Hard Creek Grows Turnagain Again

VANCOUVER — The Turnagain nickel deposit keeps expanding for owner Hard Creek Nickel (HNC-T, HNCKF-O).

Turnagain, in northern British Columbia, has seen sporadic exploration since the mid-1960s. Hard Creek has been at work in the area since 2003. Now the company’s drilling effort in 2008 has added to the defined resource.

Turnagain is now home to 695 million tonnes grading 0.174% nickel in sulphide minerals or 0.216% total nickel, as well as 0.014% cobalt, in the measured and indicated categories. Inferred resources add 511 million tonnes averaging 0.173% nickel in sulphide or 0.199% total nickel and 0.014% cobalt.

The two categories combined host 2.52 million tonnes of nickel. The last resource estimate for Turnagain, completed nearly a year ago, defined 2.37 million tonnes contained nickel.

In 2008, Hard Creek focused its work at Turnagain on two goals: increasing the confidence in its resource through infill drilling and exploring the potential of the Cliff zone to add a platinum-palladium component to the mine development plan. The company spent $4.5 million at Turnagain in 2008; work also included metallurgical studies, environmental consulting, and First Nations discussions. The deposit remains open to the northeast and while Hard Creek is confident that stepout drilling could add several more years of mine life to the project, the company decided to save that work for another year.

The First Nations discussions resulted in a tangible advance: in October, Hard Creek signed a cornerstone agreement with the Kaska Dena containing commitments from both parties regarding environmental protection, economic opportunities and benefits, and education and training. The commitments will form the basis of a socioeconomic agreement for the development of a nickel mine.

Turnagain sits 70 km east of Dease Lake, B. C. A scoping study from late 2007 eyed a mine and mill at Turnagain churning through 50,000 tonnes of ore daily that could operate economically for 29 years. With 18 million tonnes annual throughput, a mine at Turnagain could produce nearly 20,400 tonnes of nickel in concentrate and 1,300 tonnes of cobalt in concentrate each year. With a strip ratio of just 0.44, operating costs came in at just $9.43 per tonne milled. Capital costs were estimated at $1.3 billion.

Apart from the low nickel grade, the kicker at Turnagain is power. The project is in northern B. C., beyond the reach of power lines providing affordable hydroelectric power. But the province, which had planned to build a northern power line and then reneged, has again committed to the project. In September, the provincial government started the environmental assessment and First Nations consultations processes to build what is known as the Northwest Transmission Line, along Highway 37.

The 287-kilovolt line will extend 335 km from Terrace to Meziadin Junction and north to Bob Quinn Lake. The province is investing the initial $10 million to complete the assessment processes but is searching for a partner to help fund the development cost, which is estimated at $400 million. If built, it would boost the economics of a mine at Turnagain.

According to the company’s yearend financials, Hard Creek had more than $31 million in cash and equivalents at the end of 2008. News of the new resource estimate left its share price unchanged at 17¢. The company has a 52-week trading range of 8-73¢ and has 60.4 million shares outstanding.