DRC insists Afton ‘economic’

I would like to address the article “DRC’s drilling tests resource below pit at Afton” (T.N.M., Nov. 20/00) and correct a number of misleading comments. The overall negative tone and inaccurate information minimize the importance of the most innovative exploration program being undertaken in Canada.

First, you state that delivering a “substantial copper and precious metal resource” was predictable. On the contrary, the exceptional assay results were not expected and, in fact, surprised all the experts. The bornite-chalcocite mineralization in the highly altered rock was not visible, although it graded 6-8% copper. A slight change in the mineralization to iridescent bornite, due to oxidation, allowed these ore minerals to become slightly visible only when the core was viewed under a microscope. These assay grades were quite different from any of the results previously seen in the area or, in fact, anywhere.

You raise the important question, “If that resource was there when the mine was abandoned, is it economic now?” The DRC Afton 2000 program has largely ignored the more than 15 million tons left by Teck in the side and base of the pit because drilling in the fractured rock is difficult and grades are lower. However, DRC began drilling in a different direction away from the old pit, following a zone that trends southwest. The old pit mineral zone trended west. Hole No. 9 was instructive, as it appeared to have intersected both the chalcopyrite porphyry zone underneath the old workings and the new invisible, and previously unrecognized, bornite in a magmatic system. There has been no follow-up drilling under the Afton mined pit because new drilling to the southwest is higher-grade and thicker than the old workings.

So to answer the question about the economic viability of this resource: The DRC Afton 2000 drilling program indicates an excess of 25 million new tons grading 3% copper-equivalent, as stated in an October report by J.J. McDougall.

Geologists and investors would be interested in knowing that the thickness and grades improve with depth, and that the zone is open to surface, to depth and along trend. Given the evidence of 18 holes with uniformly high copper concentrations, it is reasonable to suggest that the mineral zone results could easily double to 50 million tons. The 1972 Afton mine was a sensation at 24 million tons of 1% copper — one third of DRC’s known potential. Economic? Definitely.

Next, you state that “the deep supergene zone — traditionally considered Afton’s cutest trait, since it brought the grades up — may not persist in the newly defined blocks.” This does not make sense. The new grades, without supergene enrichment, are three times higher than previous estimates. Prior to the DRC Afton discovery, the conventional wisdom was that Afton was a supergene-enriched porphyry copper deposit. This theory suggests that only low-grade primary ore exists at depth. Thus, when the native copper ore seemed to be depleted at 900 ft. below surface, exploration ceased and the mine closed.

DRC’s exploration theories and methods differ in the following ways. DRC started drilling from the bottom of the pit in order to probe the depth for a different structural interpretation. The new drilling direction taken by DRC, and the assay results, suggest that the rock is a sulphur-deficient magmatic segregation deposit that settled out in a large intrusive body, and not a porphyry copper. Detailed microscopic studies demonstrate that minerals are dispersed throughout the rock, and are not related to fracturing or veinlets, or to hydrothermal activities — indicating that the mineralizing system could be large and pervasive.

The Northern Miner suggests that “substantial resources 13 years ago were not enough to keep the pit in operation.” Your article indicates that “Teck was considering a push-back to take out additional reserves” but that “that plan faded, not least because the stripping ratio in the pit would have grown to about 8:1.” Teck’s methods and theories have no relevance to the possible mining techniques for this new orebody. The greater thickness of the new zone implies a stripping ratio of 8:1 and an operating cost of not more than $10 per ton. The gross metal value of the mineral zone is $80 per ton. Per pound of copper produced, this is a low and reasonable cost structure, albeit extraordinary for a 7,500-ton-per-day milling operation. There is faint comparison to Afton’s previously proposed underground mining costs, as DRC’s Afton assay results are far greater than anything Afton ever had to work with. Similarly there is no reason to compare the Afton open pit, or the new DRC Afton 2000, to the Ajax mine.

The article states that the shares are tightly held, which is one factor in the price increase. This is not accurate, as the company has, in the public float, more than 4 million shares owned by upwards of 1,000 shareholders. DRC has been a publicly traded company for more than 20 years, and therefore it would be impossible for the shares to be tightly held. The company does have a base of loyal, diverse, international shareholders, who believe that the share price is undervalued, and they are prepared to hold these shares as an investment.

Steven LightburnAdvisor, DRC ResourcesVancouver, B.C.