Pend Orielle zinc project likely to enter production

Based on a recent feasibility study, the directors of RFC Resource Finance (TSE) have recommended that the Pend Oreille zinc- lead project in Washington State be put into production. The company also intends to exercise its option to purchase the property from Gulf Resources and Chemical (NYSE) for $1.25 million. Low capital costs, favorable operating conditions and proximity to Cominco’s smelter in Trail, B.C. combine to create a good profit picture for the deposit, says RFC President D.H. Nicholson. Ore handling and treatment facilities already exist on the property, and the deposit includes “unusually stable rock conditions and excellent metallurgical characteristics.”

Drilling to date has focused on continuous mineralization in the Yellowhead formation, a unit lying 1,000 ft. below the previously mined Josephine formation. With project operator Cominco Engineering Services moving from south to north across a major structural continuity in the past month, the grade and width of the mineralization increased substantially. As a result, RFC was able to double preliminary reserve figures to 6.2 million tons grading 8.8% zinc and 1.9% lead over 4,500 ft. strike length, at a cutoff grade of 5% zinc.

Current plans call for an 800- ton-per-day startup increasing to 1,600 tons after two months. Commercial production will begin in the fourth quarter of 1991, and the existing 2,400-ton-per-day treatment facilities will be used. RFC has not yet decided exactly how it will mine the deep deposit, said Nicholson.

The company estimates putting the property into production will cost about US$27.8 million and a financial analysis indicates a 35% rate of return on production costs, based on lead and zinc prices of 33 cents and 55 cents per lb. respectively over a 9-year initial mine life.

The Mississippi Valley-type zinc- lead deposit, mined from the early 1900s until closure in 1977, is similar to the Pine Point deposit in the Northwest Territories.