May 2007

New wealth out of Sudbury

FNX Mining demonstrates the continuing potential of the Big Nickel

By C. Hersey

Sometimes, you just get lucky.

It’s all a matter of timing, and FNX Mining couldn’t have struck while the iron was hotter—or in this case, nickel. They have recently been exploring the long-established Sudbury Basin and, in their case, a little curiosity has come a long way.

FNX Mining (originally named Fort Knox Gold Resources) began in 1983 as a syndicate. In 1997, Terry MacGibbon retired from some 30 years as geologist and director of international exploration at Inco, and was appointed president and CEO of Fort Knox Gold. His strategy was to find non-core assets owned by major companies because he thought he’d get the most value out of them—turns out he was right. In 2001, Inco had no plans to bring any new deposits into Sudbury, so they announced that they were auctioning off five of their current Sudbury properties (Levack, McCreedy West, Podolsky, Kirkwood, and Victoria—all former producing properties) because of low nickel prices at the time. Inco would hand over the properties to someone else who would in turn explore, develop, and bring them into production, providing Inco with additional ore for their mill. That someone turned out to be Terry MacGibbon, along with FNX Mining, and they’ve been reaping the rewards since. Two of their five properties are already in production, with another to produce ore next year.

Meet the properties

The McCreedy West property, which began production in 2003, is now producing about 2,000 tons a day— 1,000 tons of nickel ore, and another 1,000 from the PM (footwall) deposit. Luckily, much of the infrastructure, was already in place when FNX arrived on the scene— hundreds of millions of dollars worth of infrastructure actually. In McCreedy West’s case, all that was needed was a little refurbishing of the mine access ramp and infrastructure, re-establishing surface facilities, and building a new ramp for the newly discovered (by FNX) Inter Main Deposit.

The Levack mine property, which is adjacent to the McCreedy West mine, was up and running from 1920 until 1999 when it was closed down. Levack began producing again in December of 2006 and now has what Inco used to call the “Levack Complex” in production again. Over 74 million tons of nickel-bearing ore was mined from the Levack and McCreedy West mines before FNX acquired them. The Levack mine property is a contact (nickel and copper) deposit, and FNX plans to steadily increase production this year up to about 1,500 tons a day, with an expected 15-year mine life. In 2005, they made a discovery of a footwall deposit below the mine. They are presently accessing it from underground from both Xstrata Nickel’s Craig mine and from their Levack mine. The high-grade Levack footwall deposit is located midway between the two; it still remains open and they continue to drill it off. As with the McCreedy West mine, there was a lot of infrastructure already in place at the Levack mine, in this case leaving only the No. 2 shaft hoisting plant, ore handling facilities, and six mine levels to be reconditioned to 2,900 feet, and new offices to be built on surface.

Podolsky mine, on the other hand, was a different situation entirely. Named after Terry Podolsky, who was vice president of exploration for Inco, the property was an open pit with absolutely no underground infrastructure.When FNX discovered the 2000 Deposit in 2002, which is a mix between a footwall and an offset deposit, it was nothing but an array of surface roads, leaving the workers to start from scratch. Not wanting to impose a new footprint on top of the previous open pit mine, FNX moved to the other side of the hill in a completely different drainage area and sunk their own vertical commercial shaft to about 2,700 feet, which was completed in August of last year. The work didn’t stop there—they’ve also had to install skips and cages, establish underground ore-handling systems, crosscut across on two levels, put up ventilation systems in the second escape way, and ore passes between the levels. After all the hard work, Podolsky is expected to produce some pre-production material by the last quarter of this year, eventually reaching about 1,250 tons a day later in 2008.

The Podolsky mine is being developed on the watershed that flows into the Wahnipitae Lake (one of the main sources of water for the Sudbury area). It is occupied by the Wahnipitae First Nations. In 2005, FNX signed a Memorandum of Understanding with the Wahnipitae First Nation, one of the conditions being that an Impact and Benefits Agreement is prepared for the Podolsky mine. It outlines what opportunities and cooperations between the mine and First Nations people (including things like identifying contracts and employment opportunities) would be available through the mine for the Wahnipitae people.

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