Trio develops Sustut copper deposit

Vancouver — Northgate Exploration (NGX-T), Doublestar Resources (DSR-V) and privately owned Procon Mining & Tunneling will jointly develop the Sustut copper deposit, 65 km north of the Kemess mine in north-central British Columbia.

The Southeast zone has a resource of about 5.9 million tonnes grading 1.87% copper and 6.11 grams silver per tonne, based on a cutoff grade of 0.7% copper. Of this amount, 4.2 million tonnes grading 1.94% copper and 6.35 grams silver are classified as measured, and 1.7 million tonnes averaging 1.68% copper and 5.4 grams silver are indicated and inferred.

The 3-way agreement is in keeping with Northgate’s desire to expand in the Toodoggone area, says Ken Stowe, that company’s president. “We estimate that mining and processing of the Sustut ore could commence as early as mid-2003.”

The three companies will spend up to $300,000 to undertake a feasibility study. Procon would mine the ore on a contract basis, and Northgate would acquire and process the material at the nearby Kemess mine site. Plans call for the Sustut material to be blended with that of Kemess.

Kemess is a 50,000-tonne-per-day operation, with reserves (at the Kemess South deposit) pegged at 145.9 million tonnes grading 0.65 gram gold and 0.24% copper. In 2001, targeted production was 275,000 oz. gold and 30,390 tonnes copper at a cash cost of US$200 per oz. gold (net of byproduct credits).

The Sustut material would increase Kemess’s copper production by 40%, as well as increase the grade of the concentrate, improve the quality of tailings, and reduce the amount of steel required in the semi-autogenous mills. Environmentally, the Sustut material is acid-consuming and appears not to leach metals into the environment.

Initial scoping studies point to a capital cost in the range of $12-14 million. Based on a copper price of US90 per lb., the project’s internal rate of return would be 69%.

A tabular, volcanic redbed deposit, Sustut was discovered by Falconbridge in the early 1970s. Three deposits minable by open-pit methods were defined, and the total resource was estimated to be 43.5 million tonnes grading 0.81% copper at a cutoff grade of 0.4% copper. In 1999, Doublestar acquired 13 mineral projects, including Sustut, from Falconbridge in return for $500,000 and 1.5 million shares plus 500,000 warrants.