Jordex reviews Hushamu project

A team of independent specialists has completed a review of the Hushamu copper-gold project on northern Vancouver Island, B.C. The study was commissioned by Jordex Resources (TSE), which is earning a 45% interest in the property from BHP-Utah Mines.

The study reviewed the potential of developing a 55,000-ton-per-day mine at the site to feed the nearby Island Copper mill and determined that the company should proceed with a pre-feasibility study.

Reserves at Island Copper are expected to be depleted in 1996. Proven and probable reserves at Hushamu are estimated at 191 million tons grading 0.27% copper, 0.009% molybdenum and 0.01 oz. gold per ton at an overall strip ratio of about 2.2-to-1.

The capital cost of the project is estimated at between $170 and $200 million, of which $86 million would be required to construct a conveyor system to transport ore 18 miles southeast to the Island Copper mill. Based on estimated recoveries of 81% for copper, 62% for gold and 62% for molybdenum, annual production is projected at 88 million lb. of copper, 125,000 oz. of gold and 2.2 million lb. of molybdenum.

Using an estimated cash operating cost of $5.26 per ton and a 0.79 exchange rate, pro-rated cash costs amount to US50 per lb. for copper, US$285 per oz. for gold and US$1.20 per lb. for molybdenum.

Paul Kostuik, a director of Jordex, said the estimated net smelter return (based on US$1.05 per lb. copper, US$350 per oz. gold and US$2.20 per lb. molybdenum) is $7.21 per ton.

Jordex is proceeding with a $450,000 prefeasibility program on the project which will complete the companys 45% earn-in.

The company is also planning an additional 10,000 ft. of step-out drilling this fall around higher-grade holes along the pit boundary. The intention is to expand reserves.

William Blenkhorn, project manager for BHPs copper division, said the company is reviewing closure options for the Island Copper operation in 1996. In addition to conducting ongoing exploration on its wholly owned ground around the Island Copper operation, BHP is looking at the Red Dog deposit owned by Crew Natural Resources (VSE) and Jordexs Hushamu.

It is also considering using the mined-out pits at Island Copper as a garbage dump for populated areas to the south, including Vancouver and Victoria. Blenkhorn noted that BHP must weigh its copper opportunities in other parts of the world against funding further development at Island Copper. Despite the presence of a mill, head grades in the order of 0.3% copper have tough competition from significantly higher-grade deposits in other parts of the world, Blenkhorn said.