Sudbury: the need for feed

Large metal operations take on a life of their own in established mining camps. One result is that milling and smelting capacity create demand for near-term sources of ore.

Certainly Sudbury has followed this pattern, and while principal player Inco (N-T) has large reserves of its own, the need for feed drives much of the exploration in the camp.

Over the past three years Inco may have seemed preoccupied by the wrangle over development of the Voisey’s Bay nickel deposit in Labrador, but in that space of time, the company has outlined deposits at Kelly Lake, Totten, Copper Cliff North and Pump Lake. At Copper Cliff North, an extension to the known 138 Orebody was brought into production in late 2000. It was a small deposit with a relatively low nickel grade, but held very rich platinum-group credits: its 300,000 tonnes graded 0.9% nickel and 4.5% copper with 16.4 grams combined platinum, palladium and gold per tonne.

Another 2.5 metres north of Copper Cliff North, Pump Lake has an indicated resource of 3.5 million tonnes with average grades of 1.4% nickel, 1% copper, and 1.5 grams per tonne in combined platinum, palladium and gold.

At the beginning of 2001, Inco announced a resource of 10.1 million tonnes grading 1.5% nickel, 1.97% copper and 4.8 grams combined palladium and platinum at the Totten mine, on an extension to the known orebody. At the time the deposit was open at depth, and down-hole geophysics showed more conductive material in untested areas, but Inco has not made any public statements about an increase in tonnage since.

Kelly Lake, near the Copper Cliff South mine, has 10.5 million tonnes that run 1.77% nickel, 1.34% copper, and 3.6 grams per tonne in combined platinum and palladium. It is accessible from workings in the Copper Cliff South mine.

Inco also drilled off 8 million tonnes grading 1.88% nickel, 0.84% copper and 0.91 gram platinum-group metals at McCreedy East.

The interesting result was that, over the course of its wrangles with the Newfoundland government over smelting and refining of Voisey’s Bay material, Inco outlined new mineralization that more or less matched the tonnage in the Voisey’s Bay reserve.

Just as interesting is Inco’s arrangement with junior FNX Mining (FNX-T) and mining contractor and consultant Dynatec (DY-T) to move forward on a collection of five old Inco properties that the major regarded as non-core holdings. All five properties — Levack, McCreedy West, Norman, Victoria and Kirkwood — are former producing mines that no longer met Inco’s internal economic criteria. On three of the properties (McCreedy West, Levack and Norman), Inco suspended production in the late 1990s as a cost-cutting measure while nickel prices were low. Production from the other two dates back farther.

Inco and FNX (then called Fort Knox Gold) concluded an agreement in mid-2001 under which FNX would spend $30 million over 52 months starting in January 2002, including $14 million by May 2003. Dynatec came in as a 25% joint-venture partner in February of this year, putting up half the initial $14 million work commitment, and a quarter of subsequent expenditures. FNX takes charge of the exploration, and Dynatec provides the development and underground expertise.

A large part of the backing for the work has come in the form of a $31-million financing by FNX, including $6 million in flow-through shares, closed in mid-July.

Buy back

The option deal gives FNX and Dynatec full ownership once the money is spent, subject to a back-in right. The major retains a first-refusal right and a right to hold on to 51% of any property where the joint venture outlines a resource with more than 600 million lbs. nickel; during the joint venture’s option period, Inco can buy back in by spending twice what the joint venture had spent. After the joint venture has full ownership, Inco can finance development and production to earn 51% back.

Inco also gets a 19.9% stake in FNX and an exclusive offtake agreement for any production from the properties.

Dynatec’s participation is significant, too, because the contractor has a long history with Inco. It contract-mined Inco’s Shebandowan nickel mine west of Thunder Bay in the late 1990s, as that mine was nearing depletion, and made a success out of remnant mining there. It has also signed a 3-year collective agreement with United Steelworkers local 2020 for the Sudbury work.

Dynatec has reopened the portal at McCreedy West, and the first 1,500 metres of the ramp — which extends 2,400 metres to the 1,600-ft. (480-metre) level of Inco’s Levack and McCreedy West mines — is in good condition. The joint venture sees near-term production potential at McCreedy West, possibly in the last quarter of the year, and has plans for underground drilling from the Levack and McCreedy West workings.

The joint venture’s first surface drill results came from McCreedy West, which Inco closed up in 1998 after mining just over 14 million tonnes of ore, and from Levack, which had produced 60 million tonnes before it was closed in 1997.

McCreedy West

At McCreedy West, FNX planned to test six known mineralized zones that had been left behind in 1998. Initial drilling intersected significant grades in the deposit’s PM zone, which lies in the footwall rocks below the Sudbury gabbro complex, and in the Upper Main zone, in the gabbro itself. In addition, a new body, dubbed the Inter Main zone, may be taking shape.

FNX’s first hole into the PM zone cut 76.4 metres grading 1.2% copper, 0.2% nickel, 2.13 grams platinum, 3.44 grams palladium, and 0.67 gram gold per tonne. In the Upper Main zone, a 10.7-metre intersection ran 0.6% copper and 1.7% nickel with trace precious metals.

The Inter Main zone was intersected by one drill hole, which cut a 15.9-metre length grading 0.4% copper and 3.2% nickel, with some platinum group and gold credits.

To the east, on Levack, a hole that targeted the known 1300 zone intersected 10.9 metres with average grades of 0.6% copper, 2% nickel and 0.8 grams combined platinum, palladium and gold per tonne. That same hole continued deeper to test the 1900 zone, where it cut a 25.2-metre length grading 1% copper, 1% nickel and 0.84 gram platinum, 0.89 gram palladium and 0.06 gram gold per tonne.

Another hole tested a conductor found in a previous down-hole electromagnetic survey. The conductor’s position suggested it might connect the 1300 and 1900 zones, and the drill hole intersected 1.3% copper, 2.1% nickel and 0.72 gram platinum, 0.82 gram palladium and 0.19 gram gold per tonne.

Recent results from the Victoria property in the southwestern part of the Sudbury structure have confirmed its potential to host more Sudbury-style mineralization. FNX sees the possibility of a near-surface deposit that might be capable of development as an open pit.

Victoria has seen about 7,200 metres of drilling in 50 holes since FNX started work in the spring. Here, FNX’s focus has been on outlining a narrow, higher-grade zone of massive sulphide mineralization, and the mineralized zone is now known to have a strike length exceeding 150 metres.

Nickel grades generally fall into the 1-3% range, with copper generally just under 1%, and precious-metal credits are highly variable but usually significant; the rock typically has around 1 gram palladium, between 0.2 and 0.9 gram platinum, and a little gold.

Over in the opposite corner of the camp, FNX’s work at the Norman property suggests there may be potential for more ore beneath the depleted Whistle open pit.

Two drill holes on the Norman 2000 zone, about 600 metres below the pit, cut wide zones of copper-rich massive sulphide mineralization. One hole intersected 19.8 metres of 6% copper, 0.2% nickel, 1.9 grams platinum, 2.8 grams palladium and 3.4 grams gold; the other intersected 35.3 metres that ran 3.3% copper, 0.6% nickel, 1.3 grams platinum, 1.4 grams palladium and 0.4 gram gold.

On the Norman North zone, about 600 metres north of the pit, FNX has been drilling infill holes between earlier Inco drill holes. The grades are comp
arable to Inco’s results.