November 2007

The timing is just right

By C. Hersey

What a great time for mining in Canada - a number of new mines are looking towards achieving initial production, including Victory Nickel Inc.’s Minago nickel deposit. The Minago property can be found in Manitoba’s Thompson nickel belt, approximately 225 kilometres south of Thompson, Manitoba. Initial exploration on the site was done by Amax Potash Limited about 40 years ago and since then has been worked by several companies, landing safely in the hands of Victory Nickel (previously Nuinsco Resources Limited) who owns 100 per cent of the mining lease on the property.

When current president of Victory Nickel Brian Robertson looked at the deposit four years ago, he envisioned an open pit mine rather than an underground operation. Conveniently located along a paved highway, which runs parallel to a power line, only 60 kilometres from the Omnitrax Canada railway line, paired with the current robust nickel price of nickel, Robertson said “the timing is just right!” Manitoba Provincial Highway 6 serves as a major transportation route north to Thompson, and the 230-kilovolt transmission line will provide power for the site. Because key components to the operating cost are electricity and fuel, and Manitoba boasts some of the lowest electrical costs in Canada, the location and facilities have proven to be pretty ideal for the Minago project.

In addition to excellent infrastructure, one of the big pluses for the project is the ability to produce an extremely high-grade nickel concentrate at Minago. For the scoping study completed last fall, a concentrate grading 27 per cent nickel, along with other payable metals, was produced. One of the biggest benefits from producing such a high-grade concentrate is the marketing options it creates. While CVRD Inco’s metallurgical facility, located just to the north in Thompson, presents an obvious destination for the concentrate, the high grade offers the alternative of shipping to almost anywhere in the world.

In June 2006, at Victory Nickel’s request, “an independent review of the geology, exploration history, historical resource estimates, resource estimates, and the potential for discovery of additional nickel mineralization of the Minago property in central Manitoba was conducted by geologist P. J. Chornoby.” It was found that the resource is actually buried beneath a 10-metre surficial layer of overburden (peat, sands, and clay) followed by a 50-metre layer of limestone. Beneath the limestone and at the contact of the basement rocks is a layer of silica sand, and beneath the silica sand lay the granite and ultramafic rocks. The sand was actually deemed to have the potential as frac sand for use in the oil well developing industry. The ore body itself contains both serpentinite and peridotite ores, the serpentinite being closer to the surface. This is important to keep in mind “as metal recoveries and plant operating costs vary depending on the type of ore.”

The main, or Nose, deposit is large (49.1 million tonnes of measured and indicated resources and an additional 44.1 million tonnes inferred) and relatively low-grade (0.516 per cent nickel in measured and indicated and 0.528 per cent nickel for the inferred) ore and will be processed onsite by means of crushing, grinding, flotation, thickening, concentrate filtering, and drying process steps. Aside from the power line, highway, and railway line, other infrastructure needed to be constructed include: processing and maintenance facilities, a mill building to house the ore processing equipment, water and sewage facilities, warehouse, office, and dry facilities, and a service facility to maintain the mining equipment. The technology being used is fairly straightforward; the only standout is their use of larger-than-normal haul trucks. The 240-ton trucks are not large by industry standards, but are fairly monumental in the ‘10,000-ton-per-day’ category.

Robertson added that one of the biggest and most important issues is water quality and flow. “It is anticipated that significant ground water quantities will be encountered in the overburden surrounding the proposed open pit. This water must be controlled to prevent water entry into the mining operation. A hydrogeological assessment of the ground water potential will be undertaken to determine aquifer characteristics and potential dewatering scale and impacts. General hydrogeological information for this typical geology would indicate that groundwater is present in each of these units and would be expected to flow into the proposed open pit excavation. Testing will be used to predict the required well spacing and discharge volumes required to lower the water table around the open pit.”

“The Minago deposit has demonstrated potential as a large-tonnage, low-grade nickel sulphide deposit amenable to open pit than further to underground bulk tonnage mining methods,” states Minago’s Preliminary Economic Assessment. As an open pit mine, it should produce about 10,000 tonnes a day with an expected 13-year mine life, based on the known resource. Exploration potential remains at depth, where grades typically increase, and to the north, where limited historical drilling has intersected similar grades to those found in the Nose deposit. Currently in the midst of a bankable feasibility study (expected to be completed by mid-2008), Minago hopes to be operational by 2010. Robertson said that thus far, they’ve had the support of the surrounding communities and have been in touch with Norway House, Cross Lake, Grand Rapids, Moose Lake, and Snow Lake. Because mining is quite common in the area, people seem to be welcoming Minago (and its employment opportunities) with arms wide open. Despite the fact that it is generally a mining community, there don’t seem to be too many new mines in Manitoba, so for Robertson and his crew, this upcoming project is a very exciting one. With many facilities already existing and the current price of nickel, things seem to be falling into place. Like Robertson said, the timing is just right!

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