A new leaf for Turnagain nickel

Vancouver — With an eye toward boosting mineralized tonnage on its Turnagain project, results from Hard Creek Nickel‘s (HNC-V, HNCKF-O) completion of phase-2 drilling have expanded the size potential of the nickel property located about 70 km east of Dease Lake in north-central British Columbia.

Not a new project by any means, nickel and copper sulphide mineralization at Turnagain was first identified in the mid-1950s, with Falconbridge (FAL.LV-T, FAL-N) moving in and acquiring the ground in the mid-1960s. Several years of exploration by the major (under the direction of James McDougall), including programs of geophysics, mapping, sampling and the drilling of about 40 holes, led to the discovery of significant nickel sulphide mineralization. However, Falconbridge exited B.C. in the early-1970s due to an unfriendly political climate towards mineral exploration, which accompanied the provincial election of the New Democratic Party (NDP) in 1972.

Additional work was conducted by Union Minire Explorations and Mining, and a number of juniors through the 1980s and ’90s that tested the gold, cobalt and platinum group metals (PGMs) potential of the area.

Hard Creek Nickel, through predecessor companies Canadian Metals Exploration and Bren-Mar Resources, became involved in the mid-1990s and has undertaken extensive programs of geophysics and drilling in addition to metallurgical studies.

Drilling in 2003 and 2004 formed the basis of an initial resource estimate on the Horsetrail zone of the project. Based on 36 holes, an indicated resource of 15.7 million tonnes grading 0.34% nickel, 0.07% copper and 0.019% cobalt was reviewed in the central zone, plus an additional inferred resource of 31.6 million tonnes of 0.32% nickel, 0.04% copper and 0.016% cobalt contained in the eastern and western sections of the zone. A cutoff of 0.25% total nickel was used in the calculation.

Subsequent drilling in 2005 was aimed at adding to the Horsetrail resource and identifying higher-grade mineralized sections, or potential “starter-pit” areas. Hard Creek recently engaged engineering firm AMEC to conduct a preliminary economic assessment on a potential open-pit, bulk-tonnage sulphide nickel operation at Turnagain. The study is expected to be completed by mid-2006 and will include block modelling, preliminary pit design, process infrastructure needs and capital cost estimates.

One major constraint in the potential development of Turnagain is the lack of an accessible electrical power grid. Establishing an on-site diesel generator facility may also fall short of power requirements for a large-scale operation. The hurdle may be resolved, however, if the B.C. government moves on proposals to build and expand electrical transmission lines along the Highway 37 corridor from Meziadin Junction to Dease Lake.

The Highway 37 power line initiative has received strong support from regional communities and prospective resource developers alike (mining, forestry, and oil and gas), who view it as an essential item for economic growth in the area.

The company has now completed well in excess of 100 drill holes on the project, with latest results being some of the more significant. Hole DDH 05-106, testing near-surface extensions of mineralization at Horsetrail, intersected almost 236 metres (essentially from surface) grading 0.3% nickel and 0.019% cobalt, including a 53-metre interval of 0.46% nickel. Hole 107 cut a 91-metre intercept averaging 0.3% nickel and 0.019% cobalt.

Drilling collared immediately south of Horsetrail, targeting electro-magnetic (EM) conductors, returned a number of intercepts averaging about 0.25% nickel over widths of 116-192 metres.

Several Horsetrail zone holes located west of prior drilling intersected wide intervals of near-surface mineralization ranging from 0.25% to 0.33% nickel over widths of 62-142 metres. These holes extend the Horsetrail zone about 350 metres to the west; it remains open to the west, northwest, north, south and to depth.

Interestingly, a pentlandite-dominated nickel halo was encountered in one of the recent holes. This lower sulphide mineralization was not detected in EM surveys but did show up as a geochemical anomaly with significant size potential.

“These results are expected to add significant tonnes to the Horsetrail zone,” says Mark Jarvis, president of Hard Creek Nickel. “The wide intercepts of near-surface mineralization are shaping up into a good geometry for modelling a large-volume, open-pit mining scenario.”

The rocks

Mineralization at Turnagain is hosted in an 8 by 3.5-km wide zoned, Alaskan-type ultramafic intrusive. The late-Triassic complex is situated on a major terrane boundary and composed of a central dunite core with outer, gradational zones of wehrlite (an olivine and clinopyroxene-rich peridotite), olivine clinopyroxene, clinopyroxenite and hornblendite, all representing crystal cumulate sequences. Iron and nickel sulphides most commonly occur in the wehrlites and clinopyroxenites. Semi-massive to massive sulphides (pyrrhotite with lesser pentlandite and minor chalcopyrite) and broad disseminated zones tend to occur in the wehrlites near the southern and eastern margins of the intrusive.

Testing the percentage of nickel present as a sulphide mineral, as opposed to that tied up in the crystal lattice of silicate minerals (olivines), involves leach analysis. Ammonium citrate-hydrogen peroxide leach testing of Turnagain samples indicate 60% to 90% of the nickel is in sulphide form. It is only economically feasible to extract sulphide nickel using standard flotation processes.

Other targets have developed from the EM surveys and geochemical sampling, including a few large PGM anomalies (the DB, DJ and Highland zones). The DJ zone, 3 km northwest of Horsetrail, shows significant platinum and palladium mineralization hosted in a serpentinized clinopyroxenite.

Recent drilling on the DB area returned intercepts of up to 1.5 grams platinum per tonne and 1 gram palladium per tonne over 3.1 metres in hole 05-88, within a 13-metre interval of 0.85 gram platinum and 0.7 gram palladium.

Not yet extensively tested, the PGM potential of the project is scheduled to be targeted in 2006 drilling.

The prospect of a large-scale nickel operation near the Pacific coast has the company very excited as Asian demand for the metal continues to grow. World demand growth had been pegged at around 5% annually, with China’s appetite increasing at 20% per year. Whereas about 58% of world nickel production currently comes from sulphide nickel deposits (with the remainder from laterites), just 28% of worldwide resources are in the sulphide form. Large tonnage, sulphide nickel deposits have become increasingly rare, especially those amenable to open-pit mining.

With well over 30,000 metres of drilling and spending of about $9 million to date, the company has borne criticism for possibly taking on a project deemed “too big” for a junior. However, continued exploration success and positive economic studies could remedy this by flagging the attention of a major nickel producer.

Following the recent wide-drill intercepts of nickel mineralization encountered at Horsetrail, shares of Hard Creek Nickel rallied about 50% from the 40 level to reach a new 18-month high of over 60 per share. The company posts a $23-million market capitalization based on its 37.7 million shares outstanding.