The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
US$40 million cash-infusion made by NovaGold will fund exploration aimed at unlocking the potential of emerging copper district
The stock symbol "NCQ" lit up the boards on the Toronto and New York stock exchanges May 2, marking the official launch of NovaCopper Inc. as an independent mineral exploration company under the leadership of NovaGold Resources Inc. founder Rick Van Nieuwenhuyse.
"Now that we are a public company independent of NovaGold, we are looking forward to unlocking great value from the exceptional assets we have in the Ambler mining district," said NovaCopper President and CEO Van Nieuwenhuyse.
NovaGold - which is now singularly focused on marching the 40-million-ounce Donlin Gold project to production - spun out its copper-rich Ambler project in Northwest Alaska along with its chief executive, Van Nieuwenhuyse, and US$40 million cash into NovaCopper.
"Following on the footsteps of our exploration team's achievements at Donlin Gold, now one of North America's premier gold development projects, the strategy with the Ambler district is to create extraordinary returns through the drill bit," said the NovaGold founder.
A key component of this stratagem was the formation of a partnership with NANA Regional Corp., an Alaska Native regional corporation owned by the Inupiat who have long called Northwest Alaska home. This partnership consolidates 331,000 acres (134,000 hectares) of copper-prospective lands in the Ambler region of Northwest Alaska into the Upper Kobuk Mineral Project.
The land package unites two highly prospective mineralized belts - the 70-mile (110 kilometers) Devonian Ambler volcanogenic massive sulfide belt blanketed by NovaCopper's 90,624 acres of state, federal and patented mining claims and the Devonian Bornite carbonate-hosted copper-cobalt belt that is hosted primarily on the lands owned by NANA.
"Both parties are contributing resources to create the opportunity to take a consolidated and cost-effective approach to exploring and developing one of the richest and most-prospective copper districts in the world," explains Van Nieuwenhuyse.
The alliance provides the Inupiat-owned corporation with the opportunity to benefit from the exploration and eventual development of the world-class Arctic deposit and other similar prospects across the Ambler belt. In return, NovaCopper is afforded the opportunity to investigate Bornite, a copper-rich deposit situated about 17 miles (27 kilometers) southwest of Arctic, and explore other mineral prospects across a large highly prospective swath of NANA lands in the Upper Kobuk region.
As Van Nieuwenhuyse rang the May 3 NYSE closing bell in honor of NovaCopper joining the esteemed stock exchange, the company's exploration team was preparing to create value for the new company's shareholders with a 15,000-20,000-meter drill program planned for 2012.
"I'm confident that this year's exploration efforts will further expand resources, make new discoveries, and advance this world-class mining district towards a development decision, thereby creating tremendous value for our shareholders," he said.
Extraordinary returns
The NovaCopper leader's certainty that this year's program will continue to "create extraordinary returns through the drill bit" is not unfounded.
Previous drilling in the Ambler region has uncovered Arctic and Bornite, two of the highest-grade copper deposits of their types in the world, and the district has a multitude of prospects waiting to be tapped with modern drilling.
"The environment at Ambler is one of the most 'target-rich' I have encountered in my career as a geologist," touted Van Nieuwenhuyse.
"Arctic, one of the deposits along the Ambler belt, hosts a mineral resource with an approximate 7 percent copper-equivalent grade, and is the largest and highest-grade known volcanogenic massive sulfide deposit of its kind in the world.
Step-out drilling on another deposit, Bornite, has delivered some of the best intersections in the copper space, including DDH RC11-187 which encountered mineralization of 4 percent copper over 178 meters, including a very significant high-grade intersection of 34.7 meters grading 11.4 percent copper.
I believe that these and other excellent results rival those of any copper project in any part of the world.
Yet, at a time when resource nationalism and jurisdictional instability are becoming ever greater risks to the copper mining industry, we can draw particular confidence from the fact that these outstanding results come from a project in the United States."
NovaCopper said the US$40 million cash-infusion made by NovaGold will fund two full seasons of exploration across the Upper Kobuk Mineral Project, as well as environmental baseline, metallurgical and engineering studies at Arctic and Bornite - a program aimed at giving the partnership a better understanding of the mineral potential of this emerging copper district.
"We look forward to working with NANA and the local communities to develop the Ambler mining district into a premier North American copper producer," said the NovaCopper CEO.
Targeting South Reef
An early priority of NovaCopper and NANA's strategy to understand the potential of the Upper Kobuk region is advance the Bornite and nearby South Reef targets to a stage that is on par with Arctic, which NovaGold has advanced to the prefeasibility stage.
To accomplish this NovaCopper is having an inaugural NI 43-101 resource calculated for Bornite and has 13,000 meters of drilling slated for South Reef.
The advancement of these two projects began with a 5,900-meter program carried out by NovaGold in 2011. The first priority of this work was to confirm a historical resource of some 70 million metric tons averaging 1.2 percent copper and at least 454,000 metric tons of higher grade ore averaging around 4 percent copper calculated for Bornite (then known as Ruby Creek) based on exploration completed by Kennecott Exploration Co. nearly half a century ago.
"Kennecott was looking for high-grade mineralization when they did most of this work back in the 1960s and 1970s, but they intersected a lot of 1 percent grades," Van Nieuwenhuyse told Mining News.
Six holes drilled by NovaGold last year validated the historical work completed by the Rio Tinto company:
RC11-181 cut 17.6 meters grading 8.4 percent copper. Overall the hole intersected four mineralized intervals totaling 122.3 meters averaging 2.3 percent copper;
RC11-182 cut two mineralized intervals totaling 93.2 meters averaging 2.1 percent copper;
RC11-183 cut 6.8 meters grading 24.5 percent copper within a mineralized interval totaling 26.3 meters grading 6.7 percent copper;
RC11-184 cut 5.5 meters grading 28.5 percent copper within a mineralized interval totaling 31.9 meters grading 5.4 percent copper;
RC11-185 cut 18.1 meters grading 3.8 percent copper. Overall the hole intersected two mineralized intervals totaling 121.3 meters averaging 1.4 percent copper; and
RC11-186 cut three mineralized intervals totaling 153.1 meters averaging 1.2 percent copper.
NovaCopper is having these results incorporated into an inaugural NI 43-101-compliant resource for the historically drilled Bornite deposit, which is anticipated to be finished by the end of June.
"It will likely be an open-pittable resource at about 1 percent kind of grades and a higher grade but small underground resource," Van Nieuwenhuyse explained during a May 18 interview.
The most exciting results of the 2011 program came in two exploration holes drilled into South Reef, a discovery zone situated some 500 meters east of the historical Bornite deposit.
RC11-187, the first hole to target South Reef, cut a continuous 178 meters averaging 4 percent copper, including 34.7 meters at 12 percent copper.
"It is one of the best copper holes drilled in the world, ever!" said a beaming Van Nieuwenhuyse. "The fact that it is on a new target that we now call the South Reef, makes it even more encouraging."
After losing several holes before reaching target depth, NovaGold tapped the South Reef zone with a second hole.
RC11-194, drilled 500 meters along strike to the north of hole 187, cut 110.6 meters of 2.6 percent copper.
Given the grades, thicknesses and apparent strike-extent, South Reef is shaping up to be a substantial addition to the Bornite and is the primary focus of NovaCopper's 2012 drill program.
"You never know whether you can connect the dots on these things but that is what the drill plan is going to be," he said.
South Reef - which is separated from Bornite by a major northeast-trending fault known as Iron Mountain - starts at about 300 meters from surface, making it substantially deeper than the historical deposit.
"So we will be drilling holes 600 to 800 meters deep to test that target," Van Nieuwenhuyse explained.
He said about 75 percent of this year's 15,000-20,000-meter drill program will focus on expanding upon the high-grade intercepts made at South Reef.
Developing the district
Arctic - the most advanced deposit of the Upper Kobuk Mineral Project - has an indicated resource of 19.45 million metric tons averaging 4.05 percent copper, 5.8 percent zinc, 59.55 grams per metric ton silver and 0.97 g/t gold. Additionally, the deposit has an inferred resource of 11.41 metric tons averaging 3.47 percent copper, 4.84 percent zinc, 46.75 g/t silver and 0.80 g/t gold.
A preliminary economic assessment completed by SRK Consulting in April 2011 and updated for NovaCopper earlier this year investigates a 4,000-metric-ton-per-day underground operation at Arctic producing 1.7 billion pounds of copper, 2 billion pounds of zinc, 291 million pounds of lead, 266,000 ounces of gold and 22 million ounces of silver over a 25 year mine life.
According to the revised PEA, Arctic demonstrates a base case post-tax net present value (8 percent discount) of C$533 million with an internal rate of return of 26 percent. This scenario assumes US$2.50 per pound copper, US$1.05/lb zinc, US$1.00/lb lead, US$20 per ounce silver and US$1,100/oz gold.
Plugging in May 9 metals prices (US$3.83/lb copper, US90 cents/lb, US95 cents/lb zinc, US$1,600/oz gold and US$32/oz silver) the base case post-tax net present value (8 percent discount) nearly doubles to C$1 billion with an internal rate of return of 37 percent.
While the PEA contemplates an underground mine at Arctic, NovaCopper is investigating the potential of an open-pit operation at the VMS deposit.
Van Nieuwenhuyse said the examination of various mining scenarios at Arctic is one component of NovaCopper's broader evaluation of the entire Upper Kobuk Mineral Project.
"We are looking at a variety of opportunities with the concept of developing the district," he said.
This work will include gaining a better understanding of some of the other promising targets in the Ambler VMS belt and is slated to begin with some 4,000 meters of drilling at Sunshine, a prospect about nine miles (14 kilometers) northwest of Arctic.
"Sunshine is not too far from Arctic, and there are some obvious synergies there. But there are literally a dozen other identified massive sulfide targets in the belt; we might even get to some of them this year," Van Nieuwenhuyse said.
Three rigs are slated to test South Reef and a fourth rig is scheduled to be turning at Sunshine by mid-June.
"Certainly by the end of the May they will be drilling at South Reef, probably with two rigs, and by the middle of June they will have all four rigs up and running," Van Nieuwenhuyse added.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
Reader Comments(0)