KGHM updates suppliers on Victoria project: full funding from Poland and a decision on one or two shafts expected by year end.

• Author: Tollinsky, Norm

KGHM International expects to have a decision on full funding for the Victoria Project in the Sudbury Basin by year's end, along with a decision on whether to sink one or two shafts, chief project officer Warner Uhl told close to 150 mining suppliers at an information meeting organized by the Sudbury Area Mining Supply and Service Association this past summer.

"Are we going to spend $500 million or a billion? It's not an easy decision," said Uhl. "The issue we have is that the orebody is inferred. To get it to a resource, we have to drill 604 holes and we've only drilled 32, so it's a quandary. Do we play it safe and take a couple of years longer to go into production, or do we sink two shafts on a gamble? This is the dilemma we've been facing for one and a half years."

KGHM and the former owner of the project, Quadra FNX, have gone back and forth on the one- versus two-shaft development scenario. In 2011, Quadra FNX announced plans to sink two shafts concurrently, but the company was scooped up by Polish-based KGHM a year later, leading to long drawn out negotiations with Vale over back-in rights and milling.

Once that was resolved, "the race was on to develop it, and I think some sanity hit us when we realized the original plan was too expensive," said Uhl. "We were just going to do an exploration shaft, but (more recently) our president asked us to take another look at what creates the best value." KGHM is spending approximately $30 million this year on engineering, sub-collar excavations, a collar foundation, a retaining wall for a sub-station and a mine water pond. Next year, it will spend either US$80 million or US$150 million, depending on the number of shafts it decides to sink.

If the decision is to go with one shaft, it will go down to the 1,400-metre level with ramping from that point on. "Then we'll do some drilling from underground to get a better handle on the orebody and the deleterious metals," said Uhl.

If the decision is to go with two shafts, one will go down to 1,800 metres, the other to 2,200 metres.

Shaft sinking will get underway in June 2016 if KGHM opts for two shafts, or in September 2016 if it decides on the single shaft option.

"The ore will be sent to Vale, but one of the concerns we have is the deleterious metals in the orebody," said Uhl. "We have a very tight range when it comes to zinc, mercury and arsenic. If we're over, Vale can reject the ore, so we're trying to get a better understanding of the...