Mining aficionados know that the best place to find gold is in a gold mine. The old saw holds true for diamonds, copper and nickel, too. There have been three notable deals in the last week, involving former producers – the Jericho, Granduc and Thierry mines.
Shear Minerals of Edmonton has offered to buy the former Jericho diamond mine developed by Tahera Diamond Corp. Jericho was Nunavut’s first diamond mine in early 2006, eventually producing 780,000 ct of diamonds. Perhaps the project lacked critical mass; it never was profitable despite best efforts of the management. The company filed for creditor protection two years later.
Shear will issue 80 million shares, 72 million of which will go to CAZ Petroleum, the debtor-in-possession. Shear will make cash payments of $2 million, grant a 2% royalty to CAZ and allow CAZ to nominate one director to the Shear board. Completion of the acquisition is subject to a number of conditions, including a successful $10-million equity financing by Shear.
The Jericho property 240 km northeast of Yellowknife is accessible by winter road or by air. Tahera originally invested over $200 million in the project to build the mine, a 2,000 t/d diamond recovery plant, maintenance facility, fuel farm, offices and accommodation for 225 people.
Shear believes there is significant potential upside for existing resources. In 2004 the 43-101 report listed a 3.7-million-tonne indicated resource containing 4.17 million ct and 3.4-million-tonne inferred resource containing 1.76 million ct. A total of 1.6 million tonnes of kimberlite was mined from the those resources. An additional 65,000 carats is readily accessible in a 156,000-tonne surface stockpile. SRK is presently preparing an updated 43-101 compliant resource estimate for Shear.
Potential exploration targets below the currently defined pit shell and throughout the 68,000 acres surrounding the Jericho mine, include five known kimberlites and five unresolved kimberlite indicator dispersion trains within 10 km trucking distance to the mine.
Bell Copper Corp. of Vancouver has granted an option on the former Granduc copper mine to Castle Resources of Toronto. Castle may earn up to an 80% interest by spending $25 million over six years. Bell will receive a $2.5 million cash payment and the remainder in Castle shares. An additional 10% may be earned if Castle provides the project financing. The deal also includes Bell Copper’s option agreement on the Silver Leduc claims belonging to Teuton Resources.
The Granduc mine was in production from 1968 to 1984 with a 10,000 t/d concentrator. Approximately 420 million lb of copper with silver and gold credits was produced. The property near Stewart, BC, languished until Bell Copper acquired it 10 years later. A 43-101 report filed in 2005
Castle believes the Granduc property has the potential for near-term production given the infrastructure that is in place. A 19.5-km-long tunnel connects the underground workings with the former mill site. The historical reserve estimate made in 1983 put mineralization at 5.1 million tonnes grading 1.84% Cu. The original mine exploited a deposit merely 750 metres on strike. Bell’s exploration efforts have defined a high-grade copper zone 4,000-metres-long and open in all directions.
The third former mine that may once more become a producer is the Thierry copper-nickel mine 15 km west of Pickle Lake, ON. Owner Cadillac Ventures of Toronto has brought it to the advanced exploration stage. The latest resource estimate prepared by P&E Mining Consultants puts the measured and indicated resources at 6.2 million tonnes grading 1.92% Cu and 0.20% Ni. The inferred portion is 8.4 million tonnes at 1.79% Cu and 0.16% Ni. A net smelter return (NSR) of $46/tonne was used in the calculations. The 43-101 report recommends that Cadillac carry out a further 7,000-metre infill drilling program in the Main zone and a further 1,500 metres on the east side of the zone.
The Thierry mine began production in 1976 as an open pit, and in 1978 work went underground. Before its closure in 1982 it produced over 480 million lb of copper. In 1981 the owner reworked the mill flowsheet, and over 15 million lb of nickel and 17,500 oz of platinum, 47,000 oz of palladium and 17,000 oz of gold was recovered before the operation was shut down due to low metal prices.
Metal prices are not so low now, and interest in many former producers is heating up. If projects such as these are again turned into producers, it will only expand the old saw, “The best place to find … “