Friedland undaunted by Wellgreen’s past failure

A subsidiary of Hudson Bay Mining & Smelting is said to have lost about $20 million in the early seventies when it ran a short-lived underground operation to mine nickel and copper from the deposit’s higher grade massive sulphide lenses.

In more recent years Wellgreen has been viewed as a flash-in-the- pan platinum group metals market play, a perception fueled in part by the high gear promotion of a number of juniors active in the area.

None of this fazes Robert Friedland, the chairman of All-North Resources (VSE) and president of parent company, Galactic Resources (TSE). (Galactic owns 69% of All- North, which in turn owns 100% of the Wellgreen deposit.) With a preliminary feasibility study by Watts, Griffis & McOuat in hand, Friedland maintains the Wellgreen deposit is an exploitable, bulk tonnage deposit containing economic values of nickel, copper, platinum, palladium and other by-product metals which include the rare platinum group elements, gold and cobalt.

Although he concedes Wellgreen is the kind of project “that won’t happen overnight and won’t happen without a lot of horsepower”, Friedland is envisioning an open pit mine with an associated mill and on-site smelter facilities to produce a 40% nickel-copper matte for shipment to refiners. The only Canadian smelter to accept such a product would be Inco’s Coppercliff at Sudbury, Ontario.

But because Friedland is still viewed with trepidation in some circles — and because Wellgreen’s low grade reserves make most Canadian nickel producers wince — skepticism is likely to trail this project, particularly in view of its $230-million price tag for capital costs.

Calculations by Watts, Griffis & McOuat give Wellgreen probable reserves of 46.6 million tons grading 0.36% nickel, 0.35% copper, 0.015 oz platinum and 0.010 oz palladium per ton, with an additional 8.4 million tons of possible reserves of similar grade. About 70% of the deposit is considered mineable by low cost open pit mining methods.

The study projected an 11,000- ton-per-day, year round operation to produce about 11,000 tons of nickel (the commodity of primary interest), 11,000 tons of copper, over 37,000 oz of platinum and over 25,000 oz of palladium annually. Operating costs were estimated at $13.50(US) per ton.

Watts, Griffis & McOuat used $2.14(US) as a nickel price at which all capital costs would be recovered over a 10-year operating period, but with no interest earned on the equity capital. At a nickel price of $4.50 per lb, the study concluded the operation would result in an internal rate of return of over 20%.

According to All-North, metallurgical testing by Lakefield Research using conventional flotation techniques indicated recoveries of 80-85% of the nickel, 95% of the copper, and 70% of the platinum and palladium along with significant by-product credits from other platinum group elements, gold and cobalt.

Charles Russell, president of All- North, said a key factor in the viability of the project would be the availability of “reasonably-priced” power. The company intends to begin discussions with the Yukon government in this regard. Wellgreen is accessible from the paved Alaska Highway by a 17 km by all- weather gravel road, and a further 400 km from tidewater port facilities at Haines, Alaska.

This year All-North is planning a drill program aimed at delineation and expansion of existing reserves. Environmental baseline studies will continue as the company reviews financing options for a bankable feasibility study expected to take 1.5 years to complete at a cost of $5 million.

While there is believed to be good potential to increase reserves at Wellgreen, Russell said the project and its proposed concentrator/ smelter complex are also important in a regional context. This view is shared by a number of independent industry sources contacted by The Northern Miner who maintain the project “deserves a fair shake” in view of the strong regional potential.

The Wellgreen deposit is contained within the 200-km long Kluane ultramafic belt where a number of other nickel-copper- platinum group element occurrences have been discovered. Most are still in the early stages of exploration.

Earlier this year, All-North announced an agreement with Chevron Minerals to explore and develop the White River nickel property located about 80 km from Wellgreen. A $1-million(US) program is planned this season to further test known mineralized areas (estimated two million tons grading 0.86% nickel). According to All- North, up to 6% nickel mineralization has been found on the property.

On its own, All-North is planning drill programs for its Linda and Arch properties which directly adjoin the Wellgreen project, and which cover extensions of the ultramafic complex that hosts the Wellgreen deposit. Preliminary work on the Linda property has outlined a multi-element geochemical anomaly as large and intense as the anomaly over the Wellgreen deposit, the company notes. A number of other companies are also active in the area.

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