Imperial teams with Sumitomo

Development work is being accelerated now that financing is at hand for the Mount Polley copper-gold project in central British Columbia.

Imperial Metals (TSE) reached an agreement with Japan-based Sumitomo, giving that company the right to acquire a 35% participating interest in Mount Polley in return for more than $85 million in project financing. Sumitomo will provide debt financing of up to $47.4 million plus $32 million for its 35% share of joint-venture costs. It is also required to spend $5.6 million on the project, as well as make certain payments to Imperial based on several factors, including metal prices, operating costs, production rates and exchange rates. The payments could exceed $20 million over the life of the mine.

The capital cost of the 13,700-tonne-per-day project is estimated at $102 million. This figure is based on a proposal to employ used equipment for milling and new equipment for mining.

Imperial Metals has already arranged the purchase of major milling equipment, together with concentrator and crusher buildings, from Noranda’s Bell, Brenda and Gaspe mines.

A mine development certificate has already been issued for Mount Polley, and the joint venture expects to carry out construction between May, 1995, and late 1996. Startup is targeted for early 1997.

Meanwhile, Imperial and the British Columbia government are discussing ways to improve the road to the site as well as the power and water lines. These capital requirements are already included in the capital cost estimate, and Pierre Lebel, president, says they account for about 12% of the total. The initial mine plan is based on a 49-million-tonne pit grading an average of 0.38% copper and 0.56 grams gold per tonne.

Based on copper recoveries of about 76% and gold recoveries in the order of 80%, yearly output is projected at 15 million kg (32-34 million lb.) of copper and 2.1 million grams (70,000 oz.) gold.

Lebel says the break-even copper price, including gold credits at current prices, is less than US60 cents per lb.

Following the recently approved amalgamation with Bethlehem Resources, Imperial has about 57 million shares outstanding and $12 million in working capital.