Raglan mine a strong performer for Falconbridge

As it struggles to return to profitability, Falconbridge (FL-T) is counting on a strong operating performance at its wholly owned Raglan nickel-copper mine in the Ungava region of northernmost Quebec.

Falco spent $700 million developing Raglan, where commercial production got under way in April 1998. Ore is mined from open pits and underground. Overall, 475 people are employed at the site, which also hosts a power plant, offices, accommodation, a fresh-water supply and fuel storage tanks.

For the first three-quarters of this year, Raglan produced 18,201 tonnes nickel and 5,158 tonnes copper, compared with 16,777 and 4,590 tonnes, respectively, in the corresponding period of 2000. Byproduct cobalt totals about 300 tonnes annually, and there are platinum and palladium credits as well.

Much of the production boost in 2001 reflects the expansion of milling capacity to 1 million tonnes from 800,000 tonnes of ore. Output for the full year is pegged at a minimum of 24,000 tonnes nickel plus copper credits.

The mine site is linked by all-weather roads to an airstrip at Donaldson and to concentrate, storage and ship-loading facilities at Deception Bay. Concentrate is trucked 100 km from the mine to Deception and then, during the warmer months, shipped to Quebec City. From there, it travels by rail to the smelter in Sudbury. Smelted matte is returned by rail to Quebec City and then shipped to Falco’s Nikkelwerk refinery in Norway.

At Dec. 31, 2000, Raglan held reserves of 27.3 million tonnes grading 2.85% nickel and 0.78% copper. A further 2.7 million tonnes of 1.86% nickel and 0.69% copper lay in the resource category.

Falco is keen to expand its reserve base at Raglan and, for 2000 and 2001, plans to spend $22 million exploring the region for traditional nickel-copper targets, as well as for platinum group metals.

Lying in the eastern part of the Cape Smith fold belt, the Raglan property extends 55 km from east to west and hosts a series of high-grade deposits along its length.

The fold belt separates the Superior and Churchill geological provinces and can be correlated with other Proterozoic rocks to the southeast in the Labrador Trough and west of Hudson Bay in the Thompson nickel belt of Manitoba.

The stratigraphy of the Cape Smith belt is subdivided broadly into a lower sedimentary group, a central division of tholeiitic basalts and sediments (Povungnituk group) and an upper division of komatiitic basalts (Chukotat group). Mafic-to-ultramafic flows and sills are abundant in the east-central portion of the belt.

Raglan mineralization consists of sulphide lenses associated with ultramafic flows along the contact of the Povungnituk and Chukotat groups. Nine peridotitic flow bodies containing economical mineralization occur over the entire property; these include Donaldson, Boundary, West Boundary, 13-14, 5-8, Katinniq, 2-3, East Lake and Cross Lake.

These ultramafic bodies are said to contain pervasive sulphide mineralization, mainly as 1-3% finely disseminated pyrrhotite and pentlandite.

Individual ore lenses, which vary from tens of metres to 200 metres in length, consist of a narrow zone of massive sulphides along the footwall contact overlain by net-textured and disseminated sulphides. The ore lenses consist of hexagonal pyrrhotite, pentlandite, chalcopyrite, magnetite and minor pyrite in a peridotite gangue. Cobalt and platinum group elements are associated with the sulphides.

Model relationship

The relationship at Raglan between Falconbridge and the local aboriginal community is a model for the mining industry. In 1995, the company signed an agreement with the Makivik Corporation — which helps guide all aspects of development in the Nunavik territory — that ensures profit-sharing and guaranteed contributions to the Inuit of Nunavik.

Falco takes care to note that people living in the villages of Salluit and Kangiqsujuaq will benefit fully from the project’s economic spinoffs, with guaranteed contributions and operational profit-sharing payments over an 18-year period made into a trust fund.

Falco has also helped set up a committee which serves as the forum between Raglan and the Inuit. Three of the six members are local Inuit.

The Raglan mine is part of Falconbridge’s largest moneymaker, the Integrated Nickel Operations (INO), which also include Sudbury’s mines and smelter, as well as the Norwegian refinery.

The INO’s metals sales during the first nine months of 2001 totalled 46,207 tonnes nickel (compared with 48,143 tonnes last year), 22,867 tonnes copper (38,028 tonnes) and precious metals worth $151 million ($118 million).

Unfortunately, over that same time period, Falco’s average realized prices declined across the board. On a per-pound basis, nickel fell to US$2.97 from US$4.23; ferronickel, to US$2.99 from US$4.10; copper, to US73 from US83; and zinc, to US46 from US56. Silver meanwhile fell to US$4.40 from US$5.08 per oz.

These bleak prices dented Falco’s bottom line, which showed 9-month earnings of $28 million on revenue of $1.6 billion, compared with the $319 million earned on $2 billion in revenue during the corresponding period of 2000. Falco’s loss in the recent third quarter was $27 million.