Monday 24th October 2016

Resource Clips

Adding Yukon gold and silver

Copper North Mining brings copper mining costs south


Look at development-ready copper projects and “you’ll find most of them are very large, multi-billion-dollar projects,” says Copper North Mining TSXV:COL president/CEO Harlan Meade. “And if you look at the smaller projects, there aren’t that many that would be in the lower decile of the cost curve.” A revised PEA announced October 12 brought the company’s Carmacks project into that category by incorporating gold and silver into a new metallurgical flowsheet. But Meade sees further potential for the south-central Yukon property with additional improvements, a new resource—completed but not yet entered into the mine plan—and an optimistic price scenario for the conductive commodity.

Metallurgy was key to the new PEA. A 2012 feasibility study “was based on a copper-only heap leach operation and that suited the higher metal prices of the day,” Meade explains. In 2014 Copper North factored gold and silver into a revised PEA. The current PEA now calls for agitated tank leaching of copper oxides to produce cathode copper. That would be followed by agitated tank leach cyanidation and carbon-in-leach processing to produce gold and silver doré bars. Considering gold and silver credits, the open pit would produce copper at US$1.08 a pound.

Copper North Mining brings copper mining costs south

Carmacks’ new resource has yet to be worked into the mine plan.
Further improvements could come from resource expansion,
improved silver recovery and eventual sulphide recovery.

The PEA sees Carmacks averaging 30 million pounds of cathode copper, 19,500 ounces of gold and 21,600 ounces of silver annually over a seven-year mine life.

Pre-production capex comes to $214.7 million, with total capex of $263.6 million and after-tax payback in 5.3 years. Using an 8% discount rate, the pre-tax NPV comes to $11.9 million with a 9.4% IRR. After taxes, the numbers show minus-$11.4 million and 6.6%.

That’s based on copper at $2.50 a pound, with gold at $1,300 and silver at $17.50 an ounce. At $2.75 copper, the pre-tax numbers show a $55.9-million NPV and 14.2% IRR. Should copper hit $3, pre-tax numbers climb to $99.8 million and 18.7%.

“Some people are using $2.75,” says Meade. “I wouldn’t blame them because if you look at the fundamentals of copper I think we’re going to see it in the $2.50 to $2.75 range towards the end of next year, and that would be the environment we’d be financing in.”

Directly sourced equipment helps cut capex. “A lot of equipment used today is made in China and brought in by U.S. suppliers. If we go straight to the source we get a very, very significant reduction.”

A pre-feas priority will be last January’s maiden resource for three zones not included in the current PEA. Located south of the proposed open pit that incorporates zones 1, 4 and 7, new zones 12, 13 and 2000S show the following totals:

Oxide and transitional mineralization

  • measured and indicated: 3.7 million tonnes averaging 0.5% total copper, 0.35% acid-soluble copper, 0.132 g/t gold, 2.011 g/t silver and 0.15% copper sulphide

  • inferred: 822,614 tonnes averaging 0.42% total copper, 0.28% acid-soluble copper, 0.119 g/t gold, 1.91 g/t silver and 0.14% copper sulphide

Sulphide mineralization

  • measured and indicated: 3.73 million tonnes averaging 0.6% total copper, 0.06% acid-soluble copper, 0.128 g/t gold, 2.288 g/t silver and 0.55% copper sulphide

  • inferred: 4.37 million tonnes averaging 0.55% total copper, 0.04% acid-soluble copper, 0.123 g/t gold, 2.081 g/t silver and 0.52% copper sulphide

Each of the three zones remains open along strike and at depth. Oxides begin at surface and extend to shallow depths. Sulphides occur at depths as shallow as 50 metres, the report stated.

Totals for all six zones come to:

Oxide and transitional mineralization

  • measured and indicated: 15.7 million tonnes averaging 0.94% copper, 0.74% acid-soluble copper, 0.379 g/t gold and 3.971 g/t silver

  • inferred: 900,000 tonnes averaging 0.45% copper, 0.3% acid-soluble copper, 0.119 g/t gold and 1.9 g/t silver

Sulphide mineralization

  • measured and indicated: 8.1 million tonnes averaging 0.68% copper, 0.178 g/t gold and 2.332 g/t silver

  • inferred: 8.4 million tonnes averaging 0.63% copper, 0.15 g/t gold and 1.994 g/t silver

Meade wants additional drilling in and around the three new zones this spring to upgrade the inferred numbers and maybe expand the resource too. “Then we’ll do some engineering to design a pit to add to the existing plan,” he says.

And we’ve still got a lot of room for exploration and expansion. I think there’s significantly more copper oxides and sulphides if one turns on the drills.—Harlan Meade,
president/CEO of
Copper North Mining

Another priority will be silver recovery, now down to 9.4%, compared with 85.5% for copper and 84.4% for gold. Silver took a hit when tests sped up the leach process by increasing heat. “But we’ll probably get it back,” says Meade.

At some point the sulphides should undergo metallurgical studies to produce either cathode copper or a concentrate. “There’s work to be done that might significantly extend the mine life,” he points out. “And we’ve still got a lot of room for exploration and expansion. I think there’s significantly more copper oxides and sulphides if one turns on the drills.”

Permitting could begin in fall 2017. “Carmacks has already been through the process and I think this proposal would be a lot simpler than the previous heap leach project,” he maintains. “I think the regulators will find much of this has been reviewed before so we think it’ll take about eight months. If that’s done you could begin production in early 2019.”

Community relations look positive, he adds. “My predecessor spent a lot of time building a relationship with two first nations. They’re keen to get started on a benefits agreement. They’re supportive of what we’re doing and hope we get this going sooner than later.”

The 4,933-hecatre project has nearby water, sits 11 kilometres from power and has 13 kilometres of road and trail access to a seasonal road that’s 34 kilometres from the town of Carmacks.

Having kept costs down to the lower decile, “we think Carmacks has a very good probability of being financed fairly quickly, especially if we see a small improvement in the copper price. We see it developing quickly and probably becoming Canada’s next copper mine. It’s financeable and it’s a low-cost producer, what more could you ask for? I guess a little more mine life, but we’re working on that.”

The company has also been active in northwestern British Columbia, where summer drilling has wrapped up on the Thor copper-gold porphyry project. Meade expects to release assays shortly.

This month Copper North closed private placements totalling $279,050.

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