Dave Sullivan
Northern News Services

Nahanni Butte (Nov 16/01) - A company planning to open a mine near Nahanni Butte still plans to go ahead but is having a hard time attracting investors.

With zinc prices at record lows, the mine remains on the books while the North's two other zinc mines have decided to close. In part due to prices in the .35 cent US per pound range, Polaris Mine on Little Cornwallis Island will shut down next summer, followed by Baffin Island's Nanisivik Mine.

Canadian Zinc has not yet begun looking for the $40 million it needs from investors to get the partially-built mine off the ground.

"When prices are down like this it's difficult to go out and raise money to move forward," said Peter Campbell, vice-president of project affairs.

"Getting investors to come on board so you can proceed with your development is always more difficult," he said.

"Our plans are still going ahead. In the process of developing a mine you expect to see metal prices fluctuate. When you see a downturn like this you know that somewhere down the line they will recover.

"If you look at a chart of zinc prices over time, you'll see it probably averages in the .50 to .55 cent range."

Operating costs at Prairie Creek should be .34.5 cents per pound, Campbell said. Nanisivik's operating costs are .41 cents a pound, according to reports by that mine's owner, Breakwater Resources.

Timeline uncertain

Canadian Zinc has no target start-up date for its Prairie Creek operation. The company recently applied to the Mackenzie Valley Environmental Impact Review Board to carry out more core sample drilling as part of a detailed mine feasibility study.

"From that you determine your rate of return, and then you go raise your money."

A feasibility study was done before the mine's original owners went bankrupt in the early 1980s. But the Texas-based Hunt Brothers were mainly interested in the mine's silver, Campbell said. Silver was $50 an ounce at the time. He said today's $4 silver prices combined with Prairie Creek's low silver content means the bulk of the mine's revenue will come from zinc.

Zinc and lead combined make up 25 per cent of Prairie Creek's mineral ore, according to Campbell. He said the low zinc prices, caused in part by an overall economic slow down, means Canadian Zinc will be looking at increasing production planned for Prairie Creek.

"The feasibility study we're entering into is looking at producing around 1,500 metric tonnes per day, which is a little more than the original design."