On April 3, 2018 Solitario and Teck announced the approval of a jointly funded budget for a new work program on the Lik zinc project in Alaska. This is the first time that project work has been jointly funded, as previously, Zazu Metals, acquired by Solitario in July 2017, had sole-funded the project as part of an option earn-in agreement. Solitario believes this is a positive step for future exploration and development activities for the Lik project.
To leverage Teck’s thirty years of successful exploration and operational experience in the world-class Red Dog mining district, Solitario and Teck agreed that Teck will act as project operator for this program. The proposed work program, which will begin once appropriate permits are obtained, will consist of surface geologic, geophysical and environmental work, as well as Lik camp rehabilitation. Specific activities include:
The 2018 work program is designed to be the first-step in identifying new drilling targets and assessing the path forward for project development.
On August 31, 2017, Solitario iinitiated metallurgical testing to determine the potential to recover silver at its recently acquired Lik zinc project in Alaska. The Lik resource, besides being a high-grade zinc deposit, contains a significant silver inventory that averages about 50 grams per tonne silver. Metallurgical testing to date has focused on the recovery of zinc and lead with virtually no work conducted on silver recovery.
In the 2014 Lik PEA, the economic model assumed less than 5% silver recovery in the zinc and lead concentrates combined. With approximately 29.1 million ounces of silver in the Indicated Resource category, and another 6.5 million ounces in the Inferred Resource category, there is potential for a significant benefit to project economics if silver recoveries can be improved. Solitario has engaged RDI Resource Development Inc. to manage the metallurgical test work. This initial phase of test work is estimated to be completed in the fourth quarter of 2017.
Lik Mineral Resource Estimate (100% basis) – December 31, 2013
*Zinc-Equivalent Grade based upon the following metal prices: $1.00 Zn, $0.90 Pb and $20 Ag
Subsequent to its acquisition of Zazu Metals in June 2017, Solitario Zinc Corp. now holds a 50% operating interest in the Lik project, a large-tonnage, high-grade, open-pittable zinc development project in in northwest Alaska through a 50/50 partnership with Teck Resources.
The Lik Deposit is a large tonnage, high grade zinc-lead-silver deposit in North West Alaska. It is 22km from Teck's Red Dog Mine, and has access to state owned purpose built infrastructure for shipping zinc-lead-silver concentrate.
Solitario is the operating partner in a 50/50 joint venture with Teck on the Lik. The joint venture agreement was originally drafted in 1983 between two entities no longer involved with the project. The two halves of the agreement survived through multiple entities, the non-operating half eventually bought by Cominco and then inherited by Teck. International Paper held the operating half of the partnership for many years until Zazu purchased it in 2007. The joint venture agreement gives Zazu the one way right to earn an additional 30% interest - for a total of 80% - by meeting spending commitments by 2018. The spending commitments can either be made by Solitario or by a third party acting for the betterment of the project. The amount for the additional earn in is (pre-inflation adjusted) US$25mm. Zazu estimates this amount to be around $45mm by 2018, once adjusted for inflation.
Location and Description
The LIK property comprises a contiguous group of state mining claims located in the sections listed in the table below.
The geographical coordinates of the LIK deposit are about 163º 12’ W and 68º 10’ N. The following figure illustrates the location of the LIK property.
The LIK property claims cover an area of 2,225 ha, and have historically been divided into four groups: the LIK, Silk, Y and Z claim groups.
The LIK property claims lie within an area of Alaska State selected land. The surface ownership is held by the Alaska State government.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
Access to the LIK property is by air to an airstrip located on the property. The airstrip is capable of handling large, multi-engine planes. Charter flights may be arranged from a number of sites in northwestern Alaska. The town of Kotzebue, which is located about 145 km from the deposit, is a seaport and is serviced by a regular air service from Anchorage. Kotzebue is the centre for access to the nearby Red Dog mine operated by a subsidiary of Teck Cominco Limited.The nearest location for which climatic data is available is the town of Kotzebue.
The average annual temperature at Kotzebue is -5.8ºC, although this may not be entirely reliable as an indicator for conditions near the LIK property. Seasonal extremes probably range between 25ºC in summer to -50ºC in winter. There is an average of 22.8 cm of rain per year and a snowfall of 1.2 m per year. Snow falls are not extreme, but blowing snow may form significant drifts. Strong winds are common in most parts of Alaska. Currently, diamond drilling is possible at the LIK property between June 1 and October 1. The existing constraint is water, since the drills and the camp currently utilize surface water.
There are no local resources adjacent to the LIK property. The Red Dog mine, operated by a subsidiary of Teck, is located about 22 km southeast of the deposit. Potentially, concentrates might be moved along the access road from the Red Dog mine to the port on the Chukchi Sea. This road is owned by the State of Alaska and is available for use by industrial users. The port has a shipping season of about 100 days. The current concentrate storage at the port site is at capacity and further storage facilities would have to be constructed if the LIK property comes into production.
There is a refurbished camp and airstrip located near the Lik deposit. The airstrip is about 1,300 m long and about 30 m wide. The strip is gravel surfaced and is capable of handling large, multi-engine planes.
The exposures of the LIK property are located at about 245 m above sea level. West of the deposit, the land rises steeply to peaks about 700 m above sea level. To the southeast, the land slopes down to the Wulik River where the bottom of the valley is about 215 m above sea level. There is sufficient space for tailings and waste rock disposal, and sufficient water is expected to be available for any proposed processing. Locally, there is vegetation on the property consisting of tundra, grasses and low brush made up of willow, dwarf birch, and alder.
The Red Dog ore deposit was originally discovered in 1970 by a geologist undertaking mapping in the De Long Mountains area on behalf of the United States Geological Survey.
GCO Minerals Company ("GCO"), in joint venture with New Jersey Zinc Company and WGM Inc, ("WGM"), carried out stream geochemical sampling and reconnaissance for colour anomalies. Claims were staked in July 1976 to protect a stream geochemical anomaly on LIK Creek. Houston OIl and Minerals Exploration Company replaced New Jersey Zinc Company in the joint venture in 1976/1977.
Diamond drilling on the LIK property commenced in 1977 and targeted a gossan with a coincident soil and electromagnetic anomaly. The first hole encountered massive lead-zinc-silver-bearing sulphides. By the end of 1977, the joint venture had completed 40 line-kilometres of ground geophysics, a soil sampling program, and ten diamond drill holes with an aggregate depth of 1,603 m. In 1978, further geological, geochemical and geophysical surveys were carried out, together with the drilling of another 79 diamond drill holes aggregating 10,680 m. A further 14 diamond drill holes with a total depth of 4,931 m were completed in 1979 and a mineral resource was estimated.
The joint venture continued to work in the district in the period 1980 to 1983. As the joint venture held a large number of claims outside the existing LIK property, work was concentrated on other targets in some of those years. However, limited diamond drilling activity continued on the LIK property. The LIK Block Agreement was signed in 1984.
In 1984, Noranda Exploration, Inc. ("Noranda") optioned the LIK property. Much of Noranda's activity was concentrated in the LIK North Area where ten diamond drill holes with an aggregate depth of 4,180 m were completed on four sections. Noranda also drilled holes in the LIK South deposit to better define "mineable high grade reserves". Noranda released its interest in the LIK property after a re-organization of its holdings in the United States.
Moneta Porcupine Mines Inc. ("Moneta") optioned the property in 1990 and together with GCO completed three diamond drill holes aggregating 263 m. The purpose of the Moneta drilling was to obtain metallurgical samples, but there are no records of any significant metallurgical work having been completed by Moneta. GCO drilled two additional diamond drill holes in 1992, but there were no additional drilling activities thereafter, until Zazu commenced drilling in 2007.
All of the diamond drill campaigns prior to Zazu's drilling are summarized in the table below.
The regional geology of the Western Brooks Range area is structurally complex. The sedimentary rocks of the area have been disrupted by thrust sheets or allochthons. The term "allochthon" describes an assemblage of stratigraphically related rocks that overlies a large displacement thrust fault. The LIK property and the other zinc-lead deposits of the Brooks Range, including Red Dog, are hosted in the Kuna Formation of the Lisburne Group. In the Western Brooks Range, the Lisburne Group includes both deep and shallow water sedimentary facies and local volcanic rocks. The rocks have been extensively disrupted by thrusting. The deep water facies of the Lisburne Group, the Kuna Formation, are exposed chiefly in the Endicott Mountains and the structurally higher Picnic Creek allochthons.
In the Red Dog plate of the Endicott Mountains allochthon, the Kuna Formation is divided into two units, the Kivilina Unit and the Ikalukrok Unit, and consists of at least 122 m of thinly interbedded calcareous shale, calcareous spiculite and bioclastic supportstone overlain by 30 m to 240 m of siliceous shale, mudstone, calcareous radiolarite and calcareous lithic turbidite. The Ikalukrok Unit in the Red Dog plate hosts all of the massive sulphide deposits in the area.
The LIK property is hosted in the Red Dog plate of the Endicott Mountains allochthon. The stratigraphically lowest rocks within the Red Dog plate belong to the Kayak Shale. The top of the Kayak Shale is interbedded with rocks of the Kuna Formation.
In a district sense, the Kivalina Unit is up to 122 m thick and may have been deposited in a local fault-bounded depression. It includes laminated, black calcareous shale and thick-bedded, grey micritic limestone, grainstone and packstone. The Ikalukrok Unit varies in thickness across the district from 29 m to greater than 240 m. The unit has been divided into a lower laminated black shale sub-unit and an upper medium-to thick-bedded black chert sub-unit.
The LIK property is hosted in the upper part of the Ikalukrok Unit of the Kuna Formation. At the LIK property, the immediate host rocks are carbonaceous and siliceous black shale, with subordinate black chert and fine-grained limestone. These rocks strike broadly north-south and dip at about 25º to 40º to the west. The massive sulphides are overlain conformably by rocks of the Siksikpuk Formation. The sequence is overridden by allochthonous rocks that form high hills north and west of the deposits.
The mineralized sequence is cut by a number of faults. The most significant disruption is the Main Break Fault, which drops the northern end of the LIK deposit down about 150 m. It is unclear whether there is a change in strike north of the fault, or whether the change is more apparent due to topography. The Main Break Fault strikes east-west and dips north at about 60º. There is another group of steeper faults that tend to strike northerly or northwesterly and which are interpreted as being both normal and reverse with throws of up to 100 m.
There had been no recent drilling on the LIK property before 2007. Details of pre-2007 drilling campaigns are discussed above under the heading "Mineral Project - History".
The LIK deposit is a stratiform zinc-lead-silver deposit. The deposit is continuous outside the LIK property onto the adjacent Teck Cominco Limited property to the south. The southern continuation of the LIK deposit is referred to as the Su deposit, lying on the Su property.
Within the LIK property, the deposit is divided into two parts by the Main Break Fault. The main part of the deposit within the existing claims is referred to as the LIK South deposit. As presently tested, the LIK South deposit's longest axis is about 1,100 m long and about 600 m wide. It has been tested down dip to a depth of about 150 m to 200 m. North of the Main Break Fault, the LIK North deposit is about 700 m long and about 350 m wide. It has been tested down dip to a depth of about 300 m.
The deposits strike broadly northerly and dip westerly at about 25º to 40º. The mineralization comprises irregular, stratiform lenses. The mineralogy of the sulphides is simple and comprises pyrite, marcasite, sphalerite, and galena, with rare tetrahedrite, bournonite and boulangerite. Gangue minerals include quartz (as chert), clay minerals, carbonate and barite. Noranda recognized six different ore types in its logging of drill core. Typical grades of mineralized intersections within the LIK deposit are listed in the table below:
Previous work by GCO determined that sulphides were deposited in four distinct cycles. The cycles are better developed close to the likely hydrothermal source of the mineralizing fluids. Individual cycles may be quite thin near the margins of the deposit and the thickest accumulation in a single cycle noted to date is about 13.7 m. The base of a sulphide cycle begins abruptly with the deposition of sphalerite, galena and pyrite. Typically, the highest grades are found at or within a few metres of the base of a sulphide cycle. Massive or finely bedded zinc- and galena-rich sulphides decrease in grade upward within a cycle. Pyrite increases relative to sphalerite and galena, forming bands of massive or colloform pyritic sulphides. Higher in the cycle, pyrite decreases and forms nodular or colloform semi-massive pyrite layers interbedded with black chert or strongly silicified black claystone. The tops of the cycles generally contain the highest marcasite concentrations. Locally, another cycle begins before the earlier cycle is finished. Lateral variations appear to mimic the vertical variations. While brecciated sulphides are common in high-grade areas, they do not form a large percentage of the overall sulphide mass. Individual breccia zones vary in thickness from a few centimetres to a few metres.
The LIK property was drill tested in the late 1970s and early 1980s, but until the Company commenced its work program, no additional drilling had been done since 1992.
The Company completed a program of diamond drilling at the Lik South Deposit during the 2007 summer field season comprising eleven drill holes with an aggregate depth of approximately 1,394m. In order to facilitate this work, the Company purchased a diamond drill rig and contracted with its independent diamond driller, Frontier, to man and maintain the drill rig.
The purpose of this work by the Company was to (i) confirm the previous work on the LIK property and upgrade mineral resources to be compliant with NI 43-101, (ii) provide material for metallurgical testing, and (iii) commence the process of in-fill drilling that will be required to develop a mine.
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Solitario Zinc Corp.
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