Marathon Drilling Promising Bigger Things

SITE VISIT

Marathon, Ont. — The Marathon copper-palladium-platinum project of Marathon PGM (MAR-T, MRPGF-O) has several solid virtues: a large resource near the surface, and indications of favourable economics, not least because of its location near an established Northern Ontario industrial town. But the summer’s field season has revealed another virtue: exploration blue sky.

Marathon spent the first three years of its existence establishing that a much larger resource could be put together on the deposit than previous work had shown, and putting a pit limit around that resource. Drilling, surface sampling, and classical prospecting by some very good field people helped stretch that resource significantly, and by the beginning of 2007, Marathon could claim a 68-million-tonne resource at grades of 0.32% copper, 0.91 gram palladium, 0.25 gram platinum and 0.09 gram gold per tonne, all inside a pit limit containing the deposit’s Main Zone, drilled off by previous operators, and its Malachite Zone to the south, a surface showing known to previous operators but drilled off during Marathon’s tenure.

A resource of that size supported scoping-level economic assessments that showed the deposit could be mined from an open pit producing 18,000 tonnes per day, with a standard flotation mill producing a bulk chalcopyrite concentrate. In all, an operation on that scale could produce 16,500 tonnes copper and 195,000 oz. precious metals — palladium, platinum and gold — annually.

A junior could be forgiven for declaring the mission accomplished at that stage: the copper deposits of the Coldwell intrusive complex had over many years proved uneconomic for many operators, and here was one with the size, the grade, and the costs to make it. But the knowledge that there was more smoke than that one fire could account for — and the luxury of a budget that would support a big exploration program — made 2007 the year to turn the project into something bigger.

The known deposits at the Marathon project make up an arc that conforms roughly with the ring of gabbro that marks the eastern rim of the Coldwell complex, an alkalic intrusive complex on the north shore of Lake Superior. Middle Proterozoic in age, it is part of the mid-continent rift that is lately proving to be a major mineral province in North America. As early as the 1920s, prospectors in the area knew of copper occurrences north of the Canadian Pacific rail line, and starting with the 1950s, a number of operators tried systematic exploration on the showings. Out of the 1960s work of Anaconda Copper, and in the 1980s, Fleck Resources, came the project’s Main Zone deposit.

Geomaque Explorations, under Marathon’s current president Philip Walford, found widespread surface showings in the late 1990s, part of which Marathon drilled off to establish the new resource figure. But much of the mineralization Marathon has uncovered is not part of the resource estimate — more so, following this summer’s work.

The company had drilled 36,000 metres by the early part of September, with another 2,500 metres scheduled. Most of that drilling has tested the area to the west of the resource, on what Marathon is calling the W horizon.

“It makes perfect sense for there to be resources in there,” says David Good, Marathon’s vice-president, exploration. The horizon sits structurally between the Main Zone and Malachite Zone resources, and has, over the field season, returned a number of very high-grade intersections. Many of the best have come from an area downdip from surface mineralization about 500 metres north of the Malachite Zone, where drilling in April cut 20 metres grading 0.28% copper, plus 17.6 grams palladium, 5 grams platinum and 0.9 gram gold per tonne. Drill intersections in both that area and farther north — in the southern extension of the Main Zone — have been mostly at or above the precious metal resource grade over widths anywhere from a few metres to 80 metres.

Because all the new high-grade platinum group mineralization is outside the boundary of the proposed pit, Marathon plans to have a new resource calculated by year-end.

A different exploration target, magnetite-rich layers higher up in the gabbro, is also getting some attention. The magnetite zones, says Walford, have “always been a sort of third-rate priority,” compared with the mineralization nearer the lower contact of the gabbro. Still, an area with high magnetism west of the Main Zone, trenched in the early summer, returned some substantial widths — 4 to 11 metres — with copper grades of 0.1% to 0.38%, palladium grades of 1 to 2 grams per tonne, platinum between 0.2 and 0.5 gram, and gold between 0.2 and 0.7 gram.

Meanwhile, the development front is not suffering any neglect, either, guided now by operations vice-president Ray Mason. Metallurgical testing has been going on for the last year; the principal problem that needs solving is adapting the recovery design to multiple rock types with different grinding characteristics. Earlier tests showed copper recoveries of 84%, platinum and palladium recoveries in the high 70s, and about 60% recovery for gold. Coldwell complex deposits “had a bad reputation that wasn’t really deserved,” says Walford, alluding to difficulties earlier operators had in developing a mill design. Contrary to that experience, the mineralization has no deleterious elements and recoverable rhodium, silver and nickel, while not in the economic model, could add as much as 14% to the net smelter return from the concentrate.

“The metallurgical response is much different,” Mason says. Copper “floats off so quick that it’s almost a gift.”

Given the scale of the mining plan, the company is looking at a gyratory crusher and a semi-autogenous grinding mill at the front end of the plant. That would feed two ball mills, which would in turn feed a conventional flotation system. The concentrate would be about 25% copper.

The project’s other advantage is good infrastructure in the area. It is a short distance from both a main provincial highway and the main transcontinental line of Canadian Pacific, and at need, a deep-water port could be built at Marathon. Hydroelectric power is available from a substation near Marathon.

“This mine will be an overnight sensation,” Mason asserts. Infrastructure “reduces the cost of what we have to do by a whole bunch.”

Infrastructure, and people too: the Hemlo gold mine will be closing in a little over a year, and the new project is a draw for skilled workers.

“When you don’t have a remote camp. . . airplane service. . . people flying in and flying out, you have a better quality of life,” says Mason, who has managed a number of remote mine-construction projects.

Capital costs were estimated at $261 million early in 2007, and cash production costs at US$144 per oz. taking palladium, platinum and gold as co-products and crediting copper revenues at US$4,400 per tonne (US$2 per lb.). Copper prices at US$6,600 per tonne (US$3 per lb.) bring that cost to a negative US$62 per oz.

Further feasibility studies — which are scheduled to be done by year-end — will look at different production rates, as each previous assessment has led to a higher tonne-per-day figure.

“We want to have good production for ten years at least,” Walford says. A decision on a daily throughput rate, probably somewhere between the 18,000 tonnes in the scoping study and 22,000 tonnes as an upper limit, should be made during the present round of feasibility work.

Marathon’s success has summoned other juniors to the area, with the dominant tie-on position held by Thunder Bay explorer Benton Resources (BTC-V, BNRJF-O). Benton holds two large properties, Bermuda and Goodchild, with Bermuda covering 34 sq. km from the northern boundary of Marathon’s ground westward along the northern contact of the Coldwell complex.

Benton’s most recent drilling on the project has been on the Bamoos showing, north and slightly west of Marathon’s resource on the strike of th
e contact.

A fall drilling program is scheduled to start shortly and 15 holes drilled this spring and summer all intersected mineralization similar to the Marathon deposit. Drilled widths have ranged from 2.5 to over 50 metres, with copper grades of 0.1% to 0.4%, palladium grades mainly 0.2 to 1.5 grams per tonne, but locally higher, and platinum, gold and nickel credits.

Goodchild, the subject of a buy-in agreement with Stillwater Mining (SWC-N), is northeast of Bermuda and the agreement provides for Stillwater to take three private placements of Benton shares at a 50% premium to the market, for a total of $6 million. Stillwater would earn 50% of the project once the placements were complete, and has the right to earn a 70% interest by spending $24 million on exploration or by providing a full feasibility study.

Actual exploration at Goodchild is at the grassroots level, although Xstrata (XSRAF-O, XTA-L) located a number of surface showings during a previous option of the property in 2006. Benton contracted an airborne magnetic and electromagnetic survey over the property this past spring.

Always an opportunist when ground comes open, Pacific North West Capital (PFN-T, PAWEF-O) holds three claim blocks covering about 155 sq. km. mainly south and west of Bermuda. Like Goodchild, a grassroots project, Pacific North West’s property will see initial exploration this fall, concentrating on the Eastern Border gabbro unit of the complex.