North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Zinc, the fourth most consumed metal in the world, is an essential building block of modern society and the dominant metal mined in Alaska over the past two decades.

In 2010, 538,000 metric tons of zinc was mined at Teck Resources Ltd.'s Red Dog Mine and an additional 67,580 metric tons of zinc was recovered as a byproduct at Hecla Mining Co.'s Greens Creek silver mine, accounting for US$1.3 billion, or about 42 percent, of Alaska's US$3.1 billion of mineral production for the year.

Other significant deposits of zinc are known to exist across Alaska, but relatively low prices due to an oversupply of the industrial metal on world markets has limited the funding available to investigate these projects.

Analysts predict growing demand coupled with the closure of several aging mines is going to tip the global balance to zinc supply shortage starting in 2013.

Several of the world's largest zinc producing mines is expected to go off-line in the coming five years, including the 2013 closure of Xstrata plc's 265,000-metric-ton-per-year Brunswick zinc mine in Canada and the 2015 shuttering of Minmetals Resources' 500,000-metric-ton-per-year Century zinc mine in Australia.

RBC Capital Markets anticipates a supply shortage will draw zinc inventories down to critical levels in 2013, Goldman Sachs foresees the supply-demand balance shifting before these mine closures happen.

"Although the global zinc market remains in surplus, we believe that demand growth is outpacing supply growth sufficiently to tip the market into deficit in 2012," the bank wrote in a July commodities research report. "We emphasize that China is a growing net importer of zinc raw materials, like copper, setting up for sizable upside for the metal even before important mine closures are set to take place in 2013-2015."

If the analysts are right, this looming shortfall and corresponding price increases bodes well for both Alaska's existing zinc producers and the explorers seeking the metal across the state.

Red Dog district

While many of the other large zinc mines around the globe may be nearing the end of their reserves, Red Dog has enough ore to continue supplying global markets for at least another 20 years and several other SEDEX ore-bodies in the district could boost the quantities of zinc shipped from Northwest Alaska in the coming years.

Teck and its partner at Red Dog, NANA Regional Native Corp., are mopping up the last of the ore in Main Pit, a deposit that has sustained production at the Northwest Alaska mine over the past two decades. Averaging around 20 percent zinc, some 10 million metric tons of zinc, around 2 million metric tons of lead and nearly 115 million ounces of silver has been recovered from this deposit.

Aqqaluk, a deposit adjacent to the north side of Main, is anticipated to provide feedstock for the mills at Red Dog until 2031. Slightly lower grade than the ore mined over the past two decades, Aqqaluk has 51.6 million tons of ore with an average grade of 16.7 percent zinc and 4.4 percent lead, or 8.6 million metric tons of contained zinc and 2.3 million metric tons of contained lead.

Anarraaq, a deep deposit that lies about eight miles (11 kilometers) northwest of Red Dog, is shaping up to be another massive zinc deposit with grades comparable to those currently being mined by Teck and NANA.

According to a 2004 report written for the Society of Economic Geologists, the Anarraaq deposit consists of a barite body, estimated to be as big as 1 billion metric tons, hosting a zone of massive sulfide zinc-lead-silver mineralization.

Teck discovered the deposit while drilling a large gravity anomaly in 1999, subsequently establishing an inferred resource of about 17.2 million metric tons grading 15.8 percent zinc, 4.8 percent lead, and 71 g/t silver.

Further exploration turned up Antiguruk, another promising zinc target adjacent to Anarraaq. Previous drilling in hole 1109 intersected 4 meters averaging 29 percent zinc at this prospect about 3 miles (5 kilometers) north of Anarraaq. Hole 1114 cut 14 meters grading 17 percent zinc and 5 meters at 46 percent zinc.

Teck completed a 17-hole drill program at the Anarraaq-Antiguruk prospect in 2010 and has two drills investigating this region this year.

Lik feasibility

Zazu Metals Corp. hopes its Lik project, located about six miles (10 kilometers) west of Anarraaq, will help fill the foreseen zinc shortage.

"A consolidation in the zinc industry is definitely under way," said Zazu Metals CEO Gil Atzmon. "Zazu's goal is to have the Lik deposit in operation in time to deliver into this supply deficit."

The ore-body at Lik is divided into two deposits separated by a fault - the near-surface Lik South and the deeper Lik North.

Lik South has an indicated resource of 18.74 million metric tons grading 8.08 percent zinc, 2.62 percent lead and 52.8 grams per metric ton silver; plus an inferred resource of 1.23 million metric tons grading 6.80 percent zinc, 2.12 percent lead and 35 g/t silver.

Lik North contains an additional inferred resource of 5.18 million metric tons grading 9.65 percent zinc, 3.25 percent lead and 51 g/t silver.

While Lik's zinc grades are only about half of those found at Red Dog some 14 miles (22 kilometers) to the southeast, a preliminary economic assessment completed by Scott Wilson Roscoe Postle Associates Inc. in 2010 indicate that mining Lik South is viable.

The project has drawn the attention of Lundin Mining, a diversified base metals mining company with operations in Portugal, Sweden, Spain and Ireland. In February, Zebra Holdings and Investments S.À.R.L, a company owned by a trust settled by the late Adolf H. Lundin, invested C$7.97 million to buy a 19.99 percent stake in Zazu.

This has provided funding for the junior to aggressively advance a feasibility study on Lik South and complete drilling on Lik North in 2011.

"We welcome this investment by Zebra as it provides sufficient capital to take the Lik deposit through the feasibility study towards a production decision," said Atzmon. "The work already completed by Zazu will enable the project to advance quickly. We also intend to conduct exploration drilling on the contiguous Lik North deposit, which already hosts a high-grade inferred resource."

Full Metal Zinc

Full Metal Minerals Ltd. has spun out its Fortymile property - a zinc-rich carbonate replacement-style massive sulfide deposit found in the eastern reaches of Alaska, about 100 miles (160 kilometers) west of Dawson City, Yukon Territory - into Full Metal Zinc Ltd.

Full Metal leadership believes that while zinc is currently under-appreciated due to relatively low prices resulting from a global oversupply of the industrial metal, the closure of aging mines, too few projects to replenish supply and a growing demand for the essential metal will lead to a zinc renaissance.

"With the mines that are set to close over the next few years and virtually no large zinc mines that are under construction or in advanced feasibility … our philosophy is, coming in 2013 or 2014 the zinc supply will be in deficit and demand is going to continue to grow," Full Metal Zinc President and CEO Rob McLeod told Mining News.

Full Metal Zinc has a 4,000-meter drill program slated for Fortymile in 2011, which will follow-up on some C$10 million of exploration completed at Fortymile by its predecessor.

The greater portion of nearly 20,000 meters of drilling completed by Full Metal Minerals since it optioned the property from Doyon Native Corp. in 2006 has been on LWM, a zone of continuous zinc-lead-silver mineralization extending 950 meters along strike and 300 meters down dip.

Highlights from this drilling at LWM include:

LWM06-01 cut 12.1 meters averaging 15.7 percent zinc, 4 percent lead, 111 grams per metric ton silver and 0.32 percent copper. This intercept included 6.6 meters grading 27 percent zinc, 7.2 percent lead, 200.8 g/t silver and 0.56 percent copper.

LWM07-04 cut 44.6 meters averaging 15.9 percent zinc, 5.3 percent lead and 76.6 g/t silver and 0.19 percent copper.

LWM07-07 cut 15.6 meters averaging 21.2 percent zinc, 8.7 percent lead, and 127 g/t silver.

LWM07-09 cut 6.48 meters averaging 31.6 percent zinc, 11.3 percent lead, 464.2 g/t silver and 1.41 percent copper.

LWM10-68 cut 4.4 meters averaging 23.71 percent zinc, 23.63 percent lead, 314 g/t silver and 0.07 percent copper.

The deposit is open for expansion to the northwest, an area where difficult drilling conditions due to frozen overburden has hindered drilling in the past. LWM10-71, the northernmost hole drilled at LWM, hit 1.28 meters true width averaging 4.38 percent zinc, 8.74 percent lead, 0.08 percent copper and 121 g/t silver.

"We think in the longer term zinc will really have its day," McLeod said.

When that day comes, Full Metal Zinc hopes to have some 20 million metric tons of high-grade zinc ore ready to mine at Fortymile.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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