Taking care of BUSINESS

It’s in partial darkness right now but unlike so many other mines on “care and maintenance,” bringing Acadian Mining Corporation’s Scotia Mine back into production won’t take much more than literally flipping a switch.

In fact, the 30-year-old zinc/lead mine, located just 65 km northeast of Halifax, is still buzzing with activity because not only is there a crew of maintenance and security personnel working to ensure that the operation is ready to go at short notice, there’s also a full management team on site occupying the mine’s administrative offices to handle other day-to-day business activities the company is involved with.

In other words, it’s business as usual because apart from the Scotia Mine itself, Acadian also boasts the largest minerals claim portfolio in the Nova Scotia Goldfields, including five advanced gold properties with a resource base of 626 koz Au (measured and indicated) and 1,111 koz Au (inferred).

But it’s still the Scotia Mine that holds much of the company’s interest; largely because of its reserves and potential for continuing business but also because of its location. Access to the property is by paved roads and the site is just 15 km off the Trans Canada Highway and only 20 km from the Halifax Stanfield International Airport.

In the world of mining, those two ingredients (paved roads and an international airport), plus the bonus of having plenty of ore, combine to make the property valuable. Adding to the site’s worth is a relatively mild climate of mixed continental and maritime weather patterns that make for year-round operations.

Paul Smith, Acadian Mining’s Vice-president of Field Operations, Compliance and Permitting, says the decision to place the mine on care and maintenance was a direct result of the collapse in zinc and lead prices and had nothing to do with the operation itself.

“On January 1, 2008, zinc and lead prices were US$1.08/lb and US$1.23/lb respectively, and by the start of December 2008, the prices had collapsed to US$0.47/lb and US$0.38/lb respectively,” says Smith.

As already mentioned, the mine was not closed for any other reason than the value of zinc and lead on the world base metal markets. In fact, Paul Smith explained that the history of the mine clearly shows that there’s no shortage of product on the site; it’s just a matter of economics.

Historically, zinc and lead mineralization at the Scotia Mine was discovered in 1973 by the Imperial Oil Enterprises/ Curvier Mines joint venture. Esso initiated mine development in 1978 and commissioned a mill in 1979. From 1979 to 1981, the mine produced 554,000 tonnes of ore containing 2.12% zinc and 1.36% lead.

“Esso had difficulty dealing with groundwater conditions along the hanging wall of the mineralized zone, which resulted in having to leave a hanging wall pillar that was comprised of high-grade material. The mine closed in 1982 due to ground water inflow and operating losses but had nothing to do with depleting reserves,” said Smith.

Two years later, Seabright Resources Inc. of Halifax acquired the mine and mill and despite a favourable feasibility study, they did not reactivate the mine due (as in 2008) to depressed metal prices at the time. Instead they converted the mill for gold recovery and processed gold ore from several satellite properties in the Nova Scotia Goldfields.

Seabright was eventually taken over by Western Mining Corporation (Westminer) in 1988 and following a review of the Scotia Mine site, the underground workings were dewatered and test mining was carried out. A total of 187,000 tonnes were mined over a 15 month period with average grades of 7.47% zinc and 3.50% lead. In 1991, production was suspended again due to groundwater inflow and economic considerations.

Over the following years, ownership of the mine bounced around between a number of companies until in April, 2006, Acadian Mining Corporation bought it from then-owners HudBay Minerals for C$7.5 million. Since then, Acadian Mining has spent a further $21.4 million; which includes a $1.4 M royalty buyout, $13.3 M for mill refurbishment and upgrades, $1.7 M for land and buildings, and $5.1 M for exploration and development.

As shown, the mill, designed and built by Kilborn Engineering, required the largest expenditure. It uses a flotation process and has a design rated capacity of 1,350 tonnes per day (490 kpta). However, Paul Smith says it has operated for extended periods at a rate of 2,400 tonnes per day (876 ktpa).

The first load of concentrate from the mill under Acadian Mining’s ownership included 5,000 tonnes of zinc on November 9, 2007. The mine was fully operational (from a commercial perspective) for three quarters (Q1 08 to Q3 08), with the mine ramping up to commercial production in Q3 07 -Q4 07.

Cash cost was approximately US$0.55/lb.

While the business decision was obvious based on price versus cost, Acadian continues with a business plan that it hopes will bring the Scotia Mine back into production in the not too-distant future.

Again, Paul Smith explains that Acadian has large regional base-metal exploration holdings totalling about 44,000 ha with significant potential to discover further zinc/lead mineralization.

“The most prospective holdings are very close to the mine site and it would not be considered unreasonable to grow the current resource base with a focussed exploration program. There is significant potential to extend the mine life through exploration success, primarily through resource to reserve conversion,” said Smith.

Neighbouring deposits represent a resource of 4.6 Mt which Smith says (subject to economic viability) allow for a mine life extension of at least three years beyond the current mine life.

Extending the life of the Scotia Mine is one thing, but bringing it back to life is one of Acadian’s priorities, and by the look of things, it’s going to happen… again!