Falconbridge plans Raglan ramp

Falconbridge has elected to spend $35 million over the next 18 months on an underground exploration program designed to evaluate the potential of its Raglan nickel project in Ungava, Que. The decision was taken recently after directors of Falconbridge’s joint owners Noranda (TSE) and Telleborg AB of Sweden approved a program that is scheduled to be completed by the third quarter of 1992.

Thomas Pugsley, director of the Raglan project, said ramp collaring will commence June 1 and a crew of about 60 will attempt to have a bulk sample ready for shipping by the time the snow begins to fall in late September.

Over the next 18 months, Falconbridge will attempt to obtain financing for construction of a concentrator and plant facilities capable of producing 20,000 tonnes of nickel concentrates annually.

At the remote project site on the Ungava Peninsula, work crews will drive a 2,000-metre ramp toward the Katiniq orebody, which contains about one third of known reserves on the 970-claim Raglan property, and complete 60,000 metres of definition drilling.

As part of what Pugsley describes as “old-fashioned orebody evaluation,” the company will also extract a number of samples for metallurgical testing, and conduct environmental impact studies.

Having increased the estimated reserves at Raglan by 30% and confirmed at least 16 million tonnes of grade 3.13% nickel and 0.88% copper per tonne, Falconbridge executives are quietly confident about the viability of this project.

Their enthusiasm is based partly on the reserve grade (double that of Falconbridge’s Sudbury, Ont., deposits) and the amenability of about 10 pod-like deposits spread over a 1-1/2-km strike length to open pit mining methods.

The fact that a freighter was able to break through the winter ice and dock at Deception Bay, just 40 km from the project site, raises the possibility that concentrates could be shipped from the property year-round.

Before the voyage was completed last month, management assumed that concentrates would have to be stockpiled at the harbor and shipped only when the ice had thawed sufficiently to allow free access to Deception Bay. By taking regular shipments of concentrates out by sea and processing them at a smelter in Sudbury, Falconbridge can keep its working capital needs down, says Lars Vannman, senior vice-president of business development and planning.

Another plus is the operating cost, which is expected to be low.

Falconbridge’s former chairman Bill James always maintained that the Raglan deposits would remain in the ground unless the company could be sure that the price of nickel would average US$4 per lb. throughout the life of the mine.

But according to Lars Vannman, Raglan’s production costs relative to other new nickel mines are more crucial to the success of the project than the fluctuating price of nickel.

While he said it could cost around $375 million to build the mine, cash costs could add up to less than US$2 per lb., or about half of what nickel was trading at recently on the spot market. “The strength of the project is its potentially low operating costs,” he said.

However, as Raglan will be the first mining project to be examined under the James Bay and Northern Quebec agreement, Pugsley believes nothing can be taken for granted. This agreement gives native groups certain rights over the lands they occupy. “Any new project in that area is going to rank as a major issue among Inuit and Cree Indian bands,” he said.

Even if the project passes through the environmental permitting process fairly quickly, Pugsley doesn’t expect the mine to be in production until 1995.