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Canadian Zinc Corporation's Prairie Creek Mine, an advanced-staged zinc-lead-silver property located 150-kilometres west of Fort Simpson in the South Mackenzie Mountains, is undergoing an optimization study that is expected to be completed late this month or early next month. - photo courtesy of Canadian Zinc Corporation

Canadian Zinc eyes markets
New exploratory drilling program to launch at Prairie Creek this month

Daron Letts
Northern News Services
Published Monday, October 6, 2014

PRAIRIE CREEK
After achieving all major development permits more than one year ago, Canadian Zinc Corporation is hoping to trim the estimated $233 million cost of bringing its proposed Prairie Creek Mine into production.

"Where possible," said Alan Taylor, Canadian Zinc's vice-president of exploration and chief operating officer.

The company is bringing its six-month optimization study to completion this fall. The aim of the study, being conducted on its underground mine plan by AMC Mining Consultants (Canada) Ltd., is to reduce the initial development, shorten the development schedule and improve mine operating costs.

"That optimization is all about detailing out the nitty-gritty of the (2012) pre-feasibility study," said Taylor.

Some of the hard numbers generated through that process will be released publicly later this month or in early November, he added.

"We have sent out a number of tender packages for our contractors to bid on and we've received some of those back already and we're considering those and there's more to come in," he said.

California-based contractor Tetra Tech is providing basic engineering and procurement services above ground at Prairie Creek.

A crew is preparing to re-establish the company's $18.7 million 2006/2007 underground program to allow for the start of a new exploratory drilling program, slated to begin later this month. About 30 holes will be drilled by Christmas, Taylor estimated, as the team prepares the underground for further development. This includes the preparation of five-kilometres of tunnels dug for production in the early 1980s.

Early in the new year, the company intends to publish a statement that will upgrade Prairie Creek's five-million-ton inferred resource.

Trailer complex accommodations are being upgraded to house the close to 20 workers that will be on site at different times this fall and winter. The power house is being opened and obsolete material is being removed to make way for new equipment.

The company is transporting people and materials by airlift using the site's 1,000-metre airstrip. Next winter, the 180-kilometre winter road may be re-established, said Taylor.

"But we haven't committed to that, yet," he added.

"In an ideal world, if everything meshed together, and it's all contingent upon financing, the earliest possible time this place could produce and transport concentrates out would be on the winter road of 2017."

Engineers are examining design options for the proposed mine's water storage pond and waste rock piles in anticipation of construction, which, Taylor said, could begin this spring.

Financing, however, remains a major hurdle.

"The markets are very poor and have been for the last year or so and continue to be a challenge to secure any type of senior financing at this time without a huge expense," said Taylor.

"There are certainly strong signs of interest in the base metal commodity market and prices of zinc have increased over the past year significantly and will continue to do so because of the global deficit and so we anticipate that that will continue to happen and perhaps our timing to come on-stream and secure financing is quite timely. We'll see."

The pre-feasibility study forecast the potential mine to cost $160 million in upgrades with a $33 million contingency and $40 million working capital for the first year.

It is not yet known what that figure may look like after the optimization study is done, said Earl Hope, manager of investor relations for Canadian Zinc, due to fast-increasing industrial costs, such as fuel and labour.

"We were certainly optimistic when we started (the optimization study) that our mining costs would be lower and our upgrades would be lower - instead of $160 million it might be significantly lower - that's what we were hoping, and a lower contingency, etc. I don't know if that's the case until we get it done, though," said Hope.

"Costs have gone up in mining tremendously over the past five years and they keep escalating. It's really crazy. All costs are high, and particularly in the NWT."

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