The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
South Reef adds 2.4B lbs. of high-grade resource to Upper Kobuk Mineral Project, increasing viability of building a road to Ambler
NovaCopper Inc. is 2.4 billion pounds closer to reaching its goal of defining a 10-billion-pound copper camp in the Ambler Mining District of Northwest Alaska.
"In our first season of drilling at South Reef, we have defined 2.4 billion pounds of high-grade copper and the mineralized system is wide open for expansion," NovaCopper CEO Rick Van Nieuwenhuyse said.
South Reef, with an inferred resource of 43.1 million metric tons of material averaging 2.54 percent copper, is the second billion-pound-plus copper deposit NovaCopper has delineated at the Bornite project since forging a long-term collaborative agreement NANA Regional Corp. in 2011.
Known as the Upper Kobuk Mineral Project, this partnership is providing NovaCopper with the opportunity to explore the South Reef and Ruby Creek deposits at Bornite and a number 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 state, federal and patented mining claims that blanket a 70-mile (110 kilometers) long belt of VMS deposits and prospects that stretch along the southern slopes of the Brooks Range.
All told, the Upper Kobuk Mineral Project covers some 352,900 acres (142,831 hectares) of the copper-rich Ambler district.
The 2.4 billion-pound copper resource at South Reef adds to 1.1 billion pounds of copper delineated at Ruby Creek, an open-pittable zone of carbonate replacement style mineralization roughly 500 meters to the southeast, and 2.6 billion pounds of copper at Arctic, a VMS deposit situated about 17 miles (27 kilometers) to the northeast.
"We are well underway to achieving our objective of defining 10 billion pounds of high-grade copper in the Upper Kobuk, which has the potential to evolve into one of the world's major copper mining districts," said Van Nieuwenhuyse.
This growing resource is expected to help pave the way towards a project of the scale and grade to support a 200-mile (320 kilometers) road and other infrastructure needed to develop this world-class copper camp in Northwest Alaska.
High-grade or higher grade?
With three high tenor copper deposits in such close proximity, the NovaCopper team is tasked with determining the most efficient path to advance the Upper Kobuk Mineral Project with an anticipated C$16 million program for 2013.
"It's a pretty tight year on the equity market side so we are just being conservative - we want to move the project along and we are deciding where to focus that drilling," Van Nieuwenhuyse told Mining News.
While it is certain that the majority of the 2013 drill program will focus on Bornite, the two carbonate replacement style deposits that make up the project provide multiple targets, including a "higher high-grade zone" emerging at South Reef.
"What is particularly exciting about the South Reef zone at Bornite is that significant tonnes of very high-grade copper exist at elevated copper cutoff grades," Van Nieuwenhuyse said.
Applying a 2 percent cutoff grade to South Reef outlines an inferred resource of 25 million metric tons averaging 3.44 percent copper - demonstrating that 1.9 billion pounds, or 79 percent, of the copper delineated is located in higher grade zones.
Increasing the cutoff to 4 percent, South Reef has an inferred resource of 4.9 million metric tons of ore averaging 4.99 percent (543,000 pounds) copper.
"These very high-grade zones could potentially be starter areas for an underground mining operation," said Van Nieuwenhuyse. "More work will be necessary to demonstrate this continuity at the measured and indicated resource categories, but our predictive geological model would suggest that the very high-grade zones are likely to demonstrate continuity."
Applying a 1 percent copper cutoff to the drilling already carried out at South Reef reveals substantial thicknesses of this higher high-grade mineralization:
RC11-187, the first hole to target South Reef, cut 124. 1 meters averaging 5.98 percent copper;
RC12-199 cut 6.5 meters averaging 4.3 percent copper;
RC12-201 cut 36.4 meters averaging 5.27 percent copper;
RC12-206 cut 12.2 meters averaging 4.8 percent copper;
RC12-207 cut 11.7 meters averaging 5.02 percent copper;
RC12-209 cut 15.2 meters averaging 5.94 percent copper, including 2.6 meters averaging 22.26 percent copper;
RC12-211 cut 44.2 meters averaging 6.06 percent copper;
RC12-212 cut 16.8 meters averaging 4.31 percent copper; and
RC12-216 cut 77.2 meters averaging 4.27 percent copper.
Testing the continuity of these higher high-grade zones is one of the targets being contemplated as the NovaCopper team plans the 2013 drilling. Expanding the overall South Reef deposit is another potential target.
"The most intriguing and exciting aspect of this success is that the high-grade copper mineralization remains wide open to the north, northeast and the southwest. In fact, the best holes drilled this season are located at the north end of the deposit," explains Van Nieuwenhuyse.
Mineralization at RC12-209, the northernmost hole successfully completed at South Reef, cut 71.2 meters over four intervals with an average grade of 3.66 percent copper, including a 2.6-meter interval that averaged an outstanding 22.26 percent copper.
The copper mineralization in hole 209 starts at 667 meters and the South Reef zone is expected to continue to deepen as expands under the hill to the north.
"We know the system is open to the north; unfortunately it's getting deeper so it is a little slower to drill that and it takes a bigger rig," said Van Nieuwenhuyse.
Ruby Creek, which outcrops at its southern extent and gets deeper as it trends north, is another zone the NovaCopper team is considering as it makes plans for the 2013 drill program at Bornite.
"We know the open-pittable resource at Ruby Creek is expandable," said the NovaCopper CEO.
In 2012, NovaCopper released an inaugural NI 43-101-compliant resource estimate for Ruby Creek of 6.8 million metric tons averaging 1.19 percent copper (179 million pounds of copper) and an inferred resource of 47.7 metric tons at 0.84 percent copper (883 million pounds of copper) at a 0.5 percent copper cut-off grade.
Van Nieuwenhuyse said expanding the breadth of the two deposits at Bornite and drilling some infill holes around the very high-high grade mineralization at South Reef "are all things we need to do and we will decide over the next two months where that drilling will focus."
"It is nice to have flexibility," he added.
Arctic, Bornite synergies
Having three high-grade deposits in close proximity also lends flexibility to potential mining scenarios.
"I think there are synergies between Arctic and Bornite to take a look at and we would like to take a look at this sooner rather than later," Van Nieuwenhuyse said.
Arctic, currently the 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.
A preliminary economic assessment completed by SRK Consulting in 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.
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.
NovaCopper's US$15.3-million program at the Upper Kobuk Mineral project in 2012 also included initial metallurgical testing of Bornite mineralization.
"We are working on metallurgical recoveries; we have four or five composite samples in the lab right now and we expect to have results out later in this quarter," explained Van Nieuwenhuyse. "Given that the mineralogy is dominated by bornite, chalcocite and chalcopyrite we are confident we are going to get a pretty good concentrate out of there."
Dependent on the results of the metallurgical work, engineering studies and exploration programs, the copper-rich deposits of the Upper Kobuk Mineral Project present a number of potential mining scenarios. These possibilities range from starting with a small underground operation that targets the highest grade copper mineralization South Reef has to offer and expanding to a larger operation to a large centrally located mill processing high volumes of ore from both Bornite and Arctic.
"It is pretty neat to have that kind of flexibility; it is not a sea of 0.3 percent (copper) like a lot of people are dealing with," said Van Nieuwenhuyse.
Ambler Road partnership
As NovaCopper's vision for the Ambler district begins to take focus, the state of Alaska continues to blaze a path toward building a road to this copper-rich region of Northwest Alaska.
In recent years the state has invested nearly US$10 million towards defining an optimal corridor to the Ambler Mining District; establishing a right-of-way; and beginning the environmental and permitting work to build the 320-kilometer (200 miles) transportation route to the remote copper-rich region.
In his 2014 budget, Gov. Sean Parnell has proposed another US$8.5 million to continue this work.
"We're going to continue working on access to this mineral-rich area," Parnell said while rolling out his budget.
Unlike previous funding for the Ambler Mining District Road, where the funds were appropriated to the Department of Transportation, this year's budget is designated for the Alaska Industrial Development and Export Authority.
According to the budget request now before the Legislature for approval, "The ultimate goal is to define a preferred build alternative, secure environmental permits and right-of-way that can be transferred to a public-private partnership for final design, finance and construction."
AIDEA formed a similar public-private partnership with Teck Resources Ltd. to build the Delong Mountain Transportation System, a 52-mile- (84 kilometers) long road, storage and port facilities used to ship zinc and lead concentrates from the Red Dog Mine in Northwest Alaska to world markets. The development agency is being reimbursed for its US$267 million investment through fees paid by Teck and NANA Regional Corp., co-owners of the mine.
Murray Walsh, manager of the Roads to Resources Program of the Alaska Department of Transportation and Public Facilities, explained to state legislators during a Jan. 22 presentation to joint House-Senate transportation committees that a partnership between DOT, AIDEA and project developers draws on the strengths of all the parties involved.
"If DOT does the initial permitting and environmental work, an inexpensive - that is on a per-mile-basis - road could be built to some remote location and make a mining project possible," Walsh explained.
AIDEA would lend its AA+ credit rating to raising the money to build the road, allowing NovaCopper to repay the state-owned agency out of the revenues generated from mining the copper-rich deposits of the Upper Kobuk Mineral Project.
Describing the advantages of the public-private partnership, DOT Program Development Director Jeffery Ottsen told members of the joint transportation committees, "It isn't a capital expense to the mine or oilfield, it is an operating expense. And, when we talk to them, they would much rather have an operating expense at a time of revenue rather than a capital expense years prior to revenue. So, it's a pretty good partnership."
NovaCopper and AIDEA are expected to enter into a memorandum of understanding that aims to identify the rights, roles, and responsibilities of each party as they relate to the potential establishment of a road to the Ambler Mining District.
"They effectively will be assuming the lead role from a permitting side and we would be working towards completing a feasibility study on the Upper Kobuk Mineral Project," Van Nieuwenhuyse explained.
And, if AIDEA funds the upfront cost of building the Ambler Road, NovaCopper can spread the reimbursement cost over the billions of pounds of copper it is discovering in the district.
"What we are doing here is an important partnership because if there is no road there is no mine," Walsh informed the House-Senate Transportation Committees.
"We kind of light the fuse but the final road is paid for by the beneficiaries," the Roads to Resources manager 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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