Curragh sets mining plan for Hundere lead-zinc bet

Just two weeks after becoming a public company, Curragh Resources (TSE) is attempting to raise the $70 million needed to bring its 80% owned Mt. Hundere lead-zinc project into production. After completing a 29,000-metre definition drilling program on the southeast Yukon property, Curragh and partner Hillsborough Resources (TSE) plan to be shipping concentrates as early as mid-1991.

Bought last year from Canamax Resources (TSE) for $10 million, Mt. Hundere is expected to produce 100,000 tonnes of concentrates annually from open pit and underground mining operations.

While it would be a smaller operation than Curragh’s 580,000- tonne-per-year Faro lead-zinc mine, grades are relatively high and ground conditions are reported to be excellent.

When The Northern Miner placed a call to Curragh’s executive offices in Toronto, Chairman Clifford Frame was in Spain and, therefore, unavailable for comment.

But George Vooro, president of Hillsborough says the banks have been up to look at the property and he has been told the project’s financing will be in place fairly shortly.

His confidence is based on the orebody’s high-grade nature and the operating costs that are expected to average US$41 per tonne milled over the life of the mine. It is in the Watson Lake region about 300 km south of Faro. The Faro mine is expected to be mined out by 1993.

As proven and probable reserves now stand at 3.9 million tonnes of 4.1% lead, 12.8% zinc and 59 grams silver per tonne, Mt. Hundere’s life span is projected to be around 8.5 years. But additional 1.2 millon tonnes of grade 5.2% lead and 12.5% zinc in possible sulphide reserves could add as much as three more years to the mine’s operating life. Probable oxide reserves of 527,000 tonnes of 8.1% lead and 12.1% zinc have also been identified within the 100-sq.-km property.

Pending completion of environmental studies, ore is scheduled to be mined initially from the Jewel Box zone, one of four zones that are known to exist on the property. Jewel Box is contained within a hill and is still open at depth.

According to Vooro, construction of a 28-km road connecting the mine site to Campbell Hwy. is almost complete, and foundations for a concentrator capable of producing 100,000 tonnes of lead and zinc concentrates annually will be poured as soon as financing plans are announced.

“The ore is free of impurities and, therefore, amenable to standard flotation milling methods,” said Vooro who expects the stripping ratios to be 2.4-to-1 and 6-to-1 when $7-million worth of preproduction work is complete.

Concentrates consisting of 60% zinc and 70% lead would be driven to Skagway 500 km away before being shipped to destinations in Asia and Europe.

Under a 1989 agreement, Canamax retains a 10% net profits royalty after capital costs are recovered. However, Vooro said Hillsborough will almost certainly exercise an option to purchase the royalty for $3.5 million before the 1994 expiry date.

Curragh shares traded recently at $10.13, while Hillsborough traded at $2.20 in a 52-week range of $1.95-3.70.