Hunter-Dickinson-led
Gibraltar is a large-scale, 37,000-tonne-per-day open-pit and milling operation with an accompanying solvent extraction-electrowinning (SX-EW) circuit. Boliden acquired Gibraltar when it took over Westmin Resources in early 1998. In March 1998, Boliden announced mining would be suspended as a result of ongoing capital requirements at the mine and high operating costs in the weak copper price environment. Waste stripping was discontinued and operations focused on mining readily available ore. An attempt by a management-employee group to secure funds to keep the mine operating was unsuccessful, and, by February of this year, the mine had closed completely. Taseko will acquire the Gibraltar mine in exchange for maintaining it until copper prices return to a profitable level, and for assuming responsibility for reclamation. Boliden has agreed to leave in place its current reclamation bonding with provincial government agencies. Reclamation and post-closure water treatment costs were estimated in 1996 to be $35 million.
Ongoing maintenance costs at the mine run in the range of $300,000-$350,000 per month, and Taseko is reviewing these figures.
Under terms of the purchase agreement, Boliden will provide Taseko with $17 million of staged working capital funding in consideration of the allotment and issuance of an interest-free convertible debenture, with a term of 10 years. The debenture is convertible into shares of Taseko at market prices in the first year, increasing by 25 cents per year thereafter. After five years, the debenture is convertible at Taseko’s option at market prices.
The closing of the agreement, which is expected before the end of June, is subject to certain conditions, including the parties’ entering into satisfactory arrangements with the provincial government for the transfer of operating permits, closure responsibility and limitation of liability for Boliden.
Bruce Jenkins, director of project development for Taseko, tells The Northern Miner that the acquisition of Gibraltar complements its Prosperity copper-gold porphyry project, which is also in the Williams Lake area. The Prosperity project is undergoing a $5-million bankable feasibility study, which is due in August, spearheaded by Kilborn Engineering.
“We thought that acquiring those staff [the Gibraltar mine management team], together with the property, would help us finalize our feasibility study and position us to start up for the Prosperity project,” Jenkins says.
He adds that Gibraltar offers excellent exploration potential. “Our geologists are convinced there are some potential blue-sky copper deposits there.”
At the beginning of 1997, sulphide minable ore reserves at Gibraltar stood at 142.5 million tonnes grading 0.303% copper and 0.009% molybdenum, whereas oxide minable ore reserves were estimated at 3 million tonnes grading 0.273% copper.
Taseko estimates that current reserves can sustain another 12 years of operations, provided copper prices return to historic levels, and also intends to expand the reserve base.
Total mine production at Gibraltar in 1998 was about equal to 1997 levels. A total of 12.4 million tonnes of ore was processed at a head grade of 0.3% copper, producing 33,900 tonnes of contained copper-in-concentrate at a cash production cost of US69 cents per lb. Cash costs in 1997 were US96 cents per lb.
Prosperity
Meanwhile, Taseko reports that its Prosperity project hosts proven and probable open-pittable reserves of 631 million tonnes grading 0.254% copper and 0.46 gram gold per tonne at an overall stripping ratio of 1.89-to-1. The total resource stands at 1.2 billion tonnes grading 0.24% copper and 0.38 gram gold.
The reserve estimate was prepared by Independent Mining Consultants based on 144,000 metres of drilling in 326 core holes, and is equivalent to a contained resource of 3.5 billion lbs. copper and 9.4 million oz. gold.
Lakefield Research has performed metallurgical tests aimed at recovering copper and gold in a flotation concentrate. Tests on a 60-tonne bulk sample averaged 89.7% copper recovery and 76.2% gold recovery, and produced a 24.8% copper concentrate containing 41.2 grams gold.
Plans call for the minable reserves to be mined and milled in years 1 through 16, followed by the processing of lower-grade stockpiles over an additional five years, for a mine life totalling 21 years.
Taseko has proposed building a milling complex with a throughput rate of 110,000 tonnes per day. The mill would utilize two parallel grinding lines. Production is forecast to average: 190 million lbs. copper and 460,000 oz. gold per year in the first 10 years; 206 million lbs. copper and 416,000 oz. gold per year for years 11-16; and 129 million lbs. copper and 257,000 oz. gold per year for the final five years of the project’s 21-year mine life.
Capital costs are projected at $700-800 million.
Jenkins says permitting for Prosperity is nearly complete and that a final project report will be submitted upon completion of the feasibility.
Since 1991, when it acquired control of Taseko, the Hunter-Dickinson group has spent more than $70 million advancing the Prosperity project, including $28.7 million in acquisition costs.
Taseko has just under 20.1 million shares outstanding and $500,000 in cash.
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