Mount Polley decision expected before fall

The Mount Polley project in central British Columbia could be producing copper and gold by the end of the first quarter of 1997.

At the annual meeting of Imperial Metals (TSE), President Pierre Lebel said a production decision is expected in late August, following a due diligence review of copper recovery, which is due in late July.

The due diligence is required under an agreement with Sumitomo. The Japan-based company can acquire a 35% interest in Mount Polley in return for providing more than $85 million in financing through a combination of debt financing, cost share payments and earn-in expenditures.

Imperial is currently carrying out metallurgical tests on fresh ore samples provided by a 5-hole drilling program in the main part of the orebody.

The capital cost of developing a 15,000-ton-per-day open-pit mine is estimated at $102 million. With a strong cash position of about $16 million and no debt, Imperial feels there is no need to raise any further financing for the Mount Polley project through the issue of additional shares. The company has 57 million shares outstanding, with management owning 45% of the issued shares.

Mount Polley hosts a geological reserve of 254 million tons grading 0.26% copper and 0.01 oz. gold. Minable reserves within an initial starter pit are estimated at 54 million tons grading 0.38% copper and 0.016 oz. gold., sufficient for a minimum mine life of 10 years.

Based on copper recoveries of about 76% and gold recoveries in the neighborhood of 80%, annual production is projected at 33 million lb. copper and 70,000 oz. gold. Imperial has received a mine development certificate for the project.

The company has purchased equipment for a 3-stage crushing system and a 2-line rod-ball-pebble grinding circuit.

Through its merger with Bethlehem Resources last February, Imperial gained a half interest in the Goldstream mine near Revelstoke, B.C. (Vancouver-listed Goldnev Resources owns the other half.) The company’s share of production in the first quarter was 3.6 million lb. copper-in-concentrate and 0.4 million lb. zinc-in-concentrate.

Exploration plans involve drill-testing at depth, under the existing orebody, to determine if the deposit is part of a series of stacked bodies. Other British Columbia projects acquired through the Bethlehem merger include the Poison Mountain property near Lillooet and the Giant Copper property near Hope. Imperial sold Bethlehem’s 25% interest of the Salvadoran project known as El Dorado to Mirage Resource (TSE) for 3.6 million of its shares.

Imperial holds about 5.5 million shares of Cathedral Gold (TSE), representing a 40% interest.

Cathedral operates and owns a 90% stake in the Sterling gold mine in Nevada. Production last year totalled 13,290 oz. at a cash cost of US$297 per oz., and this year’s output is expected to rise to about 17,000 oz. at a cash cost of US$250 per oz. Imperial holds the remaining 10% interest in Sterling.

In the first quarter, Imperial earned $875,000, or 2 cents per share, on revenue of $6.7 million. Cash flow amounted to $1.6 million.