EDM to modernize mothballed Nova Scotia zinc mine for 2023 restart

Secretariat received the Triple Crown that yr, NASA launched Skylab and Watergate intensified.

It was 1973, the identical yr Esso Minerals and Cuvier Mines started creating the Gays River underground zinc and lead undertaking in Nova Scotia, 60 km northeast of Halifax.

The Gays River mill started processing 900 tonnes per day in 1979 earlier than underground flooding hampered mining for the three way partnership and subsequent homeowners. Seabright Assets elevated mill capability to 1,500 tonnes per day within the mid-Eighties. Flooding and prices prompted Western Mining to cease operations in 1991.

The Scotia Mine. Colin McClelland picture

The province granted open-pit approval in 2000 to Pasminco earlier than extra possession modifications with out output. Acadian Mining expanded the mill to course of 2,500 tonnes per day and mined the pit from 2007 till 2009 when it put the mine, then known as ScoZinc, on care and upkeep.

The open-pit operation suffered a mixture of issues. The monetary disaster knocked metals costs decrease whereas insufficient energy provides and poor crushing jammed the mill and raised working prices, Jason Baker, who labored for Acadian on the time, stated in an interview on the web site this week. The corporate additionally over-handled the ore and product by a number of dumping and hauling as a substitute of a extra seamless course of, he stated.

“Acadian was making an attempt to push an excessive amount of ore — like 3,000 tonnes a day — via the mill,” Baker stated. “They wished to extend manufacturing as a result of the zinc value was falling however they didn’t have the ability and the right crushing so there have been a number of outages.”

Now known as Scotia Mine

Selwyn Assets purchased the undertaking in 2011 for $10 million, minus $2.5 million for an environmental bond. Then Selwyn modified its administration and title in 2019 to EDM Assets (TSXV: EDM). It known as the location Scotia Mine.

Now, EDM needs to restart the open pit mine and enhance mill capability to 2,700 tonnes per day, which, in response to an up to date prefeasibility examine accomplished in November 2021, will price an estimated $30.6 million.

The up to date PFS outlined a 14.3-year mine life producing about 1 million tonnes of zinc-equivalent per yr at an all-in sustaining price of US52¢ per lb. zinc-equivalent. Complete working prices had been forecast to run to $52.56 per tonne milled.

The examine used base case metallic costs of US$1.22 per lb. zinc and US$1.04 per lead, and estimated the undertaking would ship an after-tax web current worth of $128 million at a reduction price of 8% and an after-tax inner price of return of 65%.

EDM up to date the zinc and lead assets in December 2019, growing the measured and indicated tonnage by 105% and the inferred by 7%. The useful resource now stands at 25.45 million tonnes grading 1.89% zinc and 0.99% lead (2.84% zinc-equivalent) and 5.01 million inferred tonnes grading 1.50% zinc and 0.66% lead (2.13% zinc-equivalent).

In March 2021, the corporate up to date the useful resource estimate to incorporate a gypsum useful resource for the primary time of 5.18 million measured and indicated tonnes grading 91.8% gypsum and 790,000 inferred tonnes grading 91.2% gypsum.

The undertaking has confirmed and possible reserves of 13.66 million tonnes grading 2.03% zinc and 1.1% lead for 35 million lb. of contained zinc and 15 million lb. of contained lead.

Taylor Combaluzier, an analyst with Toronto-based Pink Cloud Securities, doesn’t cowl the corporate, however has it on his watchlist after visiting the location in October.

“The just lately accomplished and considerably improved mineral useful resource estimate and up to date PFS, the massive quantity of infrastructure already in place and resultant modest capex necessities, together with its latest debt financing to get the Scotia Mine into manufacturing ought to warrant consideration from traders,” Combaluzier stated in an e mail.

“With a number of zinc-lead mines coming offline and meager mine provide development projected within the coming years, the re-start of the Scotia Mine may doubtlessly assist meet the demand for these commodities.

Off-take settlement

In June, Geneva-based metals dealer IXM, a unit of China’s CMOC Group, signed agreements to mortgage US$24 million to EDM for the undertaking and to purchase all of the undertaking’s zinc and lead manufacturing for the primary 10 years.

Different traders embrace Fan Camp Exploration (TSXV: FNC), an explorer with initiatives throughout Ontario and Quebec, which holds about 14% of EDM. Board members and administration maintain some 30%, in response to the corporate.

EDM is betting its zinc value forecast of as a lot as US$1.40 per lb. within the subsequent two years and restricted prices to re-start the previous producing mine will imply large margins. (At press time zinc was US$1.24 per lb. and lead US90¢ per pound.)

“When you will have this enormous mill that’s been constructed it’s important to make the most of it,” EDM chief government officer Mark Haywood stated on a latest tour after working via modernizing plans. “Should you line up these issues then we will create huge worth for the stakeholders.”

Haywood, a veteran mining engineer who’s labored at BHP’s (NYSE: BHP; LSE: BHP; ASX: BHP) Morinbah North coal mine, and for Goldfields (NYSE: GFI) in Ghana and IAMGOLD (TSX: IMG; NYSE: IAG) in Burkina Faso, stated he’s making an attempt to counter inflationary pressures in diesel, reagents and wages by securing higher offers on tools within the mill and the pit.

Haywood’s re-opening plan consists of extra ore crushing exterior the mill constructing to realize correct ore measurement with much less waste materials and dirt coming into the mill. He plans to exchange a re-grinder with a second ball mill, enhance the traditional flotation circuit with automation and exchange a kiln dewatering course of with a filter press methodology. EDM will streamline the loading of zinc and lead into sealed transport containers as a substitute of open dump vehicles.

The plant wants a brand new transformer and 4 megawatts in pure fuel backup mills, and the corporate is contemplating the set up of photo voltaic and wind energy on the 664-ha web site, Haywood stated.

This autumn 2023 re-start

Baker, who joined EDM in 2019 as mine supervisor, stood overlooking the open pit crammed with about 50 metres of water and described how stripping again the overburden is to start out by the third quarter of 2023 after the supply of heavy earth-moving equipment. The corporate is aiming to start out industrial manufacturing within the fourth quarter of subsequent yr, and is awaiting a last allow for sediment and erosion management, which Baker expects to obtain earlier than the top of November.

Baker, an area who began his profession greater than 20 years in the past within the coal mines of Pennsylvania, famous that whereas “there was all the time the stigma of flooding right here with the underground mine, open-pit mining is much less of a problem with water.”

Perimeter wells to watch and drain water from the pit if wanted are to be put in the place there have been none earlier than. They’ll be contained in the ring of birch timber across the property containing the Mississippi Valley-type lead-zinc deposit. It’s in dolomitized limestone that developed on an irregular pre-Carboniferous basement topographic excessive the place coral reefs grew 300 million years in the past. The strike runs some 4 km and is about 120 metres deep.

EDM was buying and selling at 66¢ per share on Nov. 3 in Toronto inside a 52-week buying and selling vary of 75¢ and 44¢, valuing the corporate at $13.2 million.

“We’re buying and selling at 10% of our web asset worth, which is a big alternative for traders,” Haywood stated.

The yr the undertaking first started on the location, 1973, was additionally when the Montreal Canadiens defeated the Chicago Blackhawks for the Stanley Cup. Haywood, a transplanted Australian, is a Canadiens fan.

“The Habs shall be making an attempt exhausting for the Stanley Cup in 2023,” he stated. “EDM will even be pushing the game-changing begin of business manufacturing on the Scotia Mine.”

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