There is no such thing as a sure bet with the stock market — as investors well know. Against a backdrop of fluctuating metals prices, volcanogenic massive sulfide (VMS) deposits may look more attractive than ever.
That’s thanks to their polymetallic content. Often containing copper, zinc, lead, silver and gold, VMS deposits can potentially offer resource investors some cushion when it comes to the rise and fall of individual metals. If it’s a rough year for copper prices, for example, profits off zinc or gold might still help a VMS deposit company’s stock soar.
Furthermore, VMS deposits are an opportunity to buy into both the precious and base metals markets — two very different landscapes. The latter tends to be driven by commodities markets, while precious metals like gold and silver are often seen as safe-haven investments. The principle of diversification, then, seems built into a VMS deposit itself.
Not only that, VMS deposits can often be long-term producers. “They go on and on and on, with stacked layers of mineralization over large distances,” Ralph Shearing, president of Telson Mining (TSXV:TSN,OTCBB:SOHFF,FWB:TSGN), told the Investing News Network (INN). “Some of these deposits have been producing for 50 years plus.”
Location, location, location
In part, that long production run owes to how VMS deposits are formed. Most are found on old sea floors, the result of thousands of years of volcanic activity. Look for so-called “black smokers,” and you could find a growing VMS deposit. The dark, cloudy expulsions are actually hydrothermal fluids vented from the sea floor … and they’re rife with both base- and precious metals-rich fluids, leached from the rock.
The plumes from black smokers precipitate the metals upon contact with seawater, settling the mineral-rich sediments over the ocean floor, eventually coming to form a high-density mineral deposit zoned around the vent.
Since black smokers occur in clusters around rifts in the ocean floor, so too do many VMS deposits. The discovery of one target can be followed by the discovery of several more in the surrounding area. (Several such clusters are detailed below).
The distinctive shape of VMS deposits can lead to other economic benefits as well. Open-pit mining generally works well for these properties, and that can be a major draw for investors. After all, open pits are a cost-effective option compared to narrow-vein mining. That’s because bulk-mining methods can be employed effectively in an open pit, and transport of ore and waste rock is on surface as opposed to underground, where mining and development costs are generally much more expensive.
A global occurrence
The oldest VMS deposits date to around 3 billion years ago, while new ones are developing even now. They’re also distributed across the globe. In Japan, the Kuroko VMS deposits have delivered significant amounts of lead, copper, zinc, silver and gold. Mexico is also home to several clusters of VMS deposits, likely formed during the Mesozoic era (between 252 and 66 million years ago).
“VMS deposits constitute the most abundant type of Mesozoic ore in Mexico and the vast majority of VMS of Mexico, more than 60 localities, are located in the Guerrero terrane, which covers Guerrero state,” said Shearing.
There are also VMS deposits in the US and even Australia. In fact, there are over 800 known VMS deposits distributed across the globe.
Canada, however, is the country perhaps best recognized for its VMS deposits, containing almost half of those known today. Significant production has been seen across numerous provinces and current exploration is often focused in the country’s northern arctic regions.
Quebec’s Noranda district
Among Canada’s most famous VMS deposits? Look no further than the Noranda district in Quebec. Mention VMS deposits to resource investors and this region is likely one of the first to come up — after all, the region was home to 20 past producers.
The Horne mine, for example, was operational between 1926 and 1976, producing some 2.5 billion pounds of copper and 11.6 million ounces of gold under the management of Noranda. Originally operations were only scheduled to last a few years. However, the discovery of additional targets kept the mine in business for much longer.
And believe it or not, the area might not be mined out. Further exploration of mineralization beneath the Horne mine are currently underway — more on that below.
As a result of successfully producing mines like Horne, the Noranda district is among the most studied and documented regions for VMS deposits.
Other significant VMS deposits
Further west of the Noranda district lies Flin Flon, home to some of the world’s best-known VMS deposits. Located in Manitoba, Canada, the Flin Flon mines began producing for their operator, Hudbay Minerals (TSX:HBM,NYSE:HBM), all the way back in 1930. Then there’s the Kidd mine, also in Canada. Work there began in the 1960s and its current operator, Glencore (LSE:GLEN), is now mining at 9,600 feet. That makes Kidd the deepest base metals mine below sea level in the world.
Both the Flin Flon and Kidd mines have produced significant quantities of copper and zinc, as well as some silver or gold. The 777 mine at Flin Flon, for example, has average annual copper production of 25,000 tonnes, while Kidd produced some 39,000 tonnes of the metal in 2017.
The numbers climb still higher when it comes to zinc. According to Hudbay Minerals, Flin Flon’s 777 mine produces about 51,000 tonnes of the metal annually. Kidd Operations reported producing over 72,000 tonnes of it in 2017.
However, both mines may soon run their course. Hudbay Minerals projects a remaining mine life of approximately five years for the 777 mine at Flin Flon, while Steve Badenhorst, general manager of Kidd Operations, expects the Kidd mine to close in 2022, according to the Timmins Press.
Potential up and comers in the market
With several of these famous mines projected to close in the near future, investors may also want to consider more junior companies with VMS deposit properties. Among those is Telson Mining, which acquired Campo Morado, an underground mine located in Guerrero …read more
From:: Investing News Network