VANCOUVER — NorthIsle Copper and Gold (TSXV: NCX; US-OTC: NTCPF) has outlined a mine plan for its wholly owned North Island low-grade copper-gold project near the town of Port Hardy, B.C., at the northern tip of Vancouver Island.
The company’s preliminary economic assessment (PEA) marks the first publicly released engineering study on the historic Hushamu and Red Dog deposits, which were found during an exploration push in the mid-1960s.
The property totals 330 sq. km, northwest of BHP Billiton’s (NYSE: BHP; LON: BLT) reclaimed Island Copper mine, and covers most of a Mesozoic-age geological district that reportedly hosts porphyry copper and gold occurrences.
The North Island report models a 75,000-tonne-per-day operation, which would annually produce 82 million lb. copper, 79,000 oz. gold and 3 million lb. molybdenum.
The $1.3-billion development would have a 22-year mine life and features a 14.3% after-tax internal rate of return and $550-million net present value at an 8% discount rate. NorthIsle’s base case assumes US$3.10 per lb. copper, US$1,300 per oz. gold and US$9 per lb. moly.
“The PEA will come as a bit of a shock to the market because the asset has changed a lot over the past decade,” NorthIsle president Jack McClintock says during an interview in Vancouver.
“We’ve spent a lot of time exploring the growth potential at Hushamu, which is now a much bigger deposit with a very low strip ratio. The other game changer is really Red Dog. The deposits have never been looked at in combination, and it has changed our approach and the economics. The project has always had great infrastructure and relatively straightforward metallurgy,” he adds.
Indicated resources are 457 million tonnes grading 0.2% copper, 0.25 gram gold per tonne and 0.008% moly, and inferred resources total 143 million tonnes at 0.14% copper, 0.2 gram gold and 0.009% moly.
NorthIsle’s mine plan targets higher-grade material from Red Dog, concurrently with Hushamu, in the early years. The company reports a strip ratio of 0.72 to 1.
NorthIsle recently completed 1,800 metres of drilling highlighted by hole 17-5, which cut 123 metres of 0.22 gram gold, 0.11% copper and 0.01% moly. The company hopes the intercept indicates Hushamu is “open for a considerable distance to the southeast,” which could lead to more resource expansion.
“I’d also point out that drilling in the south-central part of the deposit shows that much of previously presumed barren lithocap contains copper, gold and molybdenum mineralization,” McClintock says. “There’s definite upside that requires more infill and exploration drilling. We were initially trying to run the numbers at a lower throughput to keep the capital requirements down, but found that boosting the production rate really helped the economics.”
NorthIsle could increase its throughput pending exploration success, and is analyzing models ranging from 85,000 tonnes to 90,000 tonnes per day. It will also look at metallurgy, with current recoveries estimated at 78% copper, 38% gold and 59% moly.
NorthIsle shares have traded in a 52-week range of 6.5¢ to 20¢ per share, and closed at 13¢ at press time. The company has 114.5 million shares outstanding for a $14.9-million market capitalization. It had $900,000 in cash in September.
“It’s important to understand the different demographics on Vancouver Island. We’re up in the north and it’s quite sparsely populated,” McClintock says. “The people that live in our area tend to be directly related to logging, commercial fishing and mining. We’ve had a great reception in Port Hardy and from the regional First Nation bands.”