The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
NovaCopper adds another 2.6B pounds of copper to deposit; AIDEA prepares to permit 200-mile road to landlocked Ambler District
NovaCopper Inc.'s 2013 exploration program has added another 2.6 billion pounds of copper to the resource at the Bornite project in the Ambler mining district, swelling the size of this Northwest Alaska deposit to 6 billion lbs. of the red metal.
Bornite is one of many deposits and prospects that make up the Upper Kobuk Mineral Projects, a long-term partnership forged between NovaCopper and NANA Regional Corp. in 2011. The alliance combines Bornite and a number of other mineral prospects on NANA-owned lands with the world-class Arctic deposit and dozens of similar volcanogenic massive sulfide prospects located on NovaCopper's state, federal and patented mining claims in the Ambler Mining District.
Between Bornite and Arctic, the equivalent of roughly 9.5 billion pounds of copper has been identified, so far, at the Upper Kobuk Mineral Projects, when you calculate the worth of the zinc, lead, silver and gold found with the copper at Arctic.
"In less than three years, our exploration team has increased six-fold the scale of the Bornite deposit. When combined with our high-grade (5.9 percent copper-equivalent) potentially open-pit resource at Arctic, we have nearly achieved our initial objective of defining approximately 10 billion pounds of copper-equivalent resources in the (Ambler) district," NovaCopper President and CEO Rick Van Nieuwenhuyse said upon the March 18 release of an updated resource estimate.
The rich stores of copper, gold, zinc, lead and silver in the Ambler district, however, are currently landlocked some 200 miles (322.6) kilometers) west of the contiguous road system.
As NovaCopper exploration continues to increase the size of the Bornite resource, the Alaska Industrial Development and Export Authority is poised to enter a federal permitting process for a 200-mile (322.6 kilometers) road linking the metals-rich region of Northwest Alaska to Alaska's road system.
"We are in the process of getting permit applications finalized with the hope of submitting those applications in the next three-to-four weeks," Maryellen Tuttell, a principal of the engineering group DOWL HKM and project manager for the Ambler Mining District Industrial Access Road, explained during a March presentation in Anchorage.
Explosive growth
Since its formation in 2011, NovaCopper has demonstrated that a road to the Ambler district is a worthwhile investment by adding copper to Bornite in increments measuring in the billions of pounds and refining a mine-plan for the more advanced Arctic deposit.
An updated estimated reported by the company on March 14 outlines 6 billion pounds of copper at Bornite. The potentially open-pittable portion of the Bornite project contains indicated resources of 14.1 million metric tons grading 1.08 percent (334 million pounds) copper and inferred resources of 109.6 million metric tons grading 0.94 percent (2.3 billion pounds) copper; and the deeper potentially underground minable portion of Bornite contains inferred resources of 55.6 million metric tons grading 2.8 percent (3.4 billion pounds) copper.
"We are extremely pleased with the Bornite resource expansion. We have added more high-quality copper resources, at a grade of approximately 1 percent copper, for a potential open-pit mine scenario. Also, at a grade of approximately 2.8 percent copper, we have the potential for an underground mine scenario," said NovaCopper President and CEO Rick Van Nieuwenhuyse.
The new resource estimate incorporates results from 216 drill holes including 17 holes totaling 8,142 meters drilled by NovaCopper in 2013, as well as new assays from 42 historical Kennecott drill holes comprising 14,457 meters with partial or no assays.
The fresh drilling focused on expanding shallow potentially open-pit exploitable resources in the Ruby Creek zone and extending deeper potentially underground minable resource to the north, in both the Ruby Creek and South Reef zones. Drilling targeted 4,684 meters of shallow mineralization in 12 holes and deeper drilling targeted 3,458 meters of underground mineralization in five holes.
The objectives of the re-assay program were to confirm and conduct a quality assurance/quality control program on sample results from Kennecott's historical drilling; and to identify additional lower-grade (0.2-0.5 percent copper) material in the shallower portion of the Ruby Creek zone which was not previously sampled.
Of the 33 historic drill holes sampled, 26 holes had intervals of copper greater than 0.5 percent copper, and 29 holes contained mineralization greater than 0.2 percent copper.
The success of this resampling program, in conjunction with the results from the new drilling, fueled explosive growth of Bornite in 2013.
The 334 million pounds of contained copper reporting to indicated resources in the recent estimate is an increase of 87 percent over the 179 million tons previously reported. Likewise, the 5.7 billion pounds of contained copper reporting to the inferred category is 73 percent higher than the previous 3.3 billion pounds.
NovaCopper said the Lower Reef mineralization, which now spans both the Ruby Creek and South Creek zones is open over a 1,000-meter wide front along the north end of Bornite. The company plans to resume drilling during the second or third quarter of 2014 with the goal of expanding the resource to the north and northeast. Additional re-assaying of partially sampled Kennecott era drilling is also anticipated.
"This robust new Bornite resource remains open along the one-kilometer-wide northern margin of the deposit as well as the up-dip projection of the South Reef zone. Given the scale of the mineralization, which now measures 1.5 kilometers along strike and 2 kilometers down dip, we expect that further exploration could potentially make the Bornite deposit of similar size and grade to the geologically comparable Mount Isa deposit of Queensland Australia - which ultimately extracted 405 million (metric tons) grading 2.12 percent copper."
Linking metals to market
Unlike gold mines the size of Fort Knox or Pogo, where a 1,000-ounces-per-day gold could be smelted down onsite into bars weighing 70 pounds, a copper operation on the scale that could potentially be required at Bornite would likely produce more than 1,000 short tons of concentrate per day. This distillate would need to be shipped to a smelter to produce usable copper.
Getting this metal-rich concentrate to market is the primary reason a road is vital to developing Bornite and the other deposits in the Ambler Mining District and why the rich deposits found there have yet to be mined.
"As this area has been explored over several decades, and the different mining companies have been looking at the feasibility of developing mines out there, it has become clear that it is not feasible to develop a mine without surface transportation," Ambler Road Project Manager Tuttell told those gathered at a recent luncheon hosted by the Alaska Miners Association and the Society of Mining, Metallurgy and Exploration.
A year ago, NovaCopper and AIDEA entered into a memorandum of understanding that formalizes the roles of each party as they relate to permitting the Ambler Mining District Industrial Access Road and developing one or more mines at the Upper Kobuk Mineral Projects.
AIDEA, which boasts a Standard and Poor's AA+ credit rating, would use this financial strength to obtain low-interest bonds to finance the cost to build the road. The authority would get reimbursed for financing, building and maintaining the road by charging a toll to miners and other industrial users.
"A lot of people get confused, thinking that it is just a road to a certain mine out there but it is really to an entire district; and the district contains several different mineral prospects, all of which are in different stages of exploration," explains Tuttell.
A similar arrangement for the Delong Mountain Transportation System, a road and port facility servicing Teck Resources and NANA's Red Dog zinc mine, has been a monumental success for AIDEA and would likely serve as a template for a financing agreement on the proposed Ambler Road.
AIDEA is planning to submit the permit applications that will trigger an Environmental Impact Statement review for the Ambler Mining District Industrial Access Road in the coming weeks. The record of decision on the EIS is anticipated to be completed by 2016, at which point AIDEA will decide whether to move ahead with the project.
"AIDEA's regulations require them to actually have agreements from the communities that are affected to move forward with the project," explained Tuttell. "So, at this point, they have approved doing the environmental impact statement but they won't make a decision to actually move forward with the project until the environmental impact statement is complete."
If AIDEA gets the green light from local communities and establishes a partnership with miners that promises to pay back the investment, the development authority could begin construction of the road stretching westward to the copper-rich Ambler district by the summer of 2019.
Arctic first
While Bornite is turning out to be the largest deposit to be discovered in the Ambler Mining District, it likely would not truck the first concentrates down the Ambler Mining District Industrial Access Road.
NovaCopper's Arctic deposit, a volcanogenic massive sulfide deposit located about 16 miles (26 kilometers) northeast of Bornite, is expected to get the green light to be developed first.
A preliminary economic assessment completed for Arctic in 2013 contemplates an open-pit mine feeding a 10,000-metric-ton-per-day mill.
Over a 12-year mine-life outlined in the PEA, Arctic is anticipated to produce 1.5 million lbs of copper, 1.8 million lbs of zinc, 289,000 lbs, of lead, 30.5 million ozs of silver and 349,000 ozs of gold.
These metals would be contained in three concentrates - copper, zinc and lead - that would need to be trucked to Fairbanks en route overseas smelters.
According to the scoping study, the open-pit mining scenario at Arctic would produce an after-tax net present value (8.0 percent discount) of US$537.2 million; an after-tax internal rate of return of 17.9 percent; and would pay back the capital expenses in about five years.
This is based on a rough calculation of paying AIDEA a toll for use of the Ambler Road. NovaCopper plans to refine and potentially improve the project economics as it completes a feasibility study for Arctic, scheduled for completion by 2016.
The potential use of liquefied natural gas instead of diesel to fuel power generation at the mine is one area in which NovaCopper is bullish about saving money.
"Nearly half of our costs are related to power generation and the base case assumes that we will deliver diesel fuel to site from Fairbanks. We think there is a real upside here, because AIDEA is also working on construction of an LNG (liquefied natural gas) plant on the North Slope, and if they actually complete that, we are looking at buying LNG and converting that to gas. We think that will be lower costs and lower emissions," Van Nieuwenhuyse explained.
NovaCopper anticipates signing a memorandum of understanding with AIDEA in the first half of 2014 to explore the feasibility of utilizing liquid natural gas trucked from the development authority's Interior Energy Project North Slope LNG Plant as the main source of fuel to operate the proposed Arctic processing facility.
With LNG being delivered from the north and metals-rich concentrates shipped south, the Ambler Mining District Industrial Access Road could prove to be a winning proposition for AIDEA, NovaCopper and Alaska residents.
"The completion of the MOU with NovaCopper is beneficial, not just for NovaCopper, but for all Alaskans because the development of the Ambler mining district is expected to produce significant economic benefits for the state and, most importantly, for the communities of Northwest Alaska," said AIDEA Executive Director Ted Leonard.
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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