The rising price of nickel and “new operating opportunities” are giving Sudbury-based junior Canadian Arrow Mines Ltd. the chance to look at reviving a pair of past-producing deposits 50 kilometres east of Timmins.
If efforts to bring the Alexo and Kelex deposits back into production are successful, officials hope they will act a means of financing the company’s flagship Kenbridge nickel-copper deposit 70 kilometres southeast of Kenora.
This will allow Canadian Arrow to raise much-needed cash without having to sell pieces of the company on the market, says president Kim Tyler.
“It’s still difficult for junior miners to get capital without losing control of their company,” says Tyler.
“This opportunity at Alexo and Kelex to quickly get back into production – it’s a small deposit but it has significant value, we think – will allow us to provide cash flow to thecompany without having to raise money on the markets. There’s lots of positive things in the economy, but it still hasn’t shaken down to junior miners and especially base metals, and still isn’t reflected in share prices.”
Previously mined by Mond Nickel during the First World War, Alexo produced 30,138 tonnes of ore from the property between 2004 and 2005, primarily from open pit mining of the existing underground workings.
At the time, Canadian Arrow’s sole option for processing was Xstrata’s Strathcona Mill near Sudbury, 350 kilometres away. As the material was all transported by truck, and the majority of profits were poured into shipping, the costs rapidly became prohibitive. The highest-grade material had to be mined in order to keep the project in black, “which was like taking the heart out of the project,” says Tyler.
When prices dropped to nearly $5 a pound, the company hit the point where it was no longer able to break even. Work was halted at the site and the focus shifted to the newly acquired Kenbridge property.
However, with the financing market still somewhat restrictive for many juniors and Canadian Arrow looking for less dilutive ways of funding their primary project, the Timmins deposits became more attractive.
This is particularly true given certain “operational alternatives” the company is looking at to lower costs by not hauling raw ore all the way to Sudbury. Though Tyler is hesitant to release details, he says it would allow for a lower-grade halo of mineralization around the deposits to be profitably mined.
Tyler compares the site’s geology to other projects in the region, such as those held by Liberty Mines and Inspiration Mining.
Over the next month, plans are to begin an NI 43-101-compliant mineral resource estimate on the deposits, develop a mine plan, and evaluate potential customers. Project permits will also need to be updated.
Tyler says if all goes well, production could possibly begin by the end of 2010.
He’s also unsure about the amount of money needed to get the project off the ground, though a small round of financing will be required to kick things into gear. Tyler ventures that the Timmins price tag “will be nowhere near” the $107 million needed for Kenbridge, given its status as a relatively ready-made project.
“Things looked awful a couple years ago, but in hindsight, it’s probably been good for us that this project has sat kinda quietly and that we’re able to look at it with new eyes and new conditions and say that this really works well into a master plan for us.”
