in a position to pay cash for the acquisition. Exercising of the option will await positive results from the feasibility study.

Total geological reserves in four of the known tin zones at Mt. Pleasant are estimated at 5.1 million tons grading 0.79% tin. For comparison, Canada’s only other producing tin mine — Rio Algom’s (TSE) East Kemptville operation — has proven and probable reserves estimated at 36 million tons averaging only 0.175% tin.

The mineral deposits of the Mt. Pleasant area are examples of porphyry-type deposits and occur within a series of Mississippian- age volcanic rocks. The deposit is one of the largest tin-tungsten- bismuth occurrences in the Canadian Appalachians.

“We’ll focus on the tin mineralization and see if we can turn the project around,” said Novagold Vice-president William Young. “We’ve set a target of being able to produce tin at prices below $3 per lb,” he said.

During the 12-month option period, Novagold will pay LAC and Billiton’s maintenance costs for the facilities estimated at $20,000 per month.

Success of the project is expected to depend largely on whether the company and its consultants can sort out the complex metallurgical and tin recovery questions at Mt. Pleasant.

“There’s a world-class deposit sitting there with all the environmental assessment and mine development already done,” said Young. “Everything is there, we just need to sort out the metallurgy.”

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