The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Arctic explorer funds pre-feasibility work with buyout of fellow junior
When NovaCopper Inc. needed additional funds to advance its copper-rich deposits in the Ambler Mining District of Northwest Alaska, the Vancouver B.C.-based junior bypassed typical financing vehicles for such ventures and seized the opportunity to buy Sunward Resources Ltd., a fellow exploration company with roughly US$20 million in the bank but a market cap hovering around US$13 million.
"The market had basically discounted the cash they had in the bank, so that provided an opportunity for us, particularly since we have a couple of shareholders in common," NovaCopper President and CEO Rick Van Nieuwenhuyse explained.
As a result of the buyout, NovaCopper gained full ownership of a project in Colombia and a substantial bump to its treasury north of US$20 million.
In exchange for the cash and Sunward's Titiribi gold-copper project in Columbia, NovaCopper issued 43.1 million shares to Sunward shareholders, or 0.3 NovaCopper shares per Sunward share issued.
Considering the state of the junior mining sector, Van Nieuwenhuyse said, "We felt this is the best financing alternative, with the least amount of dilution."
For Sunward shareholders, the deal provides an opportunity to realize a benefit to the cash by continuing the exploration and development of a large Alaska project with nearly 10 billion pounds of copper identified to date.
"The combination of Sunward and NovaCopper provides shareholders a single company with a strong balance sheet to advance critical path objectives at our high-quality Arctic and Bornite copper-zinc assets in Alaska," said Van Nieuwenhuyse.
With more than US$20 million in the bank, NovaCopper management shifted its focus to the next step in the development of the world-class Ambler Mining District in Northwest Alaska - gathering the data needed to complete a pre-feasibility study for a potential open-pit mine at its Arctic volcanogenic massive sulfide deposit, one of the copper-rich deposits that make up the Upper Kobuk Mineral Projects.
Arctic focus
In July, NovaCopper launched a C$5.5 million work program focused on advancing a pre-feasibility study for the development of an open-pit mine at Arctic, the most advanced of numerous copper-rich deposits that NovaCopper has assembled in the Ambler Mining District.
In 2011, NovaCopper forged a partnership with NANA Corp., the Alaska Native regional corporation that represents the Iñupiat of Northwest Alaska, to explore a large swath of land in the Ambler district. Known as the Upper Kobuk Mineral Projects, the 353,000 acres being advanced by this partnership cover two adjacent mineralized belts - the Ambler Belt, which hosts Arctic and numerous other known VMS deposits, and the Devonian-age Bornite sequence, which includes the Bornite carbonate-hosted copper deposit.
A preliminary economic assessment for developing an open-pit mine at Arctic was completed in 2013.
This scoping level study outlined a 10,000-metric-ton-per-day mill at Arctic that is anticipated to produce roughly 1.5 billion pounds of copper, 1.8 billion lbs. of zinc, 289 million lbs. of lead, 30.5 million ounces of silver and 349,000 oz of gold over a 12-year mine-life.
The open-pit for Arctic encompasses an indicated resource of 23.85 million metric tons averaging 3.26 percent (1.71 billion lbs.) copper, 4.45 percent (2.34 billion lbs.) zinc, 0.76 percent (400 million lbs.) lead, 0.71 grams per metric ton (550,000 oz) gold, and 53.2 g/t (40.8 million oz) silver. Additionally, Arctic has an inferred resource of 3.63 million metric tons averaging 3.22 percent (239 million lbs.) copper, 3.84 percent (285 million lbs.) zinc, 0.58 percent (43.2 million lbs.) lead and 0.59 g/t (60,000 oz) gold.
One of the primary goals of a 3,000-meter infill drill program completed this summer was to upgrade much of the inferred resources at Arctic to the higher confidence measured and indicated category.
Other facets of the 2015 program included: geotechnical and hydrology drilling to better understand the wall rock characteristics and hydrology within the open pit area; waste rock characterization studies to evaluate acid generation potential; wetlands delineations studies; and continued environmental baseline studies.
"So, in short all the information we need to advance the Arctic towards a pre-feasibility study," Van Nieuwenhuyse summarized.
Bornite synergies
While the 2015 program will primarily focus on advancing Arctic to a project that can be presented to banks and permitting agencies, NovaCopper intends to continue to investigate the viability of mining Bornite, which has been the primary focus of NovaCopper's exploration since the 2012 season.
"We will continue to work on Bornite but probably at a little slower pace," Van Nieuwenhuyse told Mining News early in 2015.
The company sees the potential for synergies for staged development of Arctic and Bornite, which are located about 16 miles apart.
The potentially open-pittable portion of Bornite 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 mineable part of the project contains inferred resources of 55.6 million metric tons grading 2.8 percent (3.4 billion pounds) copper.
While NovaCopper did not complete any new drilling at Bornite in 2014, crews re-logged and re-sampled roughly 13,000 meters of core from 37 holes drilled by Kennecott Copper Co. between 1957 and 1976.
During its tenure at Bornite, Kennecott was focused on the highest grade components of the deposit and overlooked lower grade mineralization. For NovaCopper, these lower grade portions of the deposit could potentially convert to reserves in an open-pit mining scenario for Bornite.
To find the overlooked copper-bearing portions of the deposit, NovaCopper sampled 11,149 meters of untested core. This exercise identified five historical holes with grades topping 0.5 percent copper and another 22 with intercepts of more than 0.2 percent copper.
The program also re-affirmed results from Kennecott's previous assay work by re-sampling 1,503 meters of core already tested by its predecessor at Bornite.
NovaCopper says the data re-logging and re-sampling campaigns it has completed since 2012 are expected to fill in gaps in the Bornite resource model and help determine the ultimate pit configuration for the project.
NovaCopper is tentatively planning to complete a PEA of Bornite in 2016, a scoping level study that will assist the evaluation of synergies with Arctic and mark the first engineering step toward developing what would become the second high-grade copper deposit in the Ambler district.
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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