Feasibility study supports Minto project

Afeasibility study published in July has confirmed that Vancouver-based Sherwood Copper's Minto copper-gold-silver project in the Yukon could be economic for at least six years. That is the initial projected mine life, but Sherwood is continuing its exploration program to expand the current resources. A key component of the project is the plan to retrofit Alaska's Skagway Ore Terminal to receive shipments of concentrate.

Sherwood acquired Minto from ASARCO last year and gave the open pit project a new lease of life, fast-tracking it towards production. "The original concept when we acquired the project was just to update the capital costs, bring the project current and then recommence production," Stephen Quin, Sherwood's president and CEO, said in a conference call with investors July 11. "However, we saw there were quite a number of opportunities to improve the project, to add resources, reserves, to increase the mill throughput, options for improving power and concentrate shipment," he added.

In most of these respects Sherwood has succeeded, according to the feasibility study. Based on approximately 231 drill holes, 99 percent of Minto's resource is now in the measured and indicated category, with 77 percent of that in the measured category, sufficient for six years of high grade production of 2,400 metric tons per day at 2.4 percent copper and 0.88 grams-per-ton gold. Lower grade material - less than 1 percent copper - will be stockpiled and processed at the end of the mine life.

Mine fully permitted

Sherwood will use a larger mill and camp than ASARCO had envisaged, as well as increasing pre-stripping, all with the goal of accessing higher grade copper sooner. The mine is fully permitted and much of the large equipment has already been ordered, to ensure that it arrives on time and that costs are locked in. In terms of infrastructure, Sherwood is working with the Alaska Industrial Development and Export Authority to expedite improvements to Skagway Ore Terminal, and the company also hopes to tap into Yukon Energy's hydroelectric power grid.

Escalating fuel, labor and equipment costs over the past few years have pushed the total capital cost of the mine up to C$90 million, and one of the biggest chunks of that will be an estimated C$10-13 million for the tailings filter plant. The feasibility study assumes that a dry stack tailings method will have to be used in order to meet the requirements of Minto's Type A Water License. This is the same method that was required at Alaska's Pogo gold mine, which has also caused cost overruns as an additional filter had to be ordered after the mine went into production.

Sherwood is now looking into the option of a pressure filter system, which could be less expensive. Test work is under way and the results should be in by the end of July, according to Quin. A gravity circuit in the mill will improve gold recovery, he added. If all goes well, Minto should be in production in mid-2007.

Over the life of the mine Sherwood expects to produce 300 million pounds of copper, 122,000 ounces of gold and 1.8 million ounces of silver.