Xstrata Zinc has started construction work in Queensland, Australia, to develop the high-grade zinc-lead-silver Lady Loretta deposit as a new greenfield underground mine.

The work will involve development of the decline, underground services and surface infrastructure of the project.

The A$246m (US$239m) development will have a mine life of ten years, and is expected to be operational by the end of 2013.

Lady Loretta consists of a total mineral resource estimated at 13.7Mt, with 17% zinc and 6% lead grade.

The deposit is expected to produce one million tons of zinc-lead-silver ore per annum, an annual average of 126,000t of zinc in concentrate and 40,000t of lead in concentrate.

Xstrata Zinc Australia chief operating officer Brian Hearne said the project’s higher grade zinc will increase the annual average zinc production from the region by around 20%, or 100,000t, and will support further cost efficiencies from the Mount Isa operations.