TORONTO (miningweekly.com) – TSX Venture Exchange-listed Kria Resources is in discussions with Xstrata Zinc about the possibility of toll-processing ore from Kria's Halfmile Lake project, in New Brunswick, Canada, at Xstrata's Brunswick 12 mill, the firm revealed this week.

The mill, which currently has excess capacity, is about 40 km from Halfmile Lake, and an agreement to send initial ore to the Brunswick operation would allow Kria to accelerate its schedule towards production.

The company could then complete further mine development and build processing facilities in later phases.

Xstrata currently owns 24% of Kria, plus warrants, to buy another 7-million shares.

Kria completed a preliminary economic assessment on the Halfmile Lake project earlier this year. The company originally agreed in 2008 to buy the property and the nearby Stratmat project from Xstrata for cash, shares and a net smelter royalty.

To start production at Halfmile Lake, Kria will need to build a ramp, as well as surface facilities such as offices and maintenance facilities, as well as ore and waste rock storage pads.

“The proposed initial production access ramp and intended facilities would complement the final design and reduce the project risk by lowering initial capital requirements,” the company said in a statement.

A preliminary economic assessment was completed on the project earlier this year, which envisaged construction of an underground mine and a standalone processing facility.

The ability to step into the project on a phased approach would allow for the underground mine to be developed first for production in the upper zone area, along with giving access to an underground exploration platform for the lower and deep zones.

“The ability to generate cash flow earlier will assist Kria in financing the remainder of the project development,” the company said.

Once a decision to proceed with the Halfmile Lake project is reached by Kria, the company will need to file an environmental-impact assessment report, in order to obtain the necessary permits.

The company completed an NI 43-101-compliant mineral resource estimate on the Halfmile Lake property in February 2009, which estimates indicated mineral resources of 6,26-million tons, grading 8,13% zinc, 2,58% lead, 0,22% copper and 30,78 g/t silver, using a 5% capped zinc equivalent cutoff grade

Inferred mineral resources are estimated at 6,08-million tons, grading 6,69% zinc, 1,83% lead, 0,14% copper and 20,51 g/t silver.

Besides Halfmile Lake, Kria has other projects in New Brunswick and Manitoba.

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