INCO R&D: Foraging for Future Ore

The Inco mines and plants have a voracious appetite. The Ontario and Manitoba mining operations consumed 9.484 million tonnes of ore in 2001 containing 166,000 tonnes of nickel, 129,000 tonnes of copper, and byproducts. The company is buying an increasing amount of outside feed (estimated at 20,000 tonnes of contained nickel in 2002), destined for the Manitoba operations. However, the highest profits lie in mining its own ore.

Inco is therefore constantly on the lookout for more ore. Excluding the two laterite properties (PT Inco and the Goro project) the company plans to spend US$22-million worldwide this year on surface exploration, down from $28 million last year. The bulk of this money will go to the company’s established mining centres in Sudbury and Thompson, where the risks are relatively low by the standards of world exploration. However, the company supports nickel, copper and zinc exploration in several places around the world, many in joint venture with other companies.

They must be doing something right, because, in the past eight years, the Inco Exploration team has added reserves containing recoverable metals valued at more than Cdn$8 billion, according to exploration vice-president Bob Horn. Says Horn: “In the Manitoba operations, we need more ore to extend the life of the mine. In the Ontario operations, what we’ve been discovering in recent years is higher grade ore; we can make more money from our recent discoveries than we could out of the lower grade ore.”

Regarding the regional exploration throughout the world, Horn says, “There are other companies out there exploring for nickel, so we have to be there to make sure we move in quickly on any new discoveries.”

“We are happy to be in nickel,” says Horn. “The other base metals–copper and zinc–have less positive fundamentals. In copper, particularly, there is a significant potential for new production that would tend to have a negative effect on price in the long term. The future nickel supply is restricted both in production and reserves. We do have a small exploration program for copper and zinc in order to exploit some unusual opportunities that have arisen for high grade and large new orebodies. The technology for recovering nickel is fundamentally similar but more complex than that for copper and zinc. It is therefore relatively easy to diversify from nickel into these metals.”

Horn adds that Inco is finding monetary value in some of its unused assets around the world, such as a nickel laterite in Brazil and some small underground sulphide deposits in Ontario. “The strategy is to bring in junior companies to explore and develop these deposits. Inco benefits from holding equity in the junior company and in having rights to take the nickel product.” For example, Fort Knox Gold Resources Inc. has an option to acquire Inco’s small properties in the Sudbury Basin, and Canico is negotiating the acquisition of the Brazilian Ona-Puma nickel laterite properties. “It’s a good deal for them and for us. Inco is a large company by the standards of the mining sector. It does not make business sense for us to develop small deposits when we have projects such as Goro that have huge strategic importance to us.”

Sudbury Basin Still Hides Minable Deposits

Over one hundred years of mining in the Sudbury Basin has not dampened the enthusiasm of Inco geologists determined to find yet more orebodies. The hunt is on to tap into new ore sources in the region.

The Sudbury Structure is world-famous for its rich nickel-copper-PGM deposits. Inco’s local exploration program tackles the search for more deposits by detailed geological studies, advanced geophysics and finally by drilling. The current strategy is to explore for new deposits near the existing infrastructure that can be developed at low cost, and to extend known orebodies.

The contact west of Sudbury from the Copper Cliff North mine to the old Murray mine is a prime target that is currently being explored. About 130,000 feet were drilled in 2001, but that will drop to 90,000 feet in 2002. The drop is attributable to the fact that successful exploration programs at Totten, Kelly Lake and Victor have been completed. In addition to current drilling programs, old holes, some of which were drilled 50 years ago, are being cleaned out in preparation for borehole geophysical examination to delineate new exploration targets.

Brian Thompson, superintendent of mines exploration, co-ordinates underground exploration programs. A large part of this effort is spent in defining deposits accessible from mine workings, but equally important is finding new reserves. The Mines Exploration group works closely with the Basin Exploration group to co-ordinate drilling targets from above and below ground. Underground exploration drilling is expected to total 110,000 feet this year. Together the surface and underground programs share a $10-million annual budget.

Since 1989, borehole EM has been the tool of choice for examining drill holes, said manager of geophysics Alan King, specifically the three-component UTEM system that was developed by Lamontagne Geophysics with financial assistance from Inco. This is a digitized downhole system that reduces ambient geological noise by using fibre optic rather than copper cables. Other stray electrical noises are modeled out by computer software. Hole accuracy is improved with sophisticated gyroscopic systems. In this way information about mineralization is quantified; its size, direction and distance from the hole is known. Typically in a year, 50-55 holes from surface and 45-50 holes from underground are tested.

“Geophysics gives conductivity and size. Exploration puts it in a geological context,” King added. All data are integrated to create 3-D models. The models then become a powerful tool for production planning. “We’re getting value out of the data.”

Kelly Lake, Totten, Pump Lake and Victor–don’t forget these names. They may well be Inco’s next generation of mines rich with nickel and PGM mineralization. Their value lies in their high grades of nickel, platinum and palladium and their proximity to Inco’s existing operations.

Kelly Lake was first discovered in 1997 and is located adjacent to the Copper Cliff South mine. A feasibility study is underway with the intention of creating a low-cost mine.

The Totten mine, located near the Crean Hill mine, was put on care-and-maintenance in 1970, but was redrilled in the late 1990s. The new deposit was found using a UTEM survey in 1999 only 120 m from the old workings. The mineralization is accessible from the 1,400-m shaft on the property. Again, feasibility studies are underway.

The Pump Lake deposit lies 2,500 m north of the Copper Cliff North mine shaft and is undergoing exploration review.

The Victor high-grade Ni-Cu deposit was acquired by Inco in 1926, and in 1960 a small pit was developed. Exploration from 1963 to 1982 defined the Main zone, and further work uncovered the Deep Footwall zone in 1990. The property is known to host two separate mineralized zones located 1,525 m and 2,135 m below surface.

Inco’s exploration at the Sudbury operations has also found deposits at the Copper Cliff North mine and McCreedy East mine with very high PGM values.