Nunavik mine on horizon

The nickel potential of northern Quebec’s Ungava Peninsula is largely untested, despite the success of Xstrata Nickel’s Raglan mine. That situation is about to change, however, as Canadian Royalties advances the Nunavik project. This is the project formerly called ‘South Raglan’, and a recent bankable feasibility supports its immediate development.

Canadian Royalties has a clear goal: to develop a stand-alone mining and milling operation with a mine life of more than 10 years and an annual nickel output of 10,000 tonnes in concentrate. The goal looks realistic. Using a nickel price of US$5.50/lb, the Nunavik project’s resource is estimated at 16.1 million tonnes; but the resource more than doubles at a nickel price of US$8.00/lb, giving lots of flexibility to exploit the various deposits. No resources have been calculated yet on the underground portion of the Mequillon orebody, and this is likely to add substantial tonnage.

Despite its remote location, the project has access to major infrastructure, thanks to its location just south of the nine-year-old Raglan mine. Communications, transportation routes and a shipping port have been established. Equipment will come in and concentrates will go out through Deception Bay. Electricity will be generated on the site.

The Nunavik project is spread over 40 km east to west and includes several orebodies–Mesamax, Mequillon, Expo, TK, Ivakkak and Tootoo–amenable to open pit mining. The feasibility study is based on mining only three of them. During the first four years, ore from the Mesamax, Ivakkak and Expo deposits will be blended for mill feed. In years five to six, Ivakkak and Expo will be the ore sources. From then until the 10th year of production, the sole ore source will be the Expo deposit.

Proven and probable reserves in the three deposits covered by the feasibility study total 11.3 million tonnes (see table). Adding 16.2 million tonnes of indicated and 723,000 tonnes of inferred resources in all deposits, gives Canadian Royalties optimism that the project will have a life well beyond 10 years.

The feasibility study estimates that direct and indirect capital costs will be $438.2 million. It goes on to provide a 3.5% increase in construction costs annually, making the total commitment $465.7 million. The project is expected to pay for itself in less than three years.

The mill with have a throughput of 3,500 tonnes/day and produce separate nickel and copper concentrates. Over each of the first four years, the Nunavik project will have targeted output of 26.0 million lb of nickel, 38.8 million lb of copper, 900,000 lb of cobalt plus 14,500 oz of platinum and 78,600 oz of palladium.

If Nunavik is to begin production in the second quarter of 2010, there is much to be done. During the remainder of 2007, pre-construction activities will include a study for a possible underground mine for the Mequillon deposit, options for the port facilities, and applying for permits and the mine lease. There are nickel and copper customers to be found, an impact benefit agreement to be discussed with local Inuit communities, and a project team to assemble. Procurement of long-lead- time items will begin, and 20 km of road will be built.

“There’s lots going on in parallel,” Canadian Royalties president Richard Faucher and CEO told CMJ. “The 20 km road will be completed by the end of October. We have a deal with Hewitt [Equipment of Montreal] to supply the diesel generators and Caterpillar mining equipment, we’re doing detailed engineering for the mill and considering reconditioned ball mills to cut the lead time, and two-thirds of the camp will reach Deception Bay by November so that we can transport it to the site.”

During 2008 and 2009 the road will be completed, the tailings dam constructed and a bridge built. Major work on site construction including buildings, the generating station, the concentrator and a permanent camp will be completed. The start-up of production will be followed by three months of ramp-up until design throughput is reached.

Developing a new mining operation is only the start for Canadian Royalties. Less than a quarter of its 2,500 claims have been drilled, and so far only to an average depth of 130 m. So beginning this year, larger drills have been mobilized for deep drilling. Nunavik is shaping up to be a long-life and probably expandable undertaking.