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Vol. 12, No. 52 Week of December 30, 2007
Providing coverage of Alaska and Northwest Canada's mineral industry

MINING NEWS: Junior preps zinc-lead giant for comeback

Tamerlane Ventures aims to tap rich deposit, technology advances to return once-profitable Northwest Territories mine to operation

Rose Ragsdale

Mining News

A bold gambit to revive what was once Canada’s largest and most profitable zinc-lead mine is still on track thanks to the tenacity and innovation of Tamerlane Ventures Inc., a Blaine, Wash.-based junior mining company led by some of the industry’s savviest mining veterans.

Located just across Great Slave Lake from Yellowknife about 80 kilometers (50 miles) east of the village of Hay River in the Northwest Territories, the historic Pine Point Mine produced some 4.5 million metric tons of zinc and 2 million metric tons of lead from a number of separate deposits over 22 years, starting in 1965.

Cominco Ltd. (now Teck Cominco Ltd.) shut down the mine in 1987 due to climbing operating costs, plummeting metals prices and a shift in operating focus.

Margaret “Peggy” Kent, who is credited with launching a half-dozen companies and raising more than $1 billion in capital during her career, is Tamerlane’s chairman.

Longtime geologist and exploration manager Ross Burns is the company’s president and CEO.

In 2004, publicly traded Tamerlane acquired 60 percent interest in the Pine Point property claims from Karst Investments LLC and picked up the remaining 40 percent interest in 2006.

The junior believes the exploration potential at Pine Point is excellent. The property covers more than 175 square kilometers (109 square miles), including the original Pine Point claims and contiguous property to the west originally explored by Westmin Resources. It has a total of 47 mined deposits and another 34 deposits that were delineated before the mine was closed.

Historic but non-National Instrument 43-101 compliant resources of the four best deposits measure a remarkable 678 million pounds of lead and 1.356 billion pounds of zinc. The remaining deposits have never been mined before.

NI 43-101 is a Canadian Securities Administrators rule that governs public disclosure of scientific and technical information about mineral projects. The disclosures must come from an independent and qualified person.

Tamerlane tested and verified the historical resource calculations and believes the claims contain at least 70 million metric tons of ore grading 4.2 percent zinc and 1.6 percent lead. The junior calculates the in-situ deposit value from just four of the deposits at a minimum of $2.4 billion.

2009 startup target

Today, Tamerlane is rapidly advancing toward startup in early 2009 at Pine Point, targeting R-190, a particularly promising deposit with proven reserves of just over 1 million metric tons grading 11.2 percent zinc and 5.5 percent lead. R-190 also boasts indicated resources of nearly 11 million metric tons grading 4.69 percent zinc and 2.43 percent lead. It contains an estimated minimum $550 million worth of lead and zinc at today’s prices, the company said in a recent feasibility study that recommended mining begin as early as the second quarter of 2008.

Tamerlane also completed an environmental assessment required for land and water permits. The next step is to work with the Mackenzie Valley Land and Water Board to finalize the permits, which are anticipated in the first quarter of 2008, according to investor relations manager Brent Jones.

“This will put Tamerlane on track to begin construction in 2008 and operations in 2009,” he said.

Part of the regulatory review process included extensive filings with the Mackenzie Valley Environmental Impact Review Board, including State of Alaska reports on Teck Cominco’s operations at the Red Dog Mine in Northwest Alaska.

Tamerlane is also working on financing for the project, but the company has not commented on when financing may be received.

Infrastructure, labor agreement in place

A huge amount of operating and exploration infrastructure left behind by Cominco in the 1980s will help to jumpstart Tamerlane’s operation. That is one of two major reasons the relatively small junior is hoping to spend as little as $128 million in initial development and working capital to launch operations at Pine Point.

Cominco left behind roads, a hydro plant, a railway line, drill cores from 20 years of exploration, as well as 35 defined deposits.

Advances in technology since Cominco shut down the mine are another major factor in the project’s brighter prospects. Tamerlane aims to bring together a trio of mining and construction technologies to resolve several operating difficulties at Pine Point, including substantial flooding.

Jones said the Pine Point Project will operate 24/7 at a production and processing rate of 2,800 metric tons per day and employ 179 full-time workers during operations.

The junior has signed agreements with several First Nations designed to outline job and business opportunities at the mining project and to ensure long-lasting relationships between the company and the indigenous groups.

Tamerlane also signed a lease-to-purchase agreement in November for a 4,000-square-foot office building in Hay River. The facility will be used for management office space, employee parking, busing to and from the mine site and various other purposes, the company said.

Substantial exploration potential

More than 20,000 holes have been drilled in Pine Point claims, outlining a total resource of 138 million metric tons, with some 70 million metric tons remaining. Some areas of the claim group are either under-explored, or have not had any exploration at all.

The exploration potential of the surrounding territory has not been determined, but is considered significant.

Since the system’s geology has demonstrated a reliable past discovery rate of at least one deposit for every 1.5 kilometers, there is the potential for the discovery of at least another nine deposits, according to Tamerlane.

Initial mine life is projected for eight years.

“However, approximately 40 million (metric tons) of resources are currently the subject of our 2008 drill program that will enable Tamerlane to extend the mine life,” Jones said.

Once mining begins at the R-190 deposit, Tamerlane aims to then access nearby deposits. New drilling of 15-18 holes covering some 3,600 meters began Nov. 1, and is expected to be completed by the end of December.

Tamerlane also finalized plans last month to drill up to 16 other deposits at Pine Point in early 2008 with more than 100 holes, totaling up to 5,000 meters, planned. The goal is to convert the 40 million metric tons of historical resources into NI 43-101 compliant resources.

The next round of exploration is set to begin in January, and is expected to continue through late March or early April. The results of this drilling program will be analyzed and reviewed for long-term mine planning, Tamerlane said.

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Technologies key to Pine Point re-start

Technology may be the key to success of a plan by Tamerlane Ventures Inc. to return the Pine Point zinc-lead mine in Northwest Territories to production.

The junior mining company has pulled together three innovations in a development plan designed to resolve flooding and other critical problems that predecessor Cominco Ltd. encountered in operating Pine Point before shutting down the mine in 1987.

At its peak, the Pine Point Mine pumped 60,000 gallons a day in a losing battle against water flooding. With petroleum prices having nearly quadrupled since the 1980s, a return to the diesel-fueled pumping is too costly.

Tamerlane hopes to capitalize on relatively new “Freeze Ring” technology to minimize flooding problems when it begins mining the R-190 deposit.

The technology involves surrounding a deposit with a perimeter of drill holes filled with a refrigerant that effectively creates a wall of ice five times more impervious than concrete around the mineralization.

Costs relative to pumping are significantly reduced. Tamerlane estimates capital costs for the project will total less than $94 million, with the Freeze Ring technology and related infrastructure accounting for about $49 million. The scenario could result in the company recovering its capital costs within two years.

The freeze curtain will extend from the surface to a depth of about 185 meters, surrounding the entire R-190 mineral deposit and underground infrastructure. Any excess water underground will be collected in a sump, pumped to the surface and then either re-used or discharged to an injection well for re-introduction into the groundwater system.

Freeze-ring technology is currently being used in the Diavik diamond mine in the Arctic, and also in numerous other large-scale construction projects such as the famous big dig of Boston and in Seattle’s port area, the company said.

Proven technology offers advantages

Another more widely used innovation, “Dense Media Separation,” will contribute to the new operation’s improved economics. DMS essentially concentrates mined ore before it is fed into the main processing circuit at the mine. It is used around the world by such well-known companies as, Barrick Gold, CODELCO, Ashanti Goldfields, and Noranda. The process also has been used effectively by other lead-zinc mines, including Nanasivik, to upgrade their mill feeds, the company said.

Tamerlane said the approach will eliminate the use of cyanide, a potentially hazardous chemical, from its ore processing system. Excluding cyanide from the process flow will be accomplished through the use of DMS, additional grinding, and inert chemicals such as lime and copper sulphate.

The process also enables the use of a smaller mill and should give the R-190 deposit’s output sufficient grade and concentration that it can be directly shipped to smelters, providing the company with the ability to finance development of the rest of the deposits at Pine Point with proceeds from the direct sale of mine output without refinement, the company said.

DMS testing is currently being carried out on a bench scale and Tamerlane plans to complete a pilot scale test within the next three months. Estimated recovery and final concentrate grades for zinc and lead are 94 percent/59.5 percent and 91.7 percent/77.1 percent, respectively.

Vertical conveyor to minimize mine footprint

A third innovation at Pine Point will be a vertical shaft and conveyor system designed to move ore and waste from underground workings to the surface. Mined material will enter a primary crusher located at the bottom of the shaft and the vertical conveyor will lift material from the mine at an effective rate of 160 metric tons per hour. The vertical conveyor requires less energy to operate than conventional hoisting and has the ability to move large volumes of material at a constant rate of speed, which allows for increased efficiency in processing and reduces material handling and stockpiling, Tamerlane said. It also will minimize the mine’s footprint.

Virtually all waste contained in the 1 million metric tons to be extracted from the R-190 deposit will be returned underground for backfilling purposes. This approach eliminates the need for permanent tailings dams, the company said.

Tamerlane estimates that construction and development of the infrastructure needed to set its plan in motions will take 12-15 months. The underground workings will be mined using a concrete lined main shaft, vertical conveyance system, and rubber-tired diesel/electric equipment. In addition to the vertical conveyor, the main shaft also will use a service hoist for moving personnel and materials. A secondary escape-way and ventilation shaft also will be installed to allow flow-through ventilation.

—Rose Ragsdale