Redstone and Shakespeare developments making headway
Nickel is one of the most important, highest value commodities mined in Ontario. This article highlights a few nickel-copper deposits currently in development–the Redstone and McWatters mines near Timmins, and the Shakespeare project in the Sudbury basin.
Niche nickel operator near Timmins
Liberty Mines had a very busy 2007. The Edmonton, Alta.-based company became a producing nickel miner.
The company has targeted small, high grade nickel-copper sulphide orebodies in a belt of altered komatiite in northeast Ontario, where the geology is similar to the Kambalda nickel belt in Australia. Kambalda has hosted several nickel mines since the 1960s.
Liberty had purchased an option on the Redstone property from Inco Ltd. in December 2004 for $250,000 plus 2 million Liberty shares.There was already some rampaccess underground development at the REDSTONE NNDERGROUND NICKEL MINE on the south side of the Shaw Dome, 24 km southeast of Timmins, Ont.
The Redstone mine began preproduction in May 2006, with ore custom-milled in Cobalt, Ont., and concentrate shipped to China under an offtake agreement with Jilin Jien Nickel Co. It declared commercial production on July 1, 2007, at a rate of 200 tonnes (t) per day.
Underground drilling has extended the understanding of the orebody down to 1,200 m below surface. A NI 43-101 measured and indicated resource of 418,931 t grading 2.32% Ni down to 508-m depth was announced on July 11, 2007. Drilling continues from within the mine, to define a measured and indicated resource to at least the 640-m level, and an inferred resource between the 700 and 1,200-m level. These numbers should be released by late Q2 2008.
In May the company decided to build a shaft to access the deeper ore at Redstone, and construction began in August.The head frame had been installed by mid-December; the hoist, hoist house and the collar house as well as the headframe cladding are expected to be complete in February 2008. The timing of shaft-sinking will then be decided.
The company has constructed a new 1,500-tonne/day mill on the Redstone mine property with a sophisticated flotation circuit to effectively separate the nickel sulphides from talc. The mill was commissioned during July and achieved 91.7% nickel recovery in August. It is initially operating at 450 t/d from Redstone run-of-mine and stockpiled ore.
From October to mid-December 2007 the Redstone mill produced 803,525 lb of dry nickel in concentrate.
A mid-November agreement signed with Xstrata Nickel has diverted most of the concentrate to the Xstrata Nickel smelter in Sudbury, Ont. (Future shipments to Jilin Jien will not exceed 20 t/d to November 2010.) Xstrata Nickel pays for copper, cobalt and platinum group metals credits, which enhances Liberty’s revenue stream and improves the economics of its operations.
Liberty plans to expand well beyond its first mine. During 2007 the company had exploration success at Redstone as well as at the nearby Hart and McWatters projects, and it assembled the Groves project further south.
In November the company filed its closure plan for the McWatters mine, 9.5 km west of Redstone, and began to construct the mine. The portal was completed by mid-December and work should begin shortly on the ramp. Full production at 1,200-1,300 t/day is scheduled for early in Q3 2008. McWatters ore will be concentrated at the Redstone mill.
A technical report to be released in February will announce a NI 43-101-compliant resource and reserve for McWatters. Highlights were released in December from the definition drilling such as 1.65% Ni over 39.75 m, including 2.95% Ni over 17.25 m and 7.51% Ni over 4.95 m; and 0.91% Ni over 51.40 m, including 2.05% Ni over 9.40 m.
A new road was complete in mid- December from the Redstone mine to the McWatters mine passing through the Hart nickel project. A NI 43-101 resource/reserve technical report for the Hart deposit to the 500-m depth should be released in early 2008; soon afterward, Liberty is expected to declare Hart as its third mine.
Funding for these developments has come from four financings completed during the year, for total proceeds of $50.9 million. Liberty’s shares were listed on the Toronto Stock Exchange near the end of 2007.
An agreement was recently signed with the Mattagami, Matachewan and Wahgoshig First Nations. This will be used to construct the articles for an impact benefit agreement covering Liberty’s existing 12,000-ha properties and future acquisitions of nickel mining claims and leases in the Shaw Dome nickel belt.A formal signing ceremony will take place early in 2008.
Shakespeare project receives approvals
All major permits have been received to allow the construction of the Shakespeare nickel-copper open pit mine and mill project, 70 km west of Sudbury, Ont., and initial test mining has begun.
The Shakespeare project is a joint venture of Ursa Major Minerals of Toronto (86% beneficial interest and operator),which drilled the discovery hole in 2002, and Xstrata Nickel. (A subsidiary of North American Palladium held an option the project, but terminated this arrangement in August 2006.) Perhaps in recognition of the advances at Shakespeare, shares of Ursa Major graduated from the TSX Venture Exchange to the Toronto Stock Exchange in August 2007.
A feasibility study on the project released in January 2006 by Micon International, with subsequent further optimization, determined positive economics for two open pit mines (Shakespeare East and West) and a 4,500 tonne (t) per day on-site concentrator, over a mine production life of 6.8 years. Ways to reduce the initial $118.5-million capital cost could be primarily from leasing the mining fleet and purchasing used equipment.
The full feasibility study of the Shakespeare project, which is available at www.ursamajorminerals.com, shows a diluted probable reserve of 11.2 million t grading 0.33% Ni, 0.35% Cu, 0.02% Co and 0.9 g /t precious metals, to a depth of 250 m.The company is currently continuing exploration drilling to extend the Shakespeare deposit down plunge to the northeast of the planned East pit.
At conservative metal price assumptions (such as nickel averaging US$5.48/lb), the project is expected to produce an after-tax internal rate of return (IRR) of 14.5% (20.0% pretax IRR). The benefit of current metal prices being substantially higher than those assumed in the study is partially offset by today’s stronger Canadian dollar. The company is in the process of updating the feasibility study to reflect recent metal prices and exchange rate forecasts.
Test mining and crushing of an initial 50,000-t bulk sample from the Shakespeare pit was completed in October.The ore was hauled to Xstrata Nickel’s Strathcona mill for batch processing.Overall nickel and copper recoveries into concentrates were 76.2% and 89.4%, respectively.
Spending on the bulk sample will result in Ursa Major’s interest in Shakespeare increasing to more than 90%, at which time it will become 100% interest, while Xstrata’s interest will revert to a 1.5% NSR.
Golder Associates has managed the environmental studies and permitting activities on the project since late 2005.The last of the major permits required to proceed with the Shakespeare project were received by mid-November 2007. The project received permits from the Ontario Ministry of the Environment including a Permit to Take Water, Certificate of Approval for noise and air emissions, and a Certificate of Approval for the Shakespeare mine and mill co-disposal facility and sedimentation pond for water treatment. The Shakespeare closure plan had been accepted in September by the Ontario Ministry of Northern Development and Mines.
Ursa Major signed an agreement with Xstrata Nickel in mid-December for the further treatment of ore
from the Shakespeare nickel deposit at the Strathcona mill, and subsequent processing of the concentrates. Xstrata Nickel will initially process another 50,000-t batch of Shakespeare ore around early April 2008. Immediately following this, the Strathcona mill will treat Shakespeare ore on a blended basis starting at 500 t/day, for a period of at least a year. The additional bulk sample will provide further data on recovery and deposit grade, while the ongoing blending ore will ensure a steady cash flow for the project in 2008 and well into 2009,as construction progresses on the mill.