Unfinished business at Prairie Creek

The paint dried over 30 years ago, but a “wet paint” sign still hangs on the metal railing that was erected to stop the uninitiated from falling into the crushing circuit below.

The hopelessly outdated sign wasn’t the only thing left behind. Alan Taylor, Canadian Zinc’s (CZN-T) chief operating officer, explains that empty cups of coffee were perched on the control-room desk when his team first came into the mill in the early 1990s.

The signs and mugs are remnants of past ambitions to build a mine that would pull silver, lead and zinc from beneath the mountain to feed the wealth of one of America’s richest families at the time. And while that particular dream died 30 years ago, Canadian Zinc stands on the cusp of bringing its own vision to fruition: mining one of the highest-grade, undeveloped zinc, lead and silver deposits in the world.  

While impressive, it isn’t such mineral wealth that makes the Prairie Creek mine one of the most well-known “almost” mines in Canada. The project’s status partly comes from its connection to the notorious Hunt brothers, and more prominently from being close to the Nahanni National Park in the Northwest Territories.

Both factors contributed in their own way to keeping Prairie Creek as an almost-mine some 80 years after its discovery. But to understand how, we have to go back to the beginning.

The Prairie Creek tale begins with prospector Poole Field, who made the discovery back in 1928. Field was hiking up the Prairie Creek in the Nahanni River region when a sheen off a mountain face caught his eye, and then his imagination. Field believed he had stumbled upon the same gold deposit discovery a friend told him about in a letter 16 years earlier.

A former Mountie-turned-prospector, Field knew the Nahanni region well and understood more than anyone how it had earned its haunted reputation. It had been Field, after all, who discovered the headless bodies of two prospectors in his days as a Mountie, and it was also Field who found the bones of his friend after he made that gold discovery. The friend’s name was Martin Jorgenson, and his bones were found near his scorched cabin, but his skull wasn’t.  

With rumours of prehistoric, man-eating animals wandering the valleys and cannibals living near the cliff no doubt circling inside his head, Field found his way back to civilization after his find, with his head still on his shoulders. And while he has the distinction of being the first to dream of turning the find into a silver mine, he was also the first to be denied its fulfillment.

Field died, and over time the fear of cannibals and prehistoric animals subsided. But the region’s growing reputation as a place of natural beauty introduced new obstacles for developing a mine.

In 1972, then-prime minister Pierre Trudeau designated the area around the Nahanni River as the Nahanni National Park, and in 1978, the United Nations Educational, Scientific and Cultural Organization chose the Nahanni as the first World Heritage site. And while the Prairie Creek property lay just outside of the original park boundaries, it was clear that a balance between environmental stewardship and northern development needed to be struck.

By 1978 the development side was represented by Nelson Bunker Hunt and Herbert William Hunt. Best known as the “Hunt brothers,” the pair had made billions on Texas oil, and billions more on silver, before their attempt to corner the silver market came back to bite them.

While their massive silver play rolled along — silver went from US$6 to nearly US$50 over the course of their buying in the 1970s — the brothers decided that a silver mine at Prairie Creek would be the ticket to more wealth through the 1980s.

But their dream was not to be. The price of silver collapsed, investors filed suit and the U.S. Congress stepped in to investigate whether the Hunts’ activities in the silver market were legal. With depressed silver prices and mounting regulatory fines, the Hunts were up against bankruptcy and had to pull the plug on Prairie Creek, just three weeks before the mine was set to enter production.

And so back at the mill, coffee left in mugs evaporated and wet-paint signs grew cobwebs, until Canadian Zinc — then San Andreas — came onto the scene in 1993, and purchased the property for $3.25 million.

Since then it has been the company’s challenge to convince regulators and communities around the park that it can mine the ore in a way that preserves the integrity of the Nahanni, while at the same time convincing investors that it can do so with robust margins.

It hasn’t been a quick process. Chief operating officer Alan Taylor has been at it for 19 years, but in December 2011 a milestone was reached when the company won an environmental approval for the mine.

The approval was a high bar to clear. And when combined with the Impact Benefit Agreements signed with the two First Nations communities in any sort of proximity to the project, there is cause for renewed optimism.

Two big pieces to the puzzle remain, however, in the form of a crucial water permit and a road permit.

On the water permit front, Canadian Zinc has recently finished lock-cycle tests that will help clarify what the compliant numbers will be in terms of acceptable levels of toxicity in the discharged water. The levels are remarkably small, reaching the fourth decimal place.

Water discharge is being tested and results are being sent to regulators, but there is a slight wrinkle that is specific to the project.

The wrinkle has to do with how water treatment discharge is monitored. Normally regulators take an end-of-pipe approach to measuring discharge. In the case of Prairie Creek, however, the project will discharge treated water into a mountain creek that has dynamic water flow.

So where regulators normally measure on a day-to-day basis, the company has something else in mind.

“We’re not proposing [a consistent discharge volume],” Taylor says. “We will decant more treated water when the creek flow runs high, and less when the creek runs low. A consistent volume ratio of treated discharge water to local creek flows at an acceptable concentration provides a consistent mix, and in turn has the least impact on the ecosystem.”

Another permit is needed for a road that will allow the company to truck concentrate from the mill, through the park and down to the railhead, 460 km away.

The road has, in the past, been a sticking point for environmentalists who argued that a road carrying heavy trucks could damage sensitive areas of the park. In response, Canadian Zinc designed a road that goes around the areas of concern.

But the road permit is multi-jurisdictional, with the Mackenzie Valley Land and Water Board being the authority for the portion on Crown land, and Parks Canada being the authority for the portion of the road running through the Nahanni National Park.

The Crown land portion of the road has received a draft permit, and the company’s board is revising the draft based on comments received. It may issue a second draft for quick review.

The company has applied for the permit from Parks Canada, but says the agency likely won’t consider the application complete until it submits a road design, which it expects to do by the end of October.

Provided the permits are sorted out, the company’s grand plan is to truck concentrate 85 km to the Tetcela transfer facility, which would make space for concentrate to be stored until the southern stretches of the road freeze over, allowing the stockpiles to be hauled out.

The bottleneck in the trucking process would be an ice bridge, which would cross the Liard River and only open in January, February and March — wh
ich is why a concentrate storage supply is needed near the ice-bridge crossing at Tetcela.

By building up concentrate supply during the periods the bridge isn’t open, the three-month window will be maximized so that the company can get all of its annual production out.

From the bridge, the trucks will wind their way through the mountains until they reach Fort Nelson, where railcars will take the concentrate to port, likely for shipping to overseas smelters.

Canadian Zinc estimates that trucking costs will come in at $115 per tonne of concentrate and rail costs will be $100 per tonne, for a total cost to port of $215 per tonne.

Next week: The conclusion.