A positive feasibility study of the Duck Pond copper-zinc project in central Newfoundland means partners
The feasibility study on the project, 30 km southeast of Buchans, gives a green light to a 1,500-tonne-per-day mine and mill, with initial production to come from the Boundary deposit, a near-surface massive sulphide body 4 km northeast of the main Duck Pond mineral deposits. Boundary, with 533,000 tonnes in proven and probable reserves grading 3.4% copper, 2.7% zinc, 0.4% lead, 22 grams silver and 0.3 gram gold per tonne, would be mined by open-pit methods, providing early cash flow for the project. The mill would be built at the Duck Pond deposit, with ore trucked from Boundary.
Duck Pond itself would be ready for production in the second year of operation, with access by a decline. The feasibility study considered only the two shallower orebodies, Upper Duck and Sleeper; a third, Lower Duck, is currently only in the resource category.
The feasibility study used a reserve figure of 4.7 million tonnes grading 3.3% copper, 6.2% zinc, 1% lead, 63 grams silver and 0.9 gram gold per tonne at Duck Pond, and added in resources of 269,000 tonnes grading 2.4% copper, 6.3% zinc, 1% lead, 57 grams silver and 0.8 gram gold. There are inferred resources, over and above reserves in the three Duck Pond orebodies, totalling 1.1 million tonnes of 2.6% copper, 5.6% zinc, 1.2% lead, 58 grams silver and 0.6 gram gold.
At the projected mining rate, the mine’s life is just over 10 years. It would produce about 14,500 tonnes copper and 27,200 tonnes zinc.
The main deposit would be mined by drifting and filling, using conventional rubber-tired equipment. The 5.5-metre-wide decline would have a 15% grade.
Conventional flotation is expected to work well on Duck Pond ore, as metallurgical testing has shown recoveries of 83% of the copper and 84% of the zinc. There will be circuits for a 24.1% copper concentrate and a 56% zinc concentrate.
About 55% of the mill tailings will be returned underground as paste backfill.
Precious metals report to both concentrates; the copper con runs 134 grams silver and 1 gram gold per tonne, and the zinc con, 78 grams silver and 0.6 gram gold. Neither has significant concentrations of “penalty” elements, such as arsenic or antimony.
Concentrates would be trucked to the north coast port of Botwood, 143 km away by road, for shipment offshore. About 15 km of road upgrades are incorporated into the project. Power will come from the provincial hydro grid, requiring a 60-km line from Buchans.
The feasibility study projected capital costs of $79.6 million, including the road and hydro work and an 11% contingency figure. Average cash operating costs were estimated at $42 per tonne of ore, translating into a cash cost of US$705 per tonne of copper (US32 per lb.). The mine will employ 166 people, and during the construction phase, it will need another 15 contractors.
Assuming 100% equity financing and a discount rate of 7.5%, the project has an internal rate of return of 18%, a net present value of $44.5 million, and net cash flow of $118.3 million. The use of reconditioned equipment could bring preproduction capital costs down to $75.2 million, thereby raising the rate of return to 19%, net cash flow to $121.2 million, and the net present value to $47.5 million.
A further $11.3 million in capital expenditures will be needed once the mine is in production.
The study assumed prices of US$2,095 per tonne for copper (US95 per lb.), US$1,100 per tonne for zinc (US50 per lb.), US$440 per tonne for lead (US20 per lb.), US$5 per oz. for silver, and US$275 per oz. for gold. It also assumed the U.S. dollar will have an exchange rate of $1.47 over the life of the project.
The projections include payment of a 2% net smelter return to
Thundermin, which posted a loss of $700,034 in 2000, is seeking further financing to repay a $1.5-million loan from Queenston and to fund its activities at Duck Pond.
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