The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Extended shipping season good for 2017; mill upgrades, exploration success bode well for the future of Northwest Alaska zinc mine
Thanks to an extended shipping season, roughly 2.2 billion pounds of zinc is being delivered from the Red Dog Mine in Northwest Alaska to world markets starving for the galvanizing metal.
“The concentrate shipping season was extended by two weeks and is expected to be completed in the first week of November, having shipped the maximum possible of around a million (metric) tons of zinc concentrate and 210,000 (metric) tons of lead concentrate,” said Teck Resources Ltd. President and CEO Don Lindsay.
The extended shipping, coupled with zinc currently selling for around US$1.50 per pound, is good news for both Teck, operator of Red Dog, and NANA Regional Corp. the Alaska Native corporation that owns the land where the world-class zinc mine is located.
For NANA, strong zinc sales and soaring prices are further sweetened by a 5 percent increase in its Red Dog royalty that kicked in at the beginning of October. With this increase, the Northwest Alaska Native corporation now receives a 35 percent royalty.
The royalty paid to NANA increases in 5 percent increments on each 5-year anniversary of Teck’s pay-off of up front capital and operational costs to a maximum of 50 percent royalty.
Considering the upgrades being made to the mill and the continued expansion of zinc resources at and around the mine, Teck and NANA are poised to benefit from billions of additional pounds of zinc being shipped from Red Dog to world markets in the coming decades.
Back on pace
Red Dog churned out 152,400 metric tons (336 million lb) of zinc in third quarter, bringing the total production for the first nine months of 2017 to 400,700 metric tons (883 million lb). In addition, the Northwest Alaska operation produced 86,300 metric tons (190 million lb) of zinc during the first three quarters.
Red Dog zinc production got off to relatively slow start in 2017 due to the complexity of the ore coming out of Qanaiyaq, a new pit at Red Dog.
Qanaiyaq ore being introduced to the mill to supplement declining grade ore from the Aqqaluk pit adversely affected mill performance, particularly the highly oxidized material being mined at surface.
Teck quickly adjusted to the complex ore and is now on track to produce another 125,000 to 150,000 metric tons (275 million to 330 million lb)of zinc during the final quarter of 2017.
“As we have gained processing experience with this ore, we continued to improve metallurgical recoveries and increased the amount of Qanaiyaq ore in the mill feed blend this quarter. Together with implementing changes in mine sequencing in the Aqqaluk pit to access higher grade ore, production increased significantly over the previous quarter,” the company wrote in its third quarter report.
As a result, Red Dog is expected to produce 525,000 to 550,000 metric tons (1.16 billion to 1.21 billion lb) this year, which was Teck’s goal going into 2017.
Investing in the future
Teck is investing roughly US$110 million on mill upgrades that will help ensure strong zinc production from Red Dog in the coming years.
“In September, we initiated a mill upgrade project which is expected to increase average mill throughput by about 15 percent over the remaining mine life, helping to offset lower grades and harder ore in the Aqqaluk pit,” the diversified miner wrote.
The company is forecasting annual zinc production at Red Dog to range between 475,000 and 550,000 metric tons over the next five years.
The mill upgrades currently underway are expected to increase average throughput by about 15 percent over the remaining mine life, which will offset the challenges of processing lower grade and harder ore in the Aqqaluk pit.
These improvements to the mill are expected to be finished by the end of 2019.
While these upgrades will increase the amount of ore being fed through the mill, the current life expectancy of Red Dog remains the same.
“Because the upgrade project will permit lower grade material to be processed, the current mine life, based on existing developed deposits, will remain unchanged through to 2031,” Teck wrote.
Massive Aktigiruq
The existing developed deposits at Red Dog will likely not mark the end of this operation’s perennial supply of zinc to world markets.
By the time Qanaiyaq is mined out, it seems likely that the massive Aktigiruq deposit on Alaska mining claims to the north will be ready to supply high-grade zinc ore to the Red Dog mill – potentially for decades.
This year, Teck is investing C$16 million on an exploration program at Aktigiruq that includes roughly 18,000 meters of drilling in 16 to 20 holes.
While Aktigiruq had not previously been drilled sufficiently to calculate an NI 43-101-compliant resource estimate, the 25 widely spaced holes drilled prior to 2017 suggest this exploration target has somewhere between 80 million and 150 million metric tons of material averaging around 13 percent zinc and 4 percent lead.
For comparison, Red Dog has processed 78.3 million metric tons of ore averaging 19.6 percent zinc and 5.3 percent lead over 27 years.
Early highlights from 2017 drilling at Aktigiruq include 25.4 meters of 21.4 percent zinc and 4.1 percent lead in hole DDH 1730; and 54.6 meters of 16.8 percent zinc and 3.6 percent lead in DDH 1737.
Among the largest undeveloped zinc deposits on Earth, Aktigiruq has the potential to be a source of ore for the Red Dog mill for 25 to 50 years beyond 2031 at current production rates.
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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