Franconia updates Birch Lake resource

VANCOUVER–Franconia Minerals (FRA-T, FRALF-O) has doubled its resource estimate for the Main zone at its Birch Lake copper-nickel- platinum group metals deposit, about 11 km northeast of Babbitt, in the Duluth Complex of northeastern Minnesota.

With 20,000 metres of new wide-diameter drilling, Franconia has boosted the resource to 108 million indicated tonnes grading 0.53% copper, 0.16% nickel, 0.01% cobalt, 0.6 gram palladium, 0.28 gram platinum and 0.13 gram gold.

Franconia also reports 87 million inferred tonnes grading 0.54% copper, 0.17% nickel, 0.01% cobalt, 0.48 gram palladium, 0.23 gram platinum and 0.11 gram gold.

In 2006, the resource stood at 100 million inferred tonnes grading 0.54% copper, 0.19% nickel, 0.01% cobalt, 0.65 gram palladium, 0.32 gram platinum and 0.14 gram gold.

The news comes on the heels of Duluth Metals’ (DM-T, DULMF-O) resource update for its nearby Nokomis deposit.

Franconia president Brian Gavin says the last two years of drilling had two objectives. Not only did Franconia want to expand the resource and bump it up into the indicated category but the company also wanted to collect enough material for bulk metallurgical testing, “something you only want to do once, given the costs, which run into the millions,” he says.

So far, results from bench-scale tests using 200-kg samples have all been very good.

Now that the resource has been updated, Gavin says Franconia will complete a prefeasibility study over the summer that will consider a new scenario. In a 2006 study, Franconia had considered building two mines: one at Birch Lake and another about 5 km away at its Maturi deposit, as well as a hydrometallurgical facility for processing.

But the new scoping study will focus on developing a mine at Birch Lake alone. It will also weigh the pros and cons of building a hydromet facility against those of selling concentrate directly to market. This is a scenario, Gavin notes, that PolyMet Mining (POM-T, PLM-X) plans to use in its advanced-stage copper-nickel-PGM project, also in the Duluth Complex.

Selling the concentrate would not only allow Franconia to avoid the capital costs of building a hydromet plant, but would also let it take advantage of today’s metal prices, Gavin says. In this scenario, Franconia might later build the hydromet facility with funds generated by selling concentrate.

Franconia will consider dropping plans for a mine at Maturi in large part because it would simplify the permitting process. Much of the Maturi deposit is on federal land and “anytime the feds are involved,” Gavin says, “the process seems to slow down.” Birch Lake, on the other hand, generally falls on land with private surface rights and state mineral rights.

He calls these circumstances “a blessing” as permitting would be easier if Franconia moves forward with the project.

He also says Franconia is fortunate to be following in the footsteps of PolyMet, which is developing the NorthMet project — likely to become the first large copper-nickel mine in Minnesota. With PolyMet and state regulators both going through the permitting process for the first time, many of the bugs have been worked out, Gavin says.

Assuming the results of the scoping study are positive, Franconia would look to complete bulk metallurgical tests and a feasibility study in 2009.

“If we had a positive feasibility study, we’d like to get to production as quickly as possible,” Gavin says.

For the moment, Gavin still has his eyes on PolyMet and is waiting for the company to file its environmental assessment. Not will only the filing be a big step for PolyMet, but it will help forge a path Franconia may soon find itself following.