CEO eyes plan for Carmacks by year's end

Harlan Meade, Ph.D. is a member of a very exclusive club - professional miners who have shepherded multiple Yukon Territory mines and mining projects through the rough patches of development to production or near-production.

First, with Yukon-Zinc Corp.'s currently producing 1,700-metric-ton-per-day Wolverine volcanogenic massive sulfide mine in Southeast Yukon and a few years later, with the giant Selwyn lead-zinc project located in Howard's Pass near Yukon's eastern border with Northwest Territories, Meade harnessed his extraordinary vision and affinity for working with Chinese mining interests to step where few others have dared to tread.

Wolverine, Yukon's second-largest operating mine, began producing lead, zinc and copper concentrates with gold and silver by-products in 2011 and achieved commercial production in early 2012.

Selwyn, now owned by Selwyn-Chihong Mining Ltd., is currently moving toward production in a year-round program of exploration and development. The company is building a 35,000-metric-ton-per-day zinc-lead mine (roughly 3.5 times the size of the Red Dog Mine in Northwest Alaska) with completion anticipated in 2020.

In March Meade focused his considerable talents and more than 30 years of mine engineering experience on Copper North Mining Corp.'s stalled Carmacks copper-gold-silver project located in south-central Yukon. Seven months later, he has cobbled together a plan that many believe could deliver yet another mineral development homerun for the northern territory.

Meade's bold strategy of cutting costs, completely re-engineering the project and boosting reserves is attracting attention.

"Harlan wants to vat leach copper and vat leach gold and silver to speed up the process," observed Robert Holmes, director of the Mineral Resources Branch of Energy, Mines and Resources in the Government of Yukon. "I don't know if there's another project like that anywhere."

If Meade succeeds, it could propel him to an even higher tier of accomplished miners with modern operating mines to their credit.

The problem at Carmacks

The work at the Carmacks project, meanwhile, appears to have only just begun.

Though prospectors staked the first claims in the area to cover copper showings in 1898, it wasn't until nearly three-quarters of a century later in 1970 that a staking rush led to the discovery of zones No. 1 and No. 2 on the Carmacks property, then known as the Williams Creek property.

In 1989, Western Copper Holdings and Thermal Exploration purchased the property and undertook nearly 20 years of exploration and development efforts at Carmacks, while undergoing a succession of ownership, operating and name changes.

In early 2006, Western Copper Corp. was spun off as a separate firm in a buyout of its parent company but retained rights to the Carmacks Project. That September, the company retained M3 Engineering & Technology Corp. to revise earlier studies and create a feasibility study aimed at moving the project forward.

In the feasibility study, M3 recommended development of Carmacks as a conventional open-pit oxide mine, with acid heap leach and solvent extraction, electrowinning process facilities.

With a full environmental assessment by the Yukon Socio-Economic Assessment Board in 2008 under its belt that led to a positive decision and the issuance of a Quartz Mining License in 2009, the road-accessible copper project appeared to have picked up speed on the road to development. Located near Yukon's power grid, it seemed to have a clear path to production.

But three years later, the Yukon Water Board halted the project's quest for a water use license in its tracks, seeking further revisions to Copper North's plans for the mine's development.

After considering and rejecting an appeal of the decision, Copper North vowed to continue its permitting efforts to secure required licenses, so the project could proceed with planning, financing and execution. Subject to permitting and financing, the company hoped to initiate basic engineering in late 2013 and commence construction in early 2014. Over a projected eight years of operation, the proposed mine was to produce up to 211.5 million pounds of pure copper cathode of grade equal to or exceeding LME Grade A. Production was scheduled to commence in early 2016.

Resulting consultations with regulators and the Little Salmon/Carmacks First Nation, on which traditional territory the proposed mine would be located, led to more changes in the mine design, including modification to a proposed cyanide heap leach facility on the project, as well as a need for a new environmental assessment by YESAB.

Control of the Carmacks project, meanwhile, changed hands again when it became part of a spinoff of Copper North Mining Corp. from Western Copper and Gold Corp. in 2011.

Faced with the harsh constraints of the capital drought in 2013, development appeared to grind to a halt at the Carmacks project. Copper North worked to stay afloat financially, executing loan and salary deferral agreements and advancing lower-cost initiatives such as studying engineering for a power supply for the Carmacks project.

Multiphase strategy for success

This year the junior hit the ground running in March with Meade taking the helm, raising more than C$650,000 and initiating a strategic review of the Carmacks Copper development plan. By June 30, Copper North had C$913,000 in working capital and another C$1.3 million financing in progress.

Meade, with the help of various technical consultants, has undertaken a re-engineering of the mine plan with changes to the leach process and a simplified operating plan aimed at reducing capital and operating costs and improving project economics.

He organized the work in three phases designed to advance the Carmacks project through development and into production by 2017. The new approach led to completion of a preliminary economic assessment in the first phase that included the impact of adding gold and silver recovery to mine production; re-engineering the project to reduce operating and capital expenses in phase 2; and expanding the project's mineral resources and reserves in the final phase with an initial goal of adding another three years to the current eight years of anticipated production.

In April, Copper North retained Vancouver, B.C.-based Merit Consultants International Inc. to undertake the PEA that amended the leach plan to include gold and silver recovery. Completed in July, the assessment was a first step in re-engineering the project to leach copper, gold and silver from the oxide mineralization in three of the Carmacks property's numerous zones of mineralization and increase operational efficiency and improve project economics. It changes the leach plan for copper and provides for gold and silver leach following completion of copper leach.

Preliminary modeling of potential gold and silver recovery at Carmacks could result in annual recovery of 17,300 oz gold and 165,000 oz silver, with a resulting 32 percent in gross net revenues, and 48 percent increase in net operating revenues.

Copper North said the PEA supersedes a 2012 feasibility study for the project. It combines the previous study of copper heap leaching with the results of the new phase 1 conceptual study of gold and silver recovery.

The second phase of re-engineering and optimization of the mine and processing plan followed completion of the PEA. When the phase 2 study considering improvement opportunities is finished, the company said it will prepare a new pre-feasibility or feasibility study.

By September, Copper North was focused on evaluating alternative processing plans and opportunities for the reduction of capital expense for mine facilities.

Meade said the addition of a gold and silver leach, alongside the copper leach, warranted a review of the optimal leach plan to maximize both copper and precious metal recovery. A mini-study comparing vat leaching of copper to heap leaching of copper utilizing an on/off leach pad indicated that the capital costs are similar; however, there may be significant benefits from using vat leaching.

Vat leach versus cyanide leach

The vat leach process of submerging crushed ore in weak sulfuric acid, removes much of the operating complexity of leach pads and simplifies environmental management of an on/off leach pad, especially under winter weather conditions. Secondly, it provides for preparation of optimal conditions for cyanide leaching of the spent copper leach material for high recovery of gold and silver. The rapid leach time expected in vat leaching (three to five weeks) provides for an early start for cyanidation of recovery of gold and silver.

A bulk sample is being prepared to undertake the vat leach test work and prepare the leached materials for the cyanidation test work.

"This is the key additional information necessary to finalize the new processing and development plan and commence the preparation of a new feasibility study and environmental assessment report for re-entry to the permitting process," said Meade told investors in an Oct. 28 presentation.

Meade believes that such projects could provide opportunities for the reduction of capital expenditures; particularly, for equipment used in the processing area.

In addition to improved efficiency in copper recover, the vat leaching approach also would result in the recovery of significant gold and silver in the Carmacks deposit. The property currently has measured and indicated mineral resources containing 161,000 ounces of gold and 1.61 million oz silver, resulting in 128,000 oz payable gold and 1.23 million oz payable silver, assuming recovery of 78 percent for gold and 75 percent for silver. Annual recovery is projected at 17,300 oz gold and 165,000 oz silver.

Among its potential advantages, the vat leach method reduces leach time (three to four weeks as compared to 12 months leach time for heap leaching of copper). It also provides more operations control and more efficient leaching of gold and silver; and early recovery of gold and silver (two months after copper leach). It also results in closed circuit leaching of copper, which reduces environmental requirements and a modest increase in operating expenses for re-handling of the spent copper leach, lime addition, agglomeration and cyanide recovery facility.

In comparing the vat leach and heap leach methods, Copper North said vat leaching could deliver even more benefits. These include the ability to submerge the crushed ore in a weak sulfuric acid bath in the vat leach, which speeds recovery of copper (Vat leaching would move gold and silver recovery forward by one year in the production plan.)

Vat leach is a more controlled operating environment, eliminating most weather concerns associated with heap leaching.

The method also leaves a smaller footprint and reduces the required expense of earthworks and pad liners for copper leach and the potential for reduced acid consumption in copper vat leach due to shorter leach time. Vat leach provides simpler more efficient neutralization of the spent copper leach materials, and addition of lime and cyanide in agglomeration for the gold/silver leach. Additional environmental benefits could include closed copper leach operations, which reduces the risk of potential leakage and the need for pad monitoring; and the use of benign waste leach materials, which could reduce treatment requirements and might allow for lower cost sub-aerial waste disposal.

Advancing to permitting

In phase 3 of the review, Meade has continued metallurgical work to determine the viability of vat leaching of gold and silver to increase recoveries and reduce capital expenditures.

Copper North officials met with three accredited engineering institutes in China to discuss the provision of detailed engineering and procurement of certain equipment for the processing of Carmacks ores.

The junior reported in mid-October that it hired JDS Energy and Mining Inc. of Vancouver and Beijing General Research Institute of Mining and Metallurgy to undertake a new feasibility study for the Carmacks project.

"I am very pleased to announce the engagement of these two engineering groups to complete the new feasibility study and manage the construction of the Carmacks Project as a very low cost copper-gold-silver producer," Meade said when he announced the joint study.

BC-based JDS is an engineering and mine construction company with extensive experience in intermediate-size metal mines in the Americas and is familiar with the construction of the nearby Minto copper-gold open-pit mine, which is an added benefit in design and construction of the Carmacks project, according to Meade. JDS has a history of working closely with mine developers using fit-for-purpose solutions to achieve reasonable engineering and construction costs.

Meade said JDS will be responsible for the completion of an NI 43-101 feasibility study for the development of the project with responsibility for infrastructure, geotechnical, mining and earthworks alongside Copper North's other independent qualified persons, and oversee the engineering and procurement by BGRIMM for inclusion in the new feasibility study.

Beijing-based BGRIMM has a 58-year history of research and metallurgical design with more than 400 mines and metallurgical and smelter projects completed globally. In Copper North's benchmarking of projects similar to the Carmacks project, the company was attracted by BGRIMM's recently completed feasibility study and construction of the Kounrad dump leach copper SXEW project in Kazakhstan.

In conjunction with Copper North's management team and consultants, BGRIMM will be responsible for all process design and equipment selection for the project, including the procurement of equipment from China.

Meade said the decision to undertake the joint approach to re-engineering the project follows considerable investigation and benchmarking the project with other similar projects.

"Copper North's discussions with both JDS and BGRIMM indicate that there is opportunity to significantly reduce capital and operating costs for the project, following the recent evaluation of alternative development plans for the project," Meade said. Proposals for engineering and preliminary cost estimates for the SXEW and sulfuric acid plant have been received and indicate that there is potential for 20-40 percent reduction in some components of the development plan at the Carmacks project.

Metallurgical test work is progressing to confirm the optimal leach design and operating parameters for the leaching of copper followed by leaching of gold and silver. He added that this work should be completed by year's-end and establish the base for the new feasibility study, which is targeted for completion in third quarter of 2015.

This work is also key to finalizing the development plan and undertaking detailed engineering for a new feasibility study. Meade also said expansion of Copper North's management team is required to meet the growing engineering and project management needs.

To wit, Copper North appointed consultant Joseph Ringwald, P. Eng., as project manager for the Carmacks project to oversee all work related to completion of a new feasibility study and advancement of the project to construction. Ringwald will work closely with the joint engineering team of JDS and BGRIMM to undertake the new feasibility study for the Carmacks copper-gold-silver project in central Yukon.

Copper North hopes to re-enter Yukon's permitting process in early 2015 and complete the process to be awarded operating licenses in the fourth quarter of 2016, targeting startup of production for early 2017.

Expansion potential and the long term

If Copper North's plans come to fruition on schedule, the company hopes to begin producing 30 million lbs. of copper cathode, 17,300 oz gold and 165,000 oz silver annually in 2017 by mining the oxidized mineralization in several zones on the Carmacks property. Currently, all resources and reserves at Carmacks are based on the mineralization in zones No.1, 4, 7 and 7A.

The company's 2014 exploration program focused on extending known mineral resources at Carmacks in an effort to expand the project's current measured and indicated mineral resources, as a first step in increasing potential mine life.

Previous exploration on the Carmacks property defined 16 mineral zones. Historic sampling of the discovery trench returned 1.0 percent copper over 45.7 meters within the sheared granite that hosts almost all mineralization at Carmacks.

A review of these zones and other anomalies identified two prime targets - Zone 2 and the Gap target (extension of 2000S zone) - as prime targets for the initial focus of resource expansion.

Copper North began trenching Aug. 11 in the Zone 2 target area and has expanded the area of known copper oxide resources. The zone 2 area is located some 2,500 meters to the north of the north end of zone 1: the proposed open-pit area. The northerly trending mineralization of zone1 appears to be offset on a cross fault. If the sense of movement on the cross-fault is right lateral, the zone 2 area may represent the continuation of the zone 1 structural trend; if this interpretation is correct, it opens up a 2,500-meter-long target.

Initial trenching has extended the known extent of mineralization toward the southeast to 500 meters from 100 meters. The oxide copper mineralization has been observed in five trenches.

The full width of the mineralization is not yet determined due to permafrost restrictions. The discovery trenches will be extended as the permafrost melts with removal of the cover materials. Trenching was continued in this area as the zone is open to the southwest; and to the northwest of the discovery trench area where the mineralized structure has been offset by a fault that has now been identified in a new trench.

Following up on an earlier three lines of induced polarization geophysics, geophysical survey work is planned to the southeast of the zone 2 discovery area to provide a better understanding of the roughly 2,000 remaining meters of strike length to the interpreted cross-fault that is thought to offset the zone 1 mineralization.

The company also planned to complete several lines of geophysical survey to fill in gaps between previous geophysical data in the gap between zones 1 and 2000S.

"The early success of the exploration work is very encouraging and is defining attractive drill targets," Meade said in August. "The company is considering a drill program to commence in September to define new mineral resources. The expansion of oxide mineral resources would be a very positive development in the re-engineering of the Carmacks Project," he added.

Because the project's current feasibility study only considers processing the 10.6 million metric tons of oxide ore contained in zones 1, 4, and 7, Carmacks has significant potential for expansion. Oxide ore also has been identified in zones 2, 5, 12, 13, 14 and 2000S.

Moreover, the potential for exploiting sulfide resources on the property is significant in that the majority of the sulfide potential in new zones is at depths accessible by open pit.

Meade believes a test program is warranted to confirm potential dump leaching of the project's current 4.3 million metric tons of measured and indicated sulfide mineral resources and 4 million metric tons of inferred sulfide mineral resources, utilizing the SXEW copper leach facility. Treatment of sulfide ore will require a dedicated long-term leach pad.

Opportunities elsewhere include two earlier stage projects the stratabound Redstone copper project in Northwest Territories and the Thor porphyry copper property in northwest British Columbia. At the 13,000-hectare (32,123 acres) Thor property, the company completed grid preparation and an IP survey this summer in preparation for diamond drilling selected targets in 2015. Thor, which is located about 20 kilometers (12.4 miles) south of the depleted Kemess South Mine and Kemess North Project, straddles the main access road and power lines.