Newfoundland’s newest copper-zinc mine looks to be a winner

With concentrate production well under way, and an official opening ceremony under its belt, mid-tier copper miner Aur Resources (AUR-T, AURRF-O) is off to a good start at its new, wholly owned Duck Pond copper-zinc mine in Newfoundland.

The mine is on a 128-sq.-km property in the central part of the island, about 100 km southwest of the city of Grand Falls-Windsor.

Miners are just beginning to tap into the property’s two deposits, named Duck Pond and Boundary, which are Cambrian-age, volcanogenic massive sulphide (VMS) lenses enriched in copper and zinc with lesser lead, silver and gold.

Aur geologists have divided the Duck Pond deposit into three gently dipping sulphide zones: Upper Duck, situated 200-450 metres below surface; Sleeper, situated 50 metres below Upper Duck; and Lower Duck, situated at a depth of 650-850 metres.

The Boundary massive sulphide deposit, 4.5 km northeast of the Duck Pond deposit, is comprised of three very shallow zones named North, South and Southeast.

Exploration at the property was first carried out in 1973 by Falconbridge, which discovered the small Burnt Pond copper-zinc prospect that year.

Falco geologists found the Boundary deposit in 1980, and then, between 1985 and 1991, drilled out the Upper Duck zone and identified the Sleeper and Lower Duck zones.

Thundermin Resources (THR-T, TUDMF-O) dropped by in 1999 and optioned the property from the major, and then entered into a separate joint-venture agreement with Queenston MiningIn those early years of the JV, Thundermin and Queenston carried out infill and definition drilling on both the Duck Pond and Boundary deposits, and retained consultants AMEC to complete a feasibility study in May 2001.

In March 2002, Aur bought Thundermin’s and Queenston’s interests in the property for a combined $6 million, and spent the next couple of years updating and revising the juniors’ work. This effort culminated in a production decision in December 2004 and mine construction getting under way in early 2005.

The first copper and zinc concentrates were produced in January 2007, and commercial production was achieved in the second quarter. The mine, mill and related infrastructure cost $115 million to build, of which $85 million was spent last year.

As of December 2006, the mine’s reserves were only 4 million tonnes grading 3.29%, 5.68% zinc, 59.3 grams silver per tonne and 0.86 gram gold per tonne.

From the current reserve base, the plan is to mine at a rate of 1,800 tonnes per day over 6.2 years. Some 3.7 million tonnes from the deeper Duck Pond deposit will be mined from underground using a ramp that will ultimately extend 3 km, and the remaining 400,000 tonnes will come from two modest open pits at Boundary in the sixth and seventh years of mining.

If the 1.1 million tonnes of similar-grading, inferred material is brought up to resource status, the mine life could be extended to eight years.

The on-site milling facility contains a semi-autogenous grinding mill operating in closed circuit with a vibrating screen, and a ball mill operating in closed circuit with hydro-cyclones.

The ore slurry is then pumped to the flotation circuit, with its three primary circuits: bulk copper-lead; copper-lead separation; and zinc.Some of the tailings is turned into paste to backfill the mined-out stopes, while the rest is pumped to a submerged tailings pond that will inhibit oxidization of the remaining sulphides.

This year, the mill is slated to process 578,000 tonnes of ore, and sell concentrate containing 28.4 million lbs. copper, 52.8 million lbs. zinc, 378,000 oz. silver and 2,700 oz. gold.

Aur expects production from existing reserves to average 41 million lbs. copper, 76 million lbs. zinc, 574,000 oz. silver and 5,000 oz. gold annually during the period 2007-2011.

From the Duck Pond site, truckers take the concentrates to a storage and ship-loading facility at the ocean port of St. George’s on Newfoundland’s west coast.

Xstrata (XSRAF-O, XTA-L) is buying the copper and zinc concentrates under the terms of life-of-mine concentrate sales agreements.

Aur says that the copper concentrate will all be sold at benchmark Japanese smelting and refining terms, while the zinc concentrates will be sold at discounts to benchmark terms in years 2007-2010 and at European benchmark terms thereafter.

Power at the mine site is supplied from a sub-station in the nearby town of Buchans, while process water is brought in via a 1.7-km pipeline from Tally Pond.

Aur expects mine-site operating costs to average US$69 per tonne milled in 2007, while the total cash-production cost, including all concentrate treatment, refining and transportation costs and net of zinc, gold and silver revenues, is expected to average US15 per lb. of copper sold.

The Duck Pond mine employs about 192 people; about half will live on-site in a camp, with the rest commuting by road from not-too-far towns.

Company-wide, Aur’s mining revenues were US$156.4 million in the first quarter of 2007, compared to US$135.1 million for the same period in 2006, while net earnings were an impressive US$57.8 million, up from US$46.8 million a year earlier.

Based in Toronto, Aur also owns 90% of the Quebrada Blanca copper mine and 90% of the Andacollo copper mine, both of which are located in northern Chile.