Major Arctic, Bornite milestones in 2019

Trilogy Metals Inc. Jan. 31 announced a US$16.2 million work program this year for the Upper Kobuk Mineral Projects in Northwest Alaska, a work program that is expected to result in major milestones toward realizing the world-class mineral potential the Ambler Mining District has to offer.

Similar to the previous two years, Australia-based South32 Ltd. will invest US$9.2 million of the 2019 funding, which will go toward infill and resource expansion drilling at the Bornite copper-cobalt deposit, and Trilogy will invest another US$7 million, which will be applied toward the engineering and environmental work requisite to finalize a feasibility study for Arctic and prepare the copper-zinc-lead-silver-gold project for permitting.

Together, Arctic and Bornite host roughly 8.9 billion pounds of copper, 3.6 billion lb of zinc, 626 million lb of lead, 77 million lb of cobalt, 770,000 ounces of gold and 58.3 million oz of silver. And, the copper and cobalt contingents are expected to grow significantly when expansion areas of the Bornite project are brought into the resource.

While South32 and Trilogy continue to quantify the vast mineral potential in the Ambler District, the U.S. Bureau of Land Management is expected to take long strides this year toward finalizing the Environmental Impact Statement for the Ambler Mining District Industrial Access Road, a proposed 211-mile transportation corridor that will connect the metals-rich region to Alaska's highway system and world markets.

"With the Bureau of Land Management plan to complete a Draft Environmental Impact Statement on the Ambler Access Road by the summer and a Final EIS by the end of the year, investors can count on several very significant catalysts in the year ahead," said Van Nieuwenhuyse.

Planning for 2019

Trilogy's ability to steadily advance Arctic and Bornite, the two most advanced of the Upper Kobuk Mineral Projects, is largely due to South32's robust investment over the past two seasons.

Under an agreement struck early in 2017, South32 has the option to buy a 50 percent stake in UKMP for US$150 million. The Australian major can exercise this option at any time between now and the end of next January. To keep this option in good standing, South32 agreed to invest US$30 million into UKMP over three field seasons. This US$180 million investment to earn a 50 percent stake in UKMP is roughly double what Trilogy Metals had invested into the property before the Perth-based company entered into the option.

So far, South32 invested US$10 million into exploration at UKMP during 2017 and another US$10.8 million in 2018. With the US$800,000 of extra spending last year, South32 has a balance of US$9.2 million left on its option, which the company is investing into additional drilling at Bornite in 2019.

In mid-December, Van Nieuwenhuyse and Trilogy's technical team attended meetings with representatives of South32 at their headquarters in Perth to review the results from the 2018 field programs at UKMP and to formulate plans for the 2019 summer field season.

Given last year's robust program and the milestones the companies hope to achieve over the coming 12 months, the technical teams had much to discuss.

"2018 was a busy and successful year for Trilogy and we expect more of the same for 2019," said Van Nieuwenhuyse. "This is the last year of the South32 option agreement and we look forward to working with South32 to execute this year's program."

Feasibility, permitting for Arctic

Arctic, the most advanced of the Upper Kobuk Mineral Projects, hosts 43.04 million metric tons of probable reserves averaging 2.32 percent copper, 3.24 percent zinc, 0.57 percent lead, 0.49 grams per metric ton gold and 36 g/t silver.

A prefeasibility study published earlier this year details plans for an open-pit mine to extract the volcanogenic massive sulfide mineralization at Arctic and a 10,000-metric-ton-per-day mill to produce metals-rich concentrates to deliver to markets.

To provide the additional data needed to elevate Arctic to the feasibility level, Trilogy completed 24 holes (592 meters) during 2018 to gather geotechnical and hydrological information at the proposed tailings dam, waste rock facility and grinding mill locations.

This year's program will carry this work forward with additional hydrological and geotechnical work at the Arctic deposit, along with water management, tailings facility and waste rock containment analysis and design.

Additional metallurgical test work to verify ore hardness and grinding characteristics will also be carried out on material from Arctic.

Trilogy had considered using ore sorting technology to improve the grade of ore being fed into the mill by removing unmineralized waste rock. While the ore sorting tests carried out at the Steinert Labs facility in Kentucky demonstrated grade improvements, the costs to install and operate this added step are higher than the gains resulting from rejecting non-mineralized rock ahead of the mill.

The ore sorting pilot work did, however, demonstrate that the material tested had lower-than-expected hardness, indicating that Arctic ore may require less grinding, and hence lower processing requirements, than previously expected. This has the potential to lower capital and operating costs and Trilogy plans to investigate the hardness characteristics of the Arctic material ahead of the feasibility study.

Trilogy also plans to submit mine permit applications for Arctic by the end of the year and expects to complete the feasibility study in the first half of 2020.

Expanding the Bornite resource

As Arctic graduates to the permitting phase, drills continue to expand the world-class Bornite copper-cobalt deposit.

According to a 2016 calculation, the open-pit deposit at Bornite contains 40.5 million metric tons of indicated resource averaging 1.02 percent (913 million pounds) copper; and 84.1 million metric tons of inferred resources averaging 0.95 percent (1.77 million lb) copper.

The underground portion hosts 57.8 million metric tons of inferred resource averaging 2.89 percent (3.68 billion lb) copper.

The deposit also hosts 182.4 million metric tons of inferred resource averaging 0.019 percent (77 million lb) cobalt, according to a resource calculated for the battery metal in mid-2018.

The US$20.8 million South32 has invested in UKMP over the past two years and the US$9.2 million it will be spending this year is going toward expanding Bornite, a world-class copper deposit with healthy quantities of cobalt.

The 2017 program focused on finding out just how much further the Bornite deposit extended beyond the 2016 resources boundaries.

Instead of gradually tracing this resource with modest step-out holes, South32 and Trilogy opted for 300- and 400-meter step-out holes north of the deposit. With all seven holes hitting strong copper mineralization, the 2017 program nearly doubled the size of the Bornite mineralized footprint.

The drilling completed at Bornite last year infilled and expanded both the open-pit and underground mineral resources.

Highlights from drilling targeting the expansion of the underground resource to the north of Bornite include:

• RC18-246, drilled to the northeast of the resource boundary cut three mineralized intercepts – 19.6 meters averaging 2.06 percent copper and 0.01 percent cobalt, 6.1 meters averaging 2.36 percent copper and 0.02 percent cobalt, and 7.6 meters averaging 1.04 percent copper and 0.02 percent cobalt;

• RC18-247, drilled about 375 meters west-northwest of RC18-246, cut two mineralized intercepts – 33.4 meters averaging 0.82 percent copper and 0.01 percent cobalt, and 20.1 meters averaging 4.55 percent copper and 0.17 percent cobalt.

• RC18-0248, drilled about 650 meters further west, cut five mineralized intervals – one meter averaging 14.38 percent copper and 0.03 percent cobalt; 21.3 meters averaging 1.73 percent copper and 0.01 percent cobalt; 21 meters averaging 0.93 percent copper an 0.01 percent cobalt; 15.1 meters averaging 1.32 percent copper and 0.01 percent cobalt; and 4.9 meters averaging 2.97 percent copper and 0.08 percent cobalt.

The extra US$800,000 invested by South32 last year, primarily targeted an area of sparse drilling between the Bornite open-pit and underground resources.

• RC18-0255, the northern most of these holes cut four mineralized intervals between 256.9 and 255.6 meters – one meter averaging 11.47 percent copper and 0.02 percent cobalt; 5.4 meters averaging 0.88 percent copper and 0.02 percent cobalt; 14.3 meters averaging 0.97 percent copper and 0.01 percent cobalt; and 3.1 meters averaging 1.96 percent copper and 0.02 percent cobalt.

• RC18-0252, drilled about 200 meters south of hole 255, cut five mineralized intervals between 178.3 and 210.2 meters – 2.9 meters averaging 1.95 percent copper and 0.03 percent cobalt; 3.6 meters averaging 2.63 percent copper and 0.02 percent cobalt; 12.5 meters averaging 1.49 percent copper and 0.03 percent cobalt; 1.9 meters averaging 1.12 percent copper and 0.02 percent cobalt; and 7.5 meters averaging 2.25 percent copper and 0.02 percent cobalt.

The 25 holes drilled at Bornite over the past two years are being incorporated into an updated resource estimate for this copper-cobalt deposit, expected to be completed by the end of February.

This will be followed up by a summer drill program aimed at further expansions and upgrades to this resource.

–SHANE LASLEY

EDITOR'S NOTE: This article was corrected on Feb. 2 to clarify South32's option spending at UKMP.