Just 20 months after the discovery of the rich West zone at its High Lake polymetallic project in Nunavut,
The wholly owned High Lake volcanogenic massive sulphide, copper-zinc deposits and the satellite Ulu gold-silver deposit are 55 km apart in western Nunavut’s Coronation Gulf area, some 550 km northeast of Yellowknife, N.W.T.
Based on a cutoff grade of 2% copper-equivalent, the indicated resource in High Lake’s AB, D and West (including 007) sulphide zones now stands at 14.3 million tonnes grading 2.34% copper, 0.32% lead and 3.53% zinc, plus 1.01 grams gold and 75.69 grams silver per tonne, for a copper-equivalent grade of 4.7%.
The West zone, which ranks as one of the world’s highest-grade, undeveloped VMS deposits, lies 1.6 km west of the previously known A/B and D zones, where Kennecott and Aber Diamond had outlined a 5-million-tonne resource during a drilling campaign in the mid-1990s.
Of the three zones comprising the measured resource, the West is now the largest, at 9.1 million tonnes grading 4.96% copper-equivalent. The copper-rich AB zone comes in second at 2.8 million tonnes grading 4.77% copper-equivalent, including 4.08% copper.
In the inferred category are a further 1.3 million tonnes grading 1.17% copper, 0.28% lead, 3.36% zinc, 0.78 gram gold and 64.62 grams silver, for a copper-equivalent grade of 3.29%.
The in situ value of the metal is US$140 per tonne, based on today’s metal prices and a cutoff of 2% copper-equivalent. The copper-equivalent calculations were based on prices of US$1 per lb. copper, US48 per lb. zinc, US$375 per oz. gold, and US$5 per oz. silver. The metallurgical recovery rates used were conservative at 85% for copper, 70% for zinc, 75% for gold, and 75% for silver.
The resource was prepared by geological consultant George Wahl, an independent “qualified person” under National Instrument 43-101.
Mining at High Lake could begin relatively swiftly with open pits at the shallow A/B zone (where the highest grades and widest intervals are nearest the surface), then proceed with an initial open pit at the deeper D zone. The West zone could come on-stream in year four, with access gained from a ramp rather than a previously envisioned shaft.
Wolfden crews have also been drilling the Ulu deposit, an updated resource for which is expected later this quarter. Wolfden is confident there are at least a million ounces present.
Before selling Ulu to Wolfden in 2003 for $12 million in cash and shares,
Underground development at Ulu is largely in place, so Wolfden could begin mining there in 2006 and achieve commercial production in late 2007. The Ulu mine is expected to last at least 10 years.
Wolfden plans to build a central mill that would accept feed from both the High Lake and Ulu deposits. Base metal concentrate would be transported 45 km to the north by an all-season road to a seasonal (4-month) seawater port, to be built on Coronation Gulf. From Ulu, Wolfden would be producing some gold bullion throughout the year and flying it out regularly.
Wolfden has potentially realized some major cost savings by acquiring zinc miner
The mill complex is now ready to be dismantled and will be stored on the Baffin Island coast, ready for shipment to High Lake in 2006.
Wolfden has also been in discussions with Kinross with respect to buying equipment from the major’s recently closed Lupin gold mine, some 120 km south of Ulu, near the border with the Northwest Territories.
Wolfden has budgeted $20 million for work at High Lake this year, with funds earmarked for: feasibility and exploration drilling (to resume in February); environmental permitting; decommissioning of the Nanisivik mill; underground work at Ulu; and prefeasibility and feasibility work for the entire High Lake project.
Consulting firm Wardrop is preparing a prefeasibility study of the High Lake project, which should be completed early in the second quarter.
“Our exploration drilling this year at High Lake will have a budget about four times last year’s,” says Wolfden President Ewan Downie. “Last year we focused on defining the West zone in order to move the project toward prefeasibility, and now that we feel we have enough resources to reach that stage, we can move back into a little more of an exploration focus to find new zones.”
The new zones to be probed include 007 (southwest of the West zone) and Gambler, a precious metal stringer zone discovered in the last two holes of the 2004 campaign, halfway between the A/B zone and the D zone.
Another drill-ready, base metals grassroots target, named Sand Lake, is 10 km north of High Lake.
“The West zone has been a great project for adding resources at High Lake, and we hope zones such as 007 and Gambler develop just as well and add more near-surface resources,” says Downie. “In 2005, we plan to pick up where we left off; it will be our biggest year ever at High Lake in terms of exploration and development expenditures.”
In all, Downie says the capital cost of the High Lake project will likely be in the range of C$100-200 million, with funds spent on mill, road and deep-water port construction.
Wolfden minority shareholder
With about $32 million in working capital and no debt, Wolfden remains fully financed to take its primary project, High Lake, to completion of a bankable feasibility study.
Farther south and east in Canada, Wolfden plans to spend a total of $2.5 million on various joint-ventured gold projects.
Wolfden has 50.2 million shares outstanding (54.8 million fully diluted). Shares dropped about 80 to a new 52-week low of $3.22 in the days following the resource announcement. They had rebounded to $3.40 at presstime.
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