Study deems Redfern’s Tulsequah economic

The Tulsequah Chief massive sulphide deposit in northwestern British Columbia has been deemed economic in a pre-feasibility study.

Redfern Resources (TSE), which owns the project, hired Tonto Mining to complete the study with input from independent consulting engineers, metallurgists and geologists. The study gives the project an estimated internal rate of return of 31% and a net present value (discounted at 10%) of about $103 million.

The study uses an 18% dilution factor to estimate minable reserves at 7.7 million tons grading 1.4% copper, 1.07% lead, 6.42% zinc, 0.07 oz. gold and 2.72 oz. silver per ton.

Metallurgy is considered excellent with estimated recoveries of 87% for zinc, 91.5% for lead and 86% for gold, silver and copper.

Assuming long-term average metal prices of US60 cents zinc, US$1 copper, US35 cents lead, US$375 gold and US$4 silver, the net smelter return is estimated at about $104.65.

The total capital cost, excluding permitting and including a 20% contingency, is estimated at $138 million initially, plus a further $22 million over the 9-year mine life.

The property is on the Tulsequah River and the capital cost estimate provides for road and deep-water loading facilities 30 miles southwest at Taku Inlet. The study calls for a 2,480-ton-per-day operation initially using a decline. Shaft-sinking would follow.

Based on an estimated operating cost of about $41.64 per ton, capital payback is believed to be achievable in three years.

Using current market prices, the study estimates the pre-tax internal rate of return at 18%, although Redfern is confident that current depressed prices are not indicative of long-term conditions.

Redfern President John Greig said he is pleased with the results of the study and that the company’s thrust over the next two years will be to determine the size of the system.

Four high-priority targets on the property include the Big Bull mine, a few miles south of the Tulsequah mine.

Both Tulsequah and Big Bull were operated by Cominco in the 1950s, with the latter reporting total production of 396,000 tons grading 1.2% copper, 1.9% lead, 7.3% zinc, 0.15 oz. gold and 4.5 oz. silver. Both mines were closed in 1957 because of low metal prices.

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