MinQuest Ltd (Brisbane based) has submitted a conditional, non-binding offer for the Wolverine zinc mine in the Yukon Territory, Canada. Wolverine is located 28 km northeast of MinQuest’s Fyre Lake project in the Finlayson Lake District of the southeast Yukon Territory. MinQuest is currently examining the possibility of using the existing processing and tailings management facilities at the Wolverine zinc mine to fast-track the development of the Kona Mineral Resource on the Fyre Lake copper project.
MinQuest’s Managing Director Jeremy Read said, “If MinQuest is successful in concluding the purchase of the Wolverine zinc mine it will be a transformative event for the Fyre Lake copper project, as it will open up the possibility of putting the Kona Mineral Resource into production using the existing infrastructure at Wolverine.
“Using the existing infrastructure at Wolverine could decrease the pre-production capital expenditure for putting Fyre Lake into production by as much as C$150-200 million, which would substantially improve the economics of the Fyre Lake project.
“We are in regular discussions with PricewaterhouseCoopers, the Monitor of Yukon Zinc Corporation and we anticipate being able to finalise an Asset Purchase Agreement with Yukon Zinc and the Monitor in the very near future”, said Read.
Yukon Zinc acquired the Wolverine zinc project in 2008 and following acquisition of the project, invested in excess of C$500 million to acquire, develop, put into production and fund the ongoing operation of the mine. Construction of the mine and processing facilities occurred throughout 2009 and 2010 with the mill commissioning commencing in late 2010. Commercial production commenced in March 2012 and full design capacity of the mine and processing mill (750,000 t/y) was achieved in the first quarter of 2013. The Wolverine mine was placed on Care and Maintenance in January 2015. In March, 2015 the Supreme Court of British Columbia granted Yukon Zinc protection from its creditors pursuant to the Companies Creditors Arrangements Act (CCAA). PwC was appointed as Monitor of Yukon Zinc in the CCAA Proceedings.
In April, the Supreme Court of British Columbia, authorised the Monitor to proceed with a process for the solicitation of offers to invest in Yukon Zinc or to purchase all or any part of Yukon Zinc’s assets. As a result of the solicitation process MinQuest made a conditional offer to purchase the Wolverine zinc mine including the remaining Mineral Resources, processing mill, tailings management facility, workshops, mine office buildings, generator power plant, mine and operating leases and surrounding exploration claims (tenements).
MinQuest’s offer for the Wolverine mine and associated infrastructure is conditional upon MinQuest securing the finances to complete the asset purchase, by August 10, 2015. MinQuest is in discussions with a number of potential financiers who have expressed interest in presenting a term sheet for financing the acquisition of the Wolverine zinc mine.
MinQuest is currently assessing the possibility of fast tracking the development of the Kona Mineral Resource on the Fyre Lake project by utilising the existing mine infrastructure at Wolverine. That resource is currently defined as a total Mineral Resource of 12.6 Mt @ 1.56% Cu, 0.09% Co, 0.30% Zn and 0.63g/t Au and classified in accordance with the JORC 2012 guidelines.
Fyre Lake is approximately 28 km to the southwest of the Wolverine mine. In order to truck ore from there to the existing processingfacilities at Wolverine a 40k m road will need to be constructed. If MinQuest proceeds with the development of the Kona Mineral Resource, it says it will “follow all permitting processes as required by the Yukon Territory Government and also work closely with the Kaska First Nation.
Preliminary studies completed by MinQuest have concluded that the Wolverine processing plant is capable of being converted to a single float circuit plant, producing a copper-cobalt-gold metal concentrate and increasing the processing capacity to 1.5 Mt/y. Yukon Zinc was producing separate copper, lead and zinc metal concentrates from the Wolverine orebody at a nameplate capacity of 750,000 t/y.
In comparison to constructing a standalone metal processing plant and mine at Fyre Lake, using the existing facilities at Wolverine could save between C$150-200 million from the cost of developing the Kona Mineral Resource on the Fyre Lake project.
The Wolverine zinc mine is currently being allowed to flood and Yukon Zinc has advised MinQuest that it could take up to two years for the mine to flood. If MinQuest is successful with its bid to purchase Wolverine, MinQuest will become responsible for the environmental liabilities associated with the Wolverine mine site. MinQuest has assessed these environmental liabilities and has concluded that they are no more onerous than the liabilities incurred if a standalone project was developed at Fyre Lake.
