Engineering & Mining Journal

JUL 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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REGIONAL NEWS - U.S. & CANADA 8 E&MJ • JULY 2018 South32 to Acquire Arizona Mining South32 Ltd. has agreed to purchase the remaining 83% of shares of Arizona Mining Inc., representing a fully funded, all-cash offer of US$1.3 billion. South32 has been a shareholder in Arizona Mining since May 2017. Arizona Mining owns the Hermosa Project located in Santa Cruz County, Ari- zona, which is comprised of the high-grade base metals Taylor deposit and the Central zinc, manganese and silver oxide resource and an extensive, highly prospective land package with potential for discovery of polymetallic and copper mineralization. "Our all-cash offer for Arizona Mining will allow us to optimize the design and development of one of the most excit- ing base metal projects in the industry," South32 CEO Graham Kerr said. The Taylor deposit is a greenfield devel- opment project that has a reported resource of 101 million short tons at 10.4% zinc equivalent grade and is open at depth and laterally. The project is located close to key infrastructure in an attractive mining juris- diction. A Preliminary Economic Assess- ment completed by Arizona Mining in Jan- uary indicated that this low cost, long life project has the potential to deliver a very high Internal Rate of Return on investment. "South32's all-cash offer of C$6.20 per share represents a premium reflec- tive of the truly world class nature of the Hermosa Project and allows shareholders to realize immediate value," said Arizona Mining founder and Executive Chairman Richard Warke. "In addition, the transac- tion is not contingent on financing, which significantly reduces transaction risk." The transaction is expected to close in the September quarter. PEA Calls for 18-year Mine Life at Fireweed Zinc's Yukon Project Fireweed Zinc has announced positive results from an independent preliminary economic assessment (PEA) of its Mac- millan Pass zinc-lead-silver project 350 kilometers (km) northeast of Whitehorse, Yukon, Canada. The study assumes open- pit mining for three years followed by underground mining for 15 years to pro- duce an average of 85,000 metric tons per year (mt/y) of zinc, 48,000 mt/y of lead, and 2 million ounces per year (oz/y) of silver contained in separate zinc and lead concentrates. A total of 32.7 million mt of mineral- ization would be mined at an average min- ing and processing rate of 4,900 mt/d. Operating costs are estimated at C$82/ mt. Preproduction capex is estimated a C$404 million, and sustaining capex, in- cluding underground mine development, is estimated at C$649 million. Initial mining will be by conventional truck-and-shovel surface methods. During the third year, production will transition to underground mining using Avoca-style sublevel retreat longhole stoping, vertical crater retreat, and Alimak stoping. Open-pit mining will account for 13% of material mined and processed. Mine access portals at multiple el- evations are planned to maximize nat- ural ventilation and dewatering of un- derground operations. Diesel-powered mobile equipment will be used for all open-pit and underground mining activ- ities. Underground crushing and convey- ing will provide low-cost mineral transport from the Tom deposit, while the Jason mine, being further from the mill site, will utilize truck transport. Material delivered to the processing plant will have a diluted head grade of 9.07% zinc equivalent (5.31% zinc, 3.56% lead, and 43.41 g/mt silver). The flowsheet incorporates standard commi- nution and flotation circuits, including a primary crusher feeding a single semi-au- togenous mill, followed by a ball mill and selective two- and three-stage flotation to produce two concentrate products. Concentrates will be trucked to Skagway, Alaska, for loading onto ocean-going ves- sels bound for smelter destinations yet to be determined but assumed to be in Asia. Site access for most raw materials, fuel and supplies will be via Yukon High- way 6. This unpaved road runs 229 km from paved Highway 4 to the project site. It will require upgrade and repairs to accommodate dual-trailer concentrate trucks with a 40-mt payload. The estimated connected power load for the project is 10.6 MW. Power will be supplied by on-site liquified natural gas fired generators. Liquified natural gas will be trucked from Dawson Creek, British Columbia, and stored on-site. An all-weather, 270-person camp for construction and operation will include dormitories, kitchen, dining, laundry, boot room, recreation area and storage — all connected by arctic corridors. Numerous opportunities exist to im- prove on the Macmillan Pass PEA eco- nomics. Known zones of mineralization remain open for expansion, including into high-grade areas, and much of the large, highly prospective land package has yet to be tested by modern exploration methods. "This NI 43-101-compliant PEA on the Macmillan Pass project represents a signif- An aerial view looking northwest over the Hermosa project shows the earthwork completed to date.

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