by Greg Klein
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It would be a small mine but a nano-cap company has big hopes for a gold-silver-tellurium project in west-central British Columbia. On March 13 Deer Horn Metals TSXV:DHM released a preliminary economic assessment for a 74,000-tonne-per-annum operation that would run six months a year. The modest size offers a number of advantages in permitting, financing and garnering community support, the company believes.
The Deer Horn project’s base case, using three-year metal price trailing averages and a 5% discount rate, estimates a net present value of $39.5 million and a 32% internal rate of return. Initial capital costs are projected at $27.8 million with payback in 2.4 years. Over a 14-year lifespan the open pit would produce an estimated total of 67,000 ounces gold, 2.11 million ounces silver and 63,000 kilograms tellurium.
The project would include a conventional flotation mill producing a combined gold-silver-tellurium concentrate.
Apart from the base case, the PEA offers separate numbers projected on recent metal prices, resulting in a $49.3-million NPV, 38% IRR and a 2.2-year payback.
The rugged region makes infrastructure an obvious challenge. The capex includes the cost of upgrading an eight-kilometre road from the mine site to a lake. From there, barge traffic would connect with other roads, including a route to Imperial Metals’ TSX:III Huckleberry mine.
The report is based on an April 2012 resource update that used a cutoff of 1 gram per tonne gold, showing:
The update marked the first such 43-101 resource “as far as we know,” Deer Horn chairman Tony Fogarassy tells ResourceClips. “If there’s a company out there with a tellurium resource estimate, we haven’t seen it.”
Eastmain Resources TSX:ER, for example, has been reporting tellurium drill results from its Clearwater (Eau Claire) property in Quebec’s James Bay region. But that project’s October 2012 resource update limited itself to gold.
As for the tellurium market, “an oversupply has existed from late 2011 but it’s expected to get more balanced by the end of this year,” Fogarassy says. “That projection was made about a year ago by First Solar [FSLR ], a multi-billion-dollar manufacturer of solar panels, which are an important use for tellurium…. By the time we could build a mine we’d anticipate the tellurium market to improve.”
He adds, “It’s a very specific element that’s used in phase change technology [for CDs and DVDs], computer chips and appliances, as well as the solar panel sector.”
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by Greg Klein
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As one of the world’s top mining jurisdictions, Quebec provides a steady source of commodity news. ResourceClips takes a look at November 8 drill results from Eastmain Resources TSX:ER, Gold Bullion Development TSXV:GBB and Northern Superior Resources TSXV:SUP, each working a different part of the province.
With high grades and visible gold, Eastmain continues to build its Eau Claire (Clearwater) gold-tellurium project. Assays from this year’s 90-hole, 34,211-metre campaign in Quebec’s James Bay lowlands show the project advancing towards a goal of up to 2.3 million gold ounces.
Results from Eau Claire’s 850 West zone show:
The 450 West zone assays show:
True widths were estimated at 100%. Down-hole depths weren’t provided but the project’s resource estimate starts at surface and extends to a depth of 900 metres. The company stated approximately half the Eau Claire deposit may have open pit potential.
Assays are pending from additional holes, as well as from four 0.5-metre samples showing more than 250 grains of visible gold and one 0.5-metre sample showing 35 grains of visible gold from the 850 West zone.
Last month’s resource update for zones 450 and 850 used a 0.5 g/t cutoff for open pit resources above 220 metres in depth and an underground cutoff of 2.5 g/t. The open pit resource showed:
The underground resource showed:
In a statement accompanying the November 8 assays, QP Eugene Puritch of P&E Mining Consultants said the resource grades “are not often found in this geological and geographical setting. The open pit gold grade in particular is in the order of three or four times that of which many other exploration projects have recently reported. Additionally, the underground gold grade is also in the order of 50% higher than recent comparable projects. With these high-grade resources, close proximity to custom processing facilities, a road and power, the prospect of a positive economic analysis is very encouraging.”
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By Greg Klein
“What sets this project apart from many others is the grade of the open pit,” says Eastmain Resources TSX:ER President/CEO Donald Robinson of his flagship Clearwater Gold-Tellurium Project in the James Bay region of Quebec. “Right now, it’s 5.7 grams gold per tonne, which is three to five times higher than many of the projects out there. So our No. 1 goal is to make the resource bigger. We’ve been doing that over the last five months.”
As of April, the open-pit resource estimate for Clearwater’s Eau Claire Deposit came to 2.73 million tonnes grading 5.72 g/t for 502,000 gold ounces measured and indicated and 1.4 million tonnes grading 2.83 g/t for 127,000 gold ounces inferred. Eau Claire’s underground resource came to 630,000 tonnes grading 6.46 g/t for 130,000 gold ounces measured and indicated and 3.92 million tonnes grading 7.21 g/t for 910,000 gold ounces inferred.
“It was clear that the greatest potential would come by expanding the near-surface, open-pittable resources,” Robinson reports. “We’ve outlined an area immediately to the west of the defined resource that’s at least 500 metres long. We’ve got about 60 drill holes into it so far. The best hole is just under 18 grams across 12 metres. There’s more than two dozen holes that have visible gold in quartz-tourmaline veins. The footprint of the pit looks like it’ll grow at least twice as big as it was.”
Assays released November 7 include
Robinson hopes to have an updated resource by June 2012, this time including tellurium. Exploration Manager Catherine Butella explains, “Tellurium has been a by-product of the copper-refining process, but now with the new leach methods, it’s no longer extracted that way. Right now tellurium is sold on base-metals spot prices, but it’s perceived to have a lot more worth. There are certain experts who think it’s going to be priced like a precious metal. It’s used in passive solar power, as a coating on windows, the coating on the back of DVDs and CDs, and it’s going to be used as the new phase change technology [used in rewritable DVDs and CDs]. It’s got a lot of uses, and there’s very little around. It’s one of the rarest metals out there.”
Robinson waxes optimistic about the possible production scenario. “At these kinds of grades, a mill at 2,000 tonnes a day will generate 100,000 ounces annual production. The capital cost of this project has advantages, not only because you don’t have to build a 60,000-tonne-a-day mill, but because we’re two kilometres from a road and five kilometres from the cheapest power in the world. It gets even more exciting—our largest stockholder is building the first mine in the district, 50 kilometres to the north.” Goldcorp TSX:G, which holds 8% of Eastmain, has slated its Éléonore Gold Mine for 2014 production.
Next in importance after Clearwater is the company’s self-titled Eastmain Gold-Silver-Copper Project, which has an historic, non-43-101 resource estimate of 800,000 tonnes grading 9.95 g/t gold for 255,750 gold ounces.
“We just completed 14,000 metres of drilling at Eastmain.” Robinson says. “The property comes with 100 square kilometres, and the mine trend is at least 10. There are underground workings and there’s a ramp into the property. There’s a mine camp that was built; it’s permitted; there’s an airstrip, fuel farm and—God love the Quebec government with their Plan Nord—they’re now converting the old winter road that services the property into a permanent road.”
The company also acts as project operator on Éléonore South, holding 36.8% in the JV with Goldcorp (36.8%) and Azimut Exploration TSXV:AZM (26.4%). The early-stage gold project lies adjacent to Goldcorp’s Éléonore development.
This year we’ve had the largest program in the history of the company, 46,000 metres of drilling and a $10-million budget. We’ll do it again, at least as big, in 2012 —Donald Robinson
Last August, Eastmain JV’d with Honey Badger Exploration TSXV:TUF, granting it an option to earn an initial 50% in the Radisson Gold Project. Eastmain holds 12 properties altogether, all in Quebec’s James Bay region, some of which are also available for options.
“This year we’ve had the largest program in the history of the company, Robinson says, “46,000 metres of drilling and a $10-million budget. We’ll do it again, at least as big, in 2012.”
At press time, Eastmain had 95 million shares trading at $1.26 for a market cap of $119.7 million. Analysts believe the share price will rise higher. Robinson explains, “Casimir Capital have a target of $2.25, Macquarie have just upped their target to $2.75, and Rodman & Renshaw out of New York have a target of $2.82.”
Robinson concludes, “We’re in the best mining district in the world; we have mine-ready infrastructure and two high-grade gold deposits. They look like they’re mineable using open pit methods, and Clearwater is going to be a mine. We’ve been endorsed by one of the largest gold miners in the world, and a number of research firms follow us. There’s a lot of third-party scrutiny on us, and so far they like what they’ve seen.”
Deer Horn Metals Inc TSXV:DHM announced results from its Deer Horn Property in west-central BC. Highlights include
8.69 g/t gold, 316.8 g/t silver and 225 g/t tellurium over 12.8 metres
(including 30.16 g/t gold, 1,098 g/t silver and 669 g/t tellurium over 2.8 metres)
2.45 g/t gold, 127.7 g/t silver and 132 g/t tellurium over 15 metres
(including 5.95 g/t gold, 300 g/t silver and 290 g/t tellurium over 4.08 metres)
2.04 g/t gold, 71.3 g/t silver and 75 g/t tellurium over 7.6 metres
(including 2.82 g/t gold, 105.3 g/t silver and 98 g/t tellurium over 3.2 metres)
The project has a June 2010 resource estimate of 129,000 tonnes grading 5.71 g/t gold and 182.3 g/t silver indicated and 202,000 tonnes grading 6.1 g/t gold and 186.4 g/t silver inferred.
View Company Profile
by Greg Klein
Eastmain Resources Inc TSX:ER announced assays from its Clearwater Project in northern Quebec. Results include
49.9 g/t gold and 0.67 g/t tellurium over 2 metres
(including 84.8 g/t gold and 1.08 g/t tellurium over 1 metre)
3.8 g/t gold and 4.8 g/t tellurium over 17 metres
(including 19.5 g/t gold and 23 g/t tellurium over 2.5 metres)
9.25 g/t gold and 10.7 g/t tellurium over 4.3 metres
(including 22.6 g/t gold and 25.9 g/t tellurium over 1.5 metres)
6.77 g/t gold and 0.57 g/t tellurium over 4 metres
(including 52.8 g/t gold and 0.01 g/t tellurium over 0.5 metres)
The project has an April 2011 resource estimate of 3.35 million tonnes grading 5.39 g/t for 582,000 ounces gold measured and indicated, and 5.32 million tonnes grading 5.96 g/t for 1.02 million ounces inferred.
Exploration Manager Catherine Butella tells ResourceClips.com, “We have good grades for both gold and tellurium. Tellurium has been a by-product of the copper-refining process but now with the new leach methods it’s no longer extracted that way. Right now tellurium is sold on base metals spot prices, but it’s perceived to have a lot more worth. There are certain experts who think it’s going to be priced like a precious metal. It’s used in passive solar power, as a coating on windows, the coating on the back of DVDs and CDs, it’s going to be used as the new phase change technology [used in rewritable DVDs and CDs]. It’s got a lot of uses, and there’s very little around. It’s one of the rarest metals out there.
I think it bodes well that we have a very good project with good resources and quality ounces close to surface—Catherine Butella
“The tellurium market is picking up. Right now the price is between $100 and $500 a kilogram, and in the last five years it’s gone there from $40. The last spot price I looked at was around the $400 mark. It’s certainly increasing in value, and I think as technology develops it’s going to become more and more valuable,” she says.
“We’re going to continue drilling and building this resource. We certainly think that the project has a lot of merit. We’ve made a lot of new discoveries this summer and plan on continuing to show that these can add resources to the project. What we’re seeing now is very near surface, so we think it’s amenable to open pit. It’s our plan to continue with the drilling and make this thing as big as we can.
“Going into production isn’t our priority at this point,” she adds. “I won’t say ‘never,’ but our game plan right now would be to sell it to a producing company. But that may change.
“We have excellent infrastructure. We’re five kilometres from power and about two kilometres from roads.
“Clearwater is our flagship. We are also working quite steadily on the Eastmain Mine Property, which has some historic resources. That would probably be the next project in line. Our Eleonore South Project is a joint venture we have with Goldcorp and Azimut, and we are the operator on that. We have a total of 12 projects in the James Bay district.
“We did a little bit of work on a property Radisson last year and the year before, and this year we have joint-ventured it to Honey Badger. We hope to be drilling our Reservoir Project this winter as well. We’re doing things a bit at a time on the others. Some of those properties are available for options. We certainly will continue to focus on our flagship.”
Despite tumbling share prices elsewhere, Eastmain’s stock has risen from $0.98 on September 29 to $1.25 today.
“We’ve had a lot of good news,” Butella says. “We’ve had continued good drilling results from Clearwater. We took a hammering prior to a lot of the other companies, so we’ve managed to hold our own since then. I think it bodes well that we have a very good project with good resources and quality ounces close to surface. We’ve got some good institutional support as well. Goldcorp is our largest shareholder.”
In conclusion she says, “We have certainly seen a lot of encouragement in the core that we’ve just sent to the lab. We have a lot of visible gold, and generally that means we will see some good assay results when they come back.”
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Donald J. Robinson
or Catherine Butella
by Greg Klein