History
Mineralization was discovered at Prairie Creek in 1928 with limited work conducted on the property until 1966.
Cadillac Explorations Ltd ("Cadillac") acquired the property in 1966 and, during 1966 to 1969, explored the mineralized zones now known as Zones 3, 7 and 8 through bulldozer trenching and exploratory cross-cuts.
In 1970, the property was optioned to Penarroya Canada Ltd ("Penarroya"). Underground development of Zone 3 was carried out, as well as bulk sampling and preliminary metallurgical test work. Some surface drilling was carried out on Zones 6, 7 and 9. In late 1970, Cadillac terminated the option agreement with Penarroya. Between 1970 and 1980 extensive underground development of Zone 3 at the 3,050 foot and 2,850 foot levels (today referred to as the 930 and 870 metre levels) took place.
In 1980, an independent feasibility study was completed by Kilborn Engineering (BC) Ltd. Financing negotiations were completed with Procan Exploration Company Ltd., a private company owned by Nelson Bunker Hunt and William Hunt of Texas. In 1980, Cadillac acquired the 1,200 tons per day Churchill Copper concentrator which was dismantled and transported on the winter road to Prairie Creek.
By May 1982, the surface facilities were 90%-95% completed, and mine preparation work to produce an initial 500 tons per day had been finalized. A total of CDN$64 million had been expended on the Project. At that time the silver price collapsed and Cadillac was forced into bankruptcy, after The Project, together with all other assets of Procan, were tied up in litigation until 1990.
In 1991 Conwest Exploration Company Limited acquired the property and granted an option to Canadian Zinc Corporation (then known as San Andreas Resources Corporation) (the “Company”) to acquire a 60% interest in the property. Since 1991 Canadian Zinc has completed 40,000 metres of surface diamond drilling and an underground exploration program which has greatly expanded the inventory of known resources on the property.
In 1992 the discovery of the stratabound-type mineralization in the main zone opened up multiple exploration targets for both vein and stratabound deposit expansion.
In 1993/94 , in addition to diamond drilling, the Company also completed initial environmental assessment research and further metallurgical studies. The 1995 drill program explored for extension of the vein to the north on 200 m step-out sections all of which successfully intersected the vein structure and demonstrated the continuance and strength of the vein which now has a strike trend length of 2.1 km and remains open at depth and along strike.
In 1996 the Company successfully completed the negotiation of The Prairie Creek Development Co-operation Agreement with Nahanni Butte Dene Band.
In 1997 the underground workings were rehabilitated in order to complete detailed chip sampling of the vein at the 3,050 foot and 2,850 foot underground levels.
In January of 2001 Canadian Zinc completed a Scoping Study designed to outline and guide the re-development of the mine and mill on the Prairie Creek Property. The preliminary study indicated the feasibility of a mining and milling operation on the site and identified a number of different development and production scenarios. The operation would utilize the existing mine and mill infrastructure put in place in 1982, but never operated. Indicated capital costs for the new operation were estimated in 2000 to be CDN$40.5 million, including the construction of an all weather access road to the site. 2001 Scoping Study is now considered to be out of date and should not be relied upon. The Company anticipates that the capital costs to place the Prairie Creek Mine into production will be significantly greater than estimated in the the Scoping Study. The indicated capital costs will be re-estimated in the Pre-Feasibility Study, which is being undertaken by SNC-Lavalin Inc., and was scheduled to be completed later in 2008. The final study has now been delayed due to recent permitting uncertainties and additional engineering studies.
Throughout the years 2003, 2004 and 2005, the Company’s principal focus was its efforts to advance the Prairie Creek Project towards development, principally in the permitting process. In 2001 the Company applied for two surface exploration drilling permits, an underground exploration permit, a pilot plant metallurgical permit and a permit for use of part of the road from the property. Following Environmental Assessment the two surface exploration land use permits were issued in 2001. The underground exploration and pilot plant permit applications were referred for Environmental Assessment which lasted throughout all of 2001, 2002 and into June of 2003.
In September 2003, a Land Use Permit and Water Licence for underground exploration and development and for metallurgical testing in a pilot plant were issued to the Company by the Mackenzie Valley Land and Water Board. An appeal to the Federal Court seeking judicial review of the decision of the Water Board to issue the Water Licence was filed in October 2003 by the DehCho First Nations and heard by the Court in August 2005. In December 2005 the Court issued its Judgment directing the Water Board to reissue the Licence containing modified language which had been agreed between the Company and the Minister of Indian and Northern Affairs Canada. The Licence was reissued by the Board in February 2006.
The Company made significant progress during 2003. The issuing of the Land Use Permit and Water Licence in September 2003, after a 30 month arduous process, was an important step forward. The improvement in metal prices during 2003, including in particular, zinc, lead and silver, enhanced the attractiveness of the Prairie Creek Project.
With the general improvement in metal prices, and the investment market for resource companies, during the second half of 2003 the Company completed a number of financing's to fund the ongoing permitting, exploration and development of the Prairie Creek Property. During 2003 a total of $15,619,802, before expenses, was raised, representing a significant improvement in the Company’s liquidity and working capital.
In 2003 the Company submitted a separate application for a Land Use Permit for use of the existing road from the Liard Highway to the mine site and claimed legal exemption from the Environmental Assessment process. The claim for exemption was denied by the Water Board and the Company filed an appeal to the Supreme Court of the Northwest Territories. That Appeal was heard by the Court in December 2004 and in May 2005 the Court issued its Judgment ruling that the proposed development is exempt under the Act from Environmental Assessment.
During 2004 the Company carried out an exploration program at the Prairie Creek Property. A total of 27 holes were drilled comprising 5,963 meters, directed at three different target areas with encouraging results, especially down dip to the north outside the immediate mine development area. At the same time the underground workings were rehabilitated in preparation for the planned decline and underground drilling program, whilst important site maintenance and environmental work was also carried out.
In the spring of 2004 the Company applied to the Mackenzie Valley Land and Water Board for an amendment to expand the area of an existing diamond drill Land Use Exploration Permit. The application was referred for Environmental Assessment and this assessment was conducted by the Mackenzie Valley Environmental Impact Review Board throughout 2005, culminating in a decision dated December 23, 2005 in which the Review Board recommended to the Minister of Indian Affairs and Northern Development that the development proceed to the regulatory phase of approvals. On February 3, 2006 the Minister accepted the recommendations of the Review Board and the permit was issued by the Water Board to finalize the terms and conditions of the permit.
During 2005 the Company carried out an extensive program of site rehabilitation and maintenance including design of a new water treatment plant, upgrade of fuel facilities and the construction of a new water polishing pond.
In 2006 the Company continued with the development of Prairie Creek, including surface and underground exploration and development. A new decline tunnel was driven from the end of the existing workings to provide access to deeper parts of the mine to enable infill and deeper exploration drilling. Underground diamond drilling commenced in late 2006 and was completed in early 2008. Phase 1 of decline development and drilling was completed in June 2007. It was decided to initiate Phase 2 of the decline extension and tunneling resumed in August 2007 followed by drilling in September 2007. The 43-101 resource report was finalized in October and demonstrated more than adequate resources to supply the mill for in excess of 14 years. Due to the success of the previous program defining adequate resources to enable a pre-feasibility study, the decline tunnel was halted in November and diamond drilling was terminated in December 2007.
SNC Lavalin Inc. was chosen to initiate a Pre-feasibility Study on Prairie Creek in 2008. In tandem with this study the operations permits were submitted to the regulatory authorities to initiate the permitting process for the mine.
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