Six months of drilling from the floor of the Afton open pit, 10 km west of Kamloops, B.C., has — predictably enough — delivered a substantial copper and precious metal resource to owner
Measured against this success, there is still the question whether finding a large resource at the base of an abandoned open pit mine really matters: in short, if that resource was there when the mine was abandoned, is it economic now?
That is the question now facing DRC, which has enjoyed a strong run on the Canadian Venture Exchange since drilling started last April. The growth of the mineralized zone at Afton took DRC shares from the $3 range to a high of $14.40, though they have since fallen to $10.
In October, DRC reported a resource of 22.5 million tonnes grading 2.5% copper, with additional precious metal credits. The DRC estimate, which was based on the 15 holes DRC drilled between April and October of this year, covered a mineralized body some 200 metres in strike length, with a width of up to 135 metres, and extending down 300 metres below the present pit floor.
That resource included another mineralized zone that was already known in the early 1980s: a 9.5-million-tonne resource outlined by Teck, which grades 1.5% copper and 1 gram gold per tonne. This had been carried by the operation for much of its history, considered as a zone that might eventually be exploited from underground, rather than as an extension of the pit. Teck’s zone was 170 metres along strike, and the estimate extended only to about 200 metres below the pit floor.
John Kruzick, DRC’s president, points out that 11 of the drill holes that define the new resource lie outside the zone that Teck defined while the mine was still operating. Most of the new resource DRC has outlined along strike is on the original zone’s southwestern extension, and the deeper mineralization largely is inferred from new DRC drill holes.
Petrographic studies on the new mineralization drilled by DRC also have suggested 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. The mineralization occurs as disseminated chalcocite, bornite and chalcopyrite in diorite. Curiously, the petrographic report also mentions evidence that the textural relationships between the sulphides and the wall rocks may be magmatic, rather than hydrothermal, in origin.
Finding additional resources below the Afton pit may not be enough, though; substantial resources 13 years ago were not enough to keep the pit in operation.
The Afton mine, along with three other pits — Pothook, Ajax East and Ajax West — went into production in 1978 under
By 1987, the main Afton pit was mined out, and Teck was considering a push-back to take out additional reserves. That plan faded, not least because the stripping ratio in the pit would have grown to about 8:1. Pothook was mined out the following year, and the Ajax pits continued to ship until 1991, then again from 1994 to 1997.
Teck had looked hard at the possibility of underground mining at Afton. Block caving, vertical retreat, and several other bulk-mining methods were examined in the 1980s, but the base of the pit was already plagued by poor ground conditions. In-house and consultants’ studies both concluded that while caving might be cheap, there was a high risk that it would not work. There was a better possibility for bulk mining in cleaner ground at the eastern end of the pit, but the mineralization was not there to mine.
Kruzick says DRC has had some consultants look at the ground conditions in the new zones, though these have not been developed into full-scale studies. The unweathered wall rocks around the hypogene mineralization DRC has been drilling are relatively competent, and offer a better possibility for block caving than did the highly weathered rocks at the immediate base of the pit.
Kruzick also tells The Northern Miner that mining costs of around $20 per tonne had been estimated in earlier work, based on daily production around 4,000 tonnes.
When Teck’s mining leases lapsed, Kruzick and geologist John Ball staked the property; in October, 1999, they vended it into DRC for 2 million shares to be issued over a 6-year period, retaining a 10% net profits interest.
DRC’s obligation is for $6.5 million worth of exploration, to be spent over nine years, and it must bring a deposit into production within 10 years or the property reverts to the vendors.
Five months later, DRC also staked a property covering the Ajax open pits, and said its discussions with the previous operator left it with the understanding that a “40-million-ton” resource (36 million tonnes) was on the property. Kruzick says the estimate was based on estimates by Afton geologists and carried a grade of around 0.5% copper. The resource, however, was not one that Teck had ever formally calculated.
Both the vendors have active roles at DRC. Kruzick, the president, does not draw a salary at DRC, instead billing the company for his time. Ball is serving as exploration manager and geological consultant at Afton. The ultimate supervision is in the hands of another consultant, James McDougall, who calculated the current resource estimate.
The company’s shares are tightly held, which was doubtless one factor in the price increase of the past six months. Kruzick owns about 1.4 million shares directly and another 700,000 or so indirectly, giving him about 30% of the outstanding capital. Insider trading records show his holding as having fallen by about 140,000 shares over the past year.
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