Southeast metal prospect has major potential

  • The Palmer multi-metals deposit being evaluated by Vancouver-based Constantine and Dowa Holdings, a Japanese metal manufacturer, is adjacent to the Alaska-Canada border and near the Haines Highway about 40 miles northwest of Haines. (Map/Courtesy/Constantine Metal Resources)

A Southeast Alaska multi-metal prospect has the potential to produce a big payback if developed into a mine largely due to its proximity to established infrastructure, according to an early evaluation of the project.

Constantine Metal Resources’ underground Palmer copper-zinc-precious metals prospect north of Haines could generate $266 million in after-tax cash flow despite a projected mine life of just 11 years based on the results of a preliminary economic assessment, or PEA, released by the company June 3.

The Palmer project is a joint venture between Vancouver-based Constantine as the majority and Dowa Holdings, a Japanese metal manufacturer.

The deposit is adjacent to the Alaska-Canada border and near the Haines Highway about 40 miles northwest of Haines along the Klehani River, which flows into the Chilkat River. It is on a mix of federal mining claims surrounded by land owned by the Alaska Mental Health Trust Authority, which is open for development.

If developed as currently envisioned, the Palmer project would be an underground mine that would process up to 3,500 metric tonnes of ore per day, or approximately 12.5 million metric tonnes over the life of the mine. From that, the mine would produce more than 1 billion pounds of zinc, 196 million pounds of copper, 18 million ounces of silver, 91,000 ounces of gold and nearly 2.9 million tonnes of barite, a common industrial mineral, according to Constantine.

The mine would cost $278 million to develop and require another $140 million for sustaining capital and reclamation costs for an estimated all-in cost of $418 million. Those costs translate to an operating-capital cost of approximately $65 per tonne with operating income of $92 per tonne of ore, according to the PEA figures.

Constantine CEO Garfield MacVeigh said in a corporate release that the PEA is a major milestone for the Palmer project and demonstrates “a high-quality project with strong economics and a progressive, environmentally conscious mine design.”

Advanced zinc-copper projects such as Palmer with favorable economics are scarce in North America, MacVeigh said.

“What sets the Palmer project apart from its peers is excellent access by paved all-season highway and secondary roads, close proximity to an existing Pacific port ore terminal, reasonable and manageable capital costs, significant district-scale upside for additional mineral resources, and a joint venture that includes a global leader in the zinc smelting business,” he said further.

Constantine expects the project would support about 260 full-time jobs during operation.

Constantine plans to truck copper and zinc concentrates to the Haines port, where the material would be barged about 15 miles to the deepwater ore terminal in nearby Skagway, which is owned by the Alaska Industrial Development and Export Authority.

The barite concentrate would be barged separately from Haines to a rail terminal in Prince Rupert, British Columbia, just south of Ketchikan. Barite is an important industrial mineral in drilling mud for oil and gas wells and has other applications in the medical field.

Barite from Palmer would be ready for use and not require additional refinement, according to Constantine.

The Palmer deposit currently consists of indicated resources of 539 million pounds of zinc at an average grade of 5.3 percent; 154 million pounds of copper at a 1.5 percent average grade; and 1.1 million tonnes of barite along with gold and silver resources.

Inferred resources include more than 1 billion pounds of zinc; 124 million pounds of copper; more than 2.6 million tonnes of barite. According to the PEA, zinc would account for 48 percent of the total value of all the concentrates produced from the Palmer project.

Constantine touts Palmer as an environmentally sound project largely due to a design that would eventually store potentially acid-generating rock underground — backfilling mined ore — preventing exposure to rainwater and potential acid leaching.

Constantine estimates that 78 percent of the mine tailings would be used as backfill.

A portion of the potentially acid-generating waste rock would need to be stored above ground early in the mine’s life until space was available to begin the backfilling underground. “Desulfurized tailings,” accounting for about 15 percent of the total processed material, would permanently be stored above ground, according to the company.

However, the Palmer project has detractors. The Chilkat Indian Village of Klukwan and several local conservation groups sued the Bureau of Land Management in December 2017 for not adequately considering the potential impacts of future mine development when approving exploration permits for the project. Alaska U.S. District Court Judge Timothy Burgess rejected the claims in a March 15 ruling that has since been appealed to the U.S. 9th Circuit Court of Appeals.

Southeast Alaska Conservation Council staff scientist Guy Archibald said in an interview that the group and others oppose the project because of its location — in the upper reaches of a salmon-bearing watershed — and the omnipresent potential for acid leaching from massive sulfide deposits such as Palmer.

Archibald said Constantine’s overall plan to permanently store potentially acid-generating tailings underground is a better plan “on paper” than other traditional mine operations, but he also noted “that even the best laid plans quite often go awry.”

Elwood Brehmer can be reached at [email protected].

06/12/2019 - 9:11am