VANCOUVER – With an upgraded resource estimate for a second deposit at its Black Butte project in Montana now in hand, Tintina Resources (TAU-V) is ready to revamp the project's recent economic assessment while it awaits permission to drive a decline into the project's main copper deposit.
Tintina has been busy at Black Butte since acquiring control of the property in 2010. In the first two years Tintina completed some 54,000 metres of drilling, updated the resource at the flagship Johnny Lee deposit, and completed a preliminary economic assessment (PEA).
Now the company has boosted Black Butte's measured and indicated copper resource above 1 billion pounds by upgrading the resources within a second deposit. The Lowry deposit lies 2 km east of Johnny Lee and consists of five zones of copper mineralization, of which the Middle zone is the largest and highest grade.
The Middle zone is now home to 4.1 million indicated tonnes grading 2.94% copper, 0.1% cobalt, and 15.1 grams silver per tonne, plus 801,000 inferred tonnes averaging 2.58% copper, 0.1% cobalt, and 14.1 grams silver.
"Infill drilling on the Lowry deposit Middle zone upgraded most of the resource to indicated status," said Tintina's vice-president of exploration Jerry Zieg in a statement. "The addition of the indicated resource on the Lowry deposit achieves our goal of over one billion pounds of high-grade copper resource. The additional M&I resources justify examining the opportunity for a significant expansion in mill throughput and/or a longer mine life for a future Black Butte copper operation."
Tintina completed a first-pass PEA for Black Butte in July. That study only contemplated the Johnny Lee deposit, which at the time only contained 553 million lbs. copper in its indicated resource. The PEA determined that an investment of US$210.4 million would build an underground mine capable of processing 3,300 tonnes of ore per day through a conventional mill and flotation circuit to produce a single concentrate. Resources at the time supported a 14-year mine life.
Using a copper price of US$2.97 per lb. and an 8% discount rate, that Black Butte operation carried a pretax net present value of US$145.8 million and would have generated a 20.4% internal rate of return.
A few months later, Tintina expanded Johnny Lee with a new estimate that pegged the deposit's measured and indicated resources at 11.6 million tonnes grading 3.57% copper, 0.1% cobalt, and 13.4 grams silver. Inferred resources grew to 1.5 million tonnes averaging 2.91% copper, 0.092% cobalt, and 13.6 grams silver.
Adding together the new Lowry resource and the earlier Johnny Lee resource brings Black Butte's current count to 15.7 million measured and indicated tonnes grading 3.4% copper, 0.1% cobalt, and 13.9 grams silver, plus 2.3 million inferred tonnes averaging 2.8% copper, 0.09% cobalt, and 13.8 grams silver.
Tintina now plans to revamp its Black Butte PEA based on the newly-expanded resource. The new vision may incorporate a higher throughput or envision a longer mine life. The company plans to release the results of the new study before the middle of the year.
Copper mineralization was discovered at Black Butte in the 1980s, but the last of a series of owners turned the property back over to its rancher owners in 1993. In 2010, members of the original discovery team – now working with Tintina – reconnected with those property owners. By May 2010 Tintina had inked mining leases covering 5,000 acres of private ranch lands, which contain all known resources at Black Butte to date.
Since September 2010 Tintina has completed 54,500 metres of drilling, which added to 37,500 metres of historic drilling data to define the resources at Johnny Lee and Lowry.
The Middle zone at Lowry is a tabular unit of copper-cobalt-silver mineralization within fragmented, silicified, and dolomitized shale and carbonate. At its north end, the deposit is 265 metres below surface but it dips gently to the south, reaching a depth of 720 metres below surface. At present the Middle zone measures 600 metres length by 300 metres width; its thickest parts are 80 metres tall.
Johnny Lee is a similar deposit. Sitting 2 km west of Lowry, Johnny Lee also hosts copper, cobalt, and silver in bands of massive chalcopyrite bounded by pyritic layers within shale and conglomerates. Johnny Lee is divided into two segments. The Upper zone lies 30 to 200 metres below surface and reaches 30 metres in thickness; the Lower zone lies between 340 and 500 metres depth and is up to 13 metres thick.
Johnny Lee and Lowry are both amenable to underground mining. At the start of the year Tintina submitted an application to the Montana authorities to drive a decline in to Johnny Lee, to provide access for underground drilling and bulk sampling of as much as 10,000 tonnes of ore for metallurgical testing.
The company expects to gain approval for the plan before the middle of 2013. Community and regional support for the project is strong, because Montana has a long history of mining and because the area around Black Butte is struggling economically and residents are keen for new employment opportunities.
News of the Lowry resource had no impact on Tintina's share price, which remained at 27¢. The company has a 52-week share price range of 21¢ to 50¢ and has 142 million shares outstanding.
© 1915 - 2013 The Northern Miner. All Rights Reserved.