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By Shane Lasley
North of 60 Mining News 

Zazu orders Lik transportation study

AIDEA agrees to evaluate expanding transportation system to accommodate mine development at lead-zinc-silver deposit near Red Dog


January 17, 2010

Zazu Metals Corp. has signed an agreement with the state-owned Alaska Industrial Development and Export Agency to complete due diligence for transportation infrastructure needed to support a mine at its Lik zinc-lead-silver project located about 22 kilometers, or 14 miles, northeast of Red Dog Mine in Northwest Alaska.

Hammering out transportation infrastructure is a key component for a prefeasibility study that Zazu plans to have completed later in 2010.

"Lik is a known lead-zinc deposit with a large high-grade, credible resource located adjacent to Red Dog, the world's largest and highest-grade lead-zinc mine. At 26 million metric tons and 12 percent combined metal, it would be a fantastic resource anywhere in the world. Being proximal to Red Dog provides enormous advantages, such as existing infrastructure and essentially a blueprint for the mine," said Matthew Ford, Zazu Metals' vice president of corporate development.

Connecting to Red Dog road

Zazu hopes to be able to connect to the Delong Mountain Transportation System, a 52-mile-long haul road and port facility that currently handles all concentrate produced by partners Teck Resources Ltd. and NANA Regional Native Corp. at Red Dog.

Under the agreement with the explorer, AIDEA will evaluate its possible role in financing a spur road connecting the Lik deposit to the DMTS, and the financing of additional storage and handling facilities at the port. Zazu will reimburse AIDEA for its cost of conducting prefeasibility activities as part of the evaluation processes.

Teck has a contract with AIDEA for a priority nonexclusive right to use the DMTS to ship ore concentrates over the road, store concentrates in the storage buildings, and trans-load concentrate onto ore ships until 2040. Teck pays a toll for use of the facilities and is obligated to operate and maintain the system at a commercially reasonable rate of compensation.

Teck is also a 50 percent joint venture partner in the Lik Project. Zazu owns the remaining 50 percent and has the exclusive right to increase its stake to 80 percent by spending US$25 million on the project by 2018.

AIDEA said the transportation system that currently serves Red Dog was designed for multiple users.

Zinc explorers unite

In late December Zazu got a financial boost from a fellow zinc explorer. Canadian Zinc Corp., which is currently advancing the Prairie zinc-lead-silver project in Canada's Northwest Territories toward production, paid C$650,000 to acquire an 11.1 percent stake in Zazu.

"We seized this opportunity to acquire a strategic shareholding in Zazu, which controls one of the largest undeveloped zinc-lead deposits in the western world, in proximity to the Red Dog Mine which is almost universally acknowledged as the (No. 1) zinc mine in the world," said Canadian Zinc Chairman John Kearney. "This investment fits well with our own Prairie Creek Mine, which is one of the highest-grade zinc-lead-silver deposits in the world."

In May, Zazu moved the Lik deposit into early development stage with an updated resource estimate completed by Scott Wilson Roscoe Postle Associates Inc.

According to the estimate, Lik contains an indicated resource of 3.3 billion pounds of zinc, more than 1 billion pounds of lead and 31 million troy ounces of silver. The deposit contains an additional inferred resource of nearly 1.3 billion pounds of zinc, 500 million pounds of lead and 10 million troy ounces of silver.

A preliminary economic assessment currently being prepared for the project is expected to be completed by the end of January, and a prefeasibility study is due for completion later this year.


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