The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
With its sights set on adding to 3.6 billion pounds of copper at Arctic and Ruby Creek, explorer focuses drilling on South Reef
The 17,209-meter drill program carried out by NovaCopper Inc. in 2012 at the Upper Kobuk Mineral Project in the Ambler Mining District of Northwest Alaska is revealing a third copper deposit with sufficient size and grade to be deemed world-class.
When the spin-out of NovaGold Resources Inc.'s copper-rich Ambler project was completed in May, NovaCopper held Arctic, a single deposit with an NI 43-101-compliant resource.
But the deal also included US$40 million in start-up money, NovaGold-founder Rick Van Nieuwenhuyse as president and CEO and a partnership with NANA Regional Corp. to explore and develop a 331,000-acre (134,000 hectares) swath of highly prospective copper hunting ground in the Upper Kobuk region.
"We like exploration, we are good at it, and we know how to move projects through the value-creation timeline; from pounds of copper through reserves and feasibility," Van Nieuwenhuyse told investors at the John Tumazos Very Independent Research Conference in New York.
The NovaCopper-NANA alliance, known as the Upper Kobuk Mineral Project, provides NovaCopper with the opportunity to explore the copper-rich deposits at Bornite, a project located about 17 miles (27 kilometers) southwest of Arctic, and a host of other mineral prospects across a carbonate-hosted, copper-cobalt belt situated on the lands that NANA brought to the partnership.
In return, Inupiat-owned NANA has the opportunity to benefit from the exploration and potential development of the world-class Arctic deposit and dozens of similar volcanogenic massive sulfide prospects located on NovaCopper's 90,624 acres (36 674 hectares) of state, federal and patented mining claims that blanket a 70-mile (110 kilometers) long stretch Ambler Mining District.
"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," explained Van Nieuwenhuyse.
Grade is king
The NovaCopper leader said the exceptionally high-grade ore being found at Upper Kobuk sets the project and its owners apart.
"What is different about NovaCopper is grade; and, as they say in the business, grade is king," he told investors during the Oct. 3 conference in New York.
Arctic, currently most advanced deposit of the Upper Kobuk Mineral Project, has an indicated resource of 19.45 million metric tons averaging 4.05 percent (1.73 billion pounds) copper, 5.8 percent (2.49 billion pounds) zinc, 59.55 grams per metric ton (37.23 million ounces) silver and 0.97 g/t (501,000 ounces) gold. Additionally, the deposit has an inferred resource of 11.41 metric tons averaging 3.47 percent (873 million pounds) copper, 4.84 percent (1.22 billion pounds) zinc, 46.75 g/t (17.15 million ounces) silver and 0.80 g/t (235,000 ounces) gold.
In July, NovaCopper released an inaugural NI 43-101-compliant resource of 1.06 billion pounds of copper for the Ruby Creek zone at Bornite. This resource includes an indicated resource of 6.8 million metric tons averaging 1.19 percent (178.7 million pounds) copper and an inferred resource of 47 million metric tons of 0.84 percent (883.2 million pounds) copper.
Combined with Arctic, this escalates the resources of the Upper Kobuk Mineral Project to 3.6 billion pounds of copper, 3.7 billion pounds of zinc, 54.3 million ounces of silver, 736,000 ounces of gold and 616 pounds of lead.
"This is an excellent start to NovaCopper's life as a public company," said Van Nieuwenhuyse. "One percent copper grades in a potentially open-pit resource are rare occurrences these days, as is the addition of over a billion pounds of copper resources to an already robust inventory of 2 billion pounds of copper resources."
Focused on South Reef
South Reef, a deeper target at Bornite, is demonstrating substantially higher copper grades than those tapped at the nearby Ruby Creek zone.
"Management believes that South Reef has the potential to become another world-class copper deposit, and that it complements very well our multi-billion-pound 7-percent-copper-equivalent endowment at the Arctic deposit. These deposits are unfolding in a way that makes the Ambler district one of the most exciting copper plays in the world," said Van Nieuwenhuyse.
South Reef was first tapped during a 5,900-meter drill program carried out by NovaGold in 2011.
RC11-187, the South Reef discovery hole, cut a continuous 178 meters averaging 4 percent copper, including 34.7 meters at 12 percent copper.
South Reef - which is separated from Ruby Creek by a major northeast-trending fault known as Iron Mountain - starts at about 300 meters below surface, making it substantially deeper than the 1-billion-pound copper resource.
After losing several holes before reaching this target depth, NovaGold again drilled the zone about 500 meters north of the discovery hole with RC11-194, which cut 110.6 meters of 2.6 percent copper.
NovaCopper's 2012 drill program continues to cut long sections of high-grade copper at South Reef; highlights include:
RC12-196 cut three mineralized intervals totaling 86.8 meters (within a total interval of 97.2 meters) averaging 1.5 percent copper, including a higher grade zone of 64.8 meters grading 1.7 percent copper;
RC12-198 cut four mineralized intervals totaling 84.7 meters (within a total interval of 103.4 meters) averaging 2 percent copper, including a higher grade zone of 8.5 meters grading 6.4 percent copper;
RC12-201 cut four mineralized intervals totaling 112.5 meters (within a total interval of 142 meters) averaging 2.4 percent copper, including a higher grade zone of 12.6 meters grading 9.5 percent copper;
RC12-202 cut three mineralized intervals totaling 50.1 meters (within a total interval of 57.4 meters) averaging 3 percent copper, including a higher grade zone of 7.8 meters grading 12 percent copper;
RC12-205 cut 46.8 meters averaging 1.58 percent copper; and
RC12-209 cut 122.6 meters averaging 2.44 percent copper.
A cut-off grade of 0.5 percent copper was used to calculate all of the results.
"All of the holes have demonstrated the continuity of the high-grade copper mineralization that comes within an already robust and broad +1 percent copper envelope," said Van Nieuwenhuyse.
Increasing the cutoff grade to 1 percent reveals a promising high-grade region of South Reef NovaCopper is eager to follow-up on.
"The 71 meters of 3.66 percent in drill hole RC12-209 along the northeast edge of the deposit is a particularly exciting result given that it supports our hypotheses that the northeast portion of the South Reef Zone hosts the longest intervals of high-grade copper mineralization. As we move our drilling to the north and northeast, we will continue to target this high-grade copper mineralization along strike," explains Van Nieuwenhuyse.
During the 2012 program, NovaCopper drilled 15,457 meters in 22 holes at the South Reef. This and the 2011 drilling will be incorporated into an inaugural resource for the zone, expected in the first quarter of 2013.
Next generation targets
While drills are delineating a high-grade copper resource at South Reef, NovaCopper is seeking the next generation of exploration targets with the potential to add to the portfolio of world-class copper deposits being accumulated at the Upper Kobuk Mineral Project.
"Our objective is to outline 10 billion pounds of copper," said Van Nieuwenhuyse.
To this end, 1,752 meters (four holes) of the 2012 program tested Sunshine, a VMS prospect about 12 kilometers (7.5 miles) west of the Arctic deposit. NovaCopper said historic drilling at Sunshine has identified substantial widths of massive sulfide mineralization in the same stratigraphic horizon as Arctic.
NovaCopper plans to release an inaugural NI 43-101-compliant resource for Sunshine in the second quarter of 2013.
"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," Van Nieuwenhuyse said.
The Ambler VMS belt is not the only region with prospects; the roughly 11-mile (18 kilometers) belt of prospective stratigraphy hosting the Ruby Creek and South Reef carbonate replacement deposits is also rich in exploration targets.
Two known mineralized occurrences west of Bornite - Aurora Mountain and Pardner Hill - along with broad areas of hydrothermal dolomite and anomalous soil geochemistry occur along the belt.
To gain a better handle on the controls to mineralization and generate new drill targets here, NovaCopper carried out an initial 60 line-kilometer induced polarization survey, 25 line-kilometer soil sampling program and geologic mapping. This work will help the company prioritize targets for a larger drill program on the docket for 2013.
"We had four rigs this year, we will likely have six next year," Van Nieuwenhuyse said.
Developing the district
Though primarily focused on exploration, NovaCopper's US$16.5-million program at the Upper Kobuk Mineral project in 2012 continued the engineering reviews and metallurgical work at Arctic as well as initial metallurgical testing of Bornite ore.
A preliminary economic assessment completed by SRK Consulting in April 2011 and updated for NovaCopper in 2012 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 26-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 building an open-pit operation at the VMS deposit.
"You can't really push an underground mine more than 4,000 metric tons per day so we wanted to take a look at this as an open-pittable target," said Van Nieuwenhuyse.
The investigation will weigh the economics of a larger mill and high strip ratio against the more precise but smaller underground operation.
"If it (the open pit option) shows more net present value, you will hear about it," he said.
Van Nieuwenhuyse told Mining News that the examination of various mining scenarios at Arctic is one component of the company'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 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.
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