March/April 2008

A second pass at the basin

Levack complex prepares to mine footwall deposit

By D. Zlotnikov

Levack mine
Nickel mining is hardly news in the Sudbury Basin — easy-to-find contact deposits have been known and exploited for a century or more in what is one of Earth’s richest nickel areas. But few have done this as successfully as the relatively small FNX Mining Company, especially in its McCreedy West-Levack complex.

FNX, in existence since 1984, came into its current incarnation in 2002, when it won the bid to develop and operate the Inco (now Vale Inco) properties, none of which were operating at that time.

“The properties all had some infrastructure, both above ground and underground, with the exception of Podolsky, which was just an open pit,”said mining geologist and FNX vice president of investor relations Dave Constable. “They were all shut down, but not out of ore.”

The reason they were shut down was simple: the nickel price had dropped to below three dollars a pound and continuing to run the mines was a losing proposition for Inco.What they proposed, and FNX was happy to take on,was a deal under which FNX would handle all exploration,development and operations of the mines themselves, and Inco would take the product over at that point, as part of an offtake agreement.

“FNX’s product is a ton of ore,”Constable said of the arrangement,“ not concentrate, or metal.”

As part of the agreement, FNX began exploratory drilling in April 2002, and by summer had made its first discovery at the McCreedy West property.

Using the existing infrastructure, FNX brought the mine into production in November 2003 and, despite the nickel price being around the six dollars a pound mark at that time, paid off the capital costs 10 months later. FNX’s first producing mine was in place, and has been producing 1,500+ tons per day since.

“Half of that production is nickel ore, and half of it is from footwall deposits, producing copper, platinum, palladium and gold ore,” said Constable.

FNX then turned its attention to the adjacent Levack property.The Levack mine was brought into production at the beginning of 2007, becoming the company’s second producing mine.

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