Whitehorse, Yukon — The Minto copper-gold project 240 km northwest of this capital city almost made it to production in the late 1990s, with US$10 million spent before construction was suspended because of low metal prices.
“Minto will be the Yukon’s next mine,” Sherwood President Stephen Quin told delegates attending the recent Opportunities North 2005 conference. “The feasibility study is largely done and just needs updating for cost items.”
At the same conference, Yukon Premier Dennis Fentie announced he had just signed a 10-year extension of a “type A water licence,” which allows the company to build and operate a mine at Minto.
Quin later noted that the licence was signed one week after the Yukon Water Board sent its positive recommendation to the executive office, “illustrating just how much the Yukon has changed since devolution.”
While other northern territories have permitting regimes that some companies describe as onerous or even dysfunctional, Yukon is drawing high praise for its improved regulatory environment. Along with four other companies with advanced projects, Sherwood was provided a project co-ordinator who has direct access to cabinet ministers to resolve any issues that may arise.
“Working in the Yukon has been a very positive experience,” Quin told The Northern Miner during a recent site visit. “The process is considerably less bureaucratic than in other northern territories. You can sit down with people willing to address your concerns.”
With the renewed licence in hand, Sherwood plans to complete an updated feasibility study by early next year, with the benefit of a previous study in 1995 by Asarco and then-partner Minto Explorations.
The initial study envisioned a 1,500-ton-per-day mine producing 254 million lbs. copper over 12 years. Capital costs were estimated at $26 million, with payback in 3.8 years. A review in 2000 recommended boosting throughput to 1,700 tons per day, and reducing the mine life to 11 years.
Sherwood hasn’t yet established the operating parameters of the proposed mine at Minto, but has updated resources. In late July, the company released a resource estimate compliant with National Instrument 43-101 standards, based on holes drilled before and after the initial feasibility was completed. The new estimate resulted in an approximate 10% gain in contained copper and gold.
Based on 239 holes, including 11 drilled in 2001, the Minto project hosts measured and indicated resources of 9.2 million tons averaging 1.83% copper, 0.016 oz. gold and 0.23 oz. silver per ton, plus an inferred resource of 770,000 tons of 1.41% copper, 0.013 oz. gold and 0.2 oz. silver. (The previous operator was American; grades from historic drilling were not reported under the metric system.)
The deposit is covered by semi-unconsolidated overburden and decomposed granites described as “easily rippable.” The stripping ratio was previously estimated at 4.9:1 waste-to-ore over the life of the mine.
Sherwood is continuing to drill the property to confirm existing resources, upgrade the inferred resource within the proposed pit boundaries, and expand overall resources.
Along with the deposit and exploration data worth millions of dollars, the company acquired mining-related infrastructure that would cost many more millions, and much time and effort to duplicate today.
Access is from the Klondike Highway to Minto Crossing, where boat, barge, or an ice bridge over the Yukon River connects to a previously built 29-km road to the mine site. The compact site includes mill foundations, a semi-autogenous grinding (SAG) mill and ball mill awaiting installation, and a modern, 65-man camp.
Quin points out that the grinding and ball mills would require a long lead-time to purchase in today’s competitive mining market. “These improvements made Minto an attractive acquisition. There are very few projects that can go into production quickly, and even fewer that are economic, and partially permitted and built.
‘Perfectly maintained’
“Everything on-site was perfectly maintained,” Quin adds. “We were able to step into the kitchen and find clean cups for coffee.”
Sherwood paid a modest $8.4 million to acquire the project and completed an $11.2-million financing ($18.7 million if warrants are exercised) earlier this year.
The Minto project would benefit from infrastructure improvements, such as a power line to replace on-site diesel generators. Fortunately, the project is only about 50-80 km from a nearby hydropower grid that has excess capacity, and discussions between the company and Yukon Energy are described by both parties as “progressing well.”
Tidewater access is important too, and on this front, politicians from Alaska and the Yukon are working to ensure that developers such as Sherwood have the ability to ship concentrates to Asian markets from either Skagway or Haines.
Sherwood also has the benefit of a “co-operation agreement” with the Selkirk First Nation covering development of the deposit, and in the future may propose to explore nearby lands under their control.
Sherwood’s final study will bring costs current, update and upgrade resources, and evaluate “upside opportunities,” such as outlining areas with higher precious metals values. Previous operators didn’t pay much attention to gold and silver, and Quin sees potential for high precious metal credits in Minto concentrates.
While previous studies showed robust rates of return, Sherwood is examining “optimization opportunities” to improve project economics, including possibly adding a magnetite recovery circuit for an additional byproduct credit.
Meanwhile, the company is assessing the property’s potential for new high-grade discoveries through ongoing exploration programs. Several areas have been identified as prospective, including potential offsets of known zones, and targets outside the main deposits that were never followed-up by previous operators.
Quin describes Minto as a “unique deposit with unusual geology,” which appears to be the case, as there is geological consensus as to the origins and model of the deposit.
“Some people see similarities to intrusive-hosted porphyry copper deposits, while others believe it has affinities to IOCG (iron oxide copper-gold) deposits,” Quin says. “Others describe it as a highly metamorphosed stratiform deposit in sedimentary rocks.”
While geologically unique, the deposit isn’t geologically complex. The mineralization is coarse-grained and relatively continuous, though grades vary in certain pods and zones. Copper mineralization typically occurs as zones of bornite and chalcopyrite, with accessory magnetite. Copper oxide minerals (malachite and azurite) are present in upper parts of the zones, and to a lesser extent within the deposit along faults. The deposit is hosted in benign granodiorites or gneiss, and there are no significant other sulphides or pyrite, which means acid-mine drainage shouldn’t be a problem.
The deposit has a high-grade bornite core, further enhanced by the increased presence of gold and silver values. The nature of the mineralization is such that Sherwood expects a high-grade concentrate of 37% copper can be produced.
There is no outcrop at Minto, but because the terrain was never glaciated, new targets can be detected using stream sediment and soil geochemistry, as was the case with the initial discoveries. As for geophysics, induced polarization (IP) is effective, along with magnetic surveys, as magnetite occurs in the known deposits.
The current drill program is mostly confirmation (infill) drilling, though some stepout holes have also been drilled. Highlights from recent confirmation drilling include:
o 23.1 metres of 3.33% copper, 1.51 grams gold and 14.2 grams silver, in
cluding 10.5 metres of 5.05% copper, 1.71 grams gold and 22.6 grams silver;
o 25.7 metres of 2.42% copper; 0.94 gram gold and 9.9 grams silver, including 19.9 metres of 2.93% copper, 1.12 grams gold and 11.9 grams silver; and
o 36.6 metres of 2.52% copper, 0.45 gram gold and 8.1 grams silver, including 26.7 metres of 3.16% copper, 0.84 gram gold and 10 grams silver.
Highlights from previously reported holes include 10.2% copper, 1.8 grams gold and 42.3 grams silver per tonne over 14 metres, and 2.7% copper, 0.9 gram gold and 9.4 grams silver over 33.1 metres.
The company notes that results are “generally comparable to those anticipated from adjacent older holes, with the exception of gold, which continues to return significantly higher values than indicated by prior drilling.”
Some stepout holes also returned encouraging results, including 26.4 metres of 2.9% copper, 1.9 gram gold and 10.4 grams silver, which includes 14.4 metres of 4.1% copper, 2 grams gold and 13.6 grams silver.
Sherwood will incorporate drill results from its 2005 program into the updated feasibility study expected early next year. A production decision will follow, with the goal being to start production in 2007.
“We see Minto as our operating base in the Yukon,” Quin says. “Once the mine is up and running, we’ll turn our attention to acquisition opportunities that we’ve already identified in the district.”
Sherwood is debt-free and has 20.78 million shares (32.6 million fully diluted) outstanding.
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