Big plans for Windy Craggy hinge on copper price

Harper said a mine would employ about 600 people and produce 120,000 tonnes of copper concentrate a year for at least 20 years based on known reserves. Such an operation would put it on a scale comparable to Curragh Resources’ lead-zinc mine at Faro, Y.T.

“This is a big project, big dollars,” said Harper during a recent tour of the remote exploration project.

“I would say a 40-year mine life is not at all out of the realms of likelihood,” said Harper, also vice- president of Northgate Exploration (TSE), the largest Geddes shareholder with 27%.

Windy Craggy is in the scenic St. Elias Mountains in the northwest corner of British Columbia, an hour’s flight away from the Yukon capital of Whitehorse.

It gets its name from the 2,130- metre peak that houses the massive sulphide orebody containing copper, cobalt, zinc, gold and silver. The compact camp, with about 55 staff now, is 30 minutes away on a road winding down the Tats Glacier from the portal.

With a $13-million exploration and development budget in what has been a slow mineral exploration year, Windy Craggy is one of the biggest projects for British Columbia and the Yukon.

Despite Harper’s optimism, the project must receive the blessings of the British Columbia government to become a mine. Production wouldn’t begin before 1994 at the earliest, with construction starting possibly by 1991.

To boost its chances of success, Geddes is also raising its public profile. The company held its board meeting Oct 12 for the first time in Whitehorse, which is the logical supply centre for the mine.

It also organized tours of the site for the Yukon media and government representatives from the Yukon, British Columbia and Alaska, and plans to hold public meetings in the future.

Interest is so keen among Whitehorse businesses that the Oct 17 site tour organized by the Whitehorse Chamber of Commerce had an extensive waiting list.

Geddes expects to file an over- all prefeasibility report in January to the provincial mine development review steering committee, addressing environmental, socio-economic and other aspects of the project.

British Columbia basically has a one-window regulatory system; obtaining the required permits for waste, water and other areas is fairly routine once the committee and then Cabinet give the go-ahead. Until then, major work such as building a road into the site isn’t allowed.

Harper admits the initial approval process isn’t easy. And the company’s proposed bridge across the Tatshenshini River — valued for rafting and fishing — and increased road traffic through the Chilkat Bald Eagle preserve has some environmentalists and native groups worried.

The basic plan is to mine the ore from an open pit, starting near the mountaintop and then, like a funnel, drop it into the existing underground tunnels.

Then the ore would be moved by slurry pipe (mixed with water), conveyor belt or other means 13 km to a plant site. The 28-30% copper concentrate would be trucked to the Port of Haines in Alaska. That’s where a new $30-million 100-km all-weather road across the Tatshenshini would come in.

The stakes in the approval process are high. Harper said Geddes will have pumped $36 million into site exploration and development by the end of this year.

There’s no firm final cost estimate, but Harper suggests $400 million as a possible cost to bring the deposit to production. Extensive design and engineering work are being done, Harper said, to ensure no cost surprises.

“First and foremost we have to be satisfied that economically it’s going to be a viable project,” Harper said. The company wants a minimum 15% return on investment.

This wouldn’t be hard at copper’s current high price, around $1.27(US) to $1.30 per lb, but prices are cyclical. Harper said Geddes is using the 80-90 cents range for cost estimates. The goal is to have operating costs in the 60 cents per lb range, he said.

Various options are being examined for capital cost recovery; a straight bank loan, straight equity (but this would mean a huge share issue), a bit of both, help from an Asian smelting company, or “innovative financing” such as the equivalent of a gold loan, with forward- selling using the futures market.

Windy Craggy already has at least 20 years of life, Harper said, giving a lot of time to regain costs. At a 0.5% cutoff, there are probable reserves of 120 million tonnes grading 1.67% copper and possible reserves of 33 million tonnes grading 1.52%.

Another plus is the strip ratio. Over a 15-year period the estimated average is 2:1, with a 1.5:1 or 1.25:1 ratio in the first few years.

The copper concentrates would likely be shipped to Asian smelting companies. Harper noted that the distance from Haines to the Pacific Rim is shorter than that from Vancouver.

“Several of the Asian smelting companies visit us periodically to keep up to date on the project,” he said. “They’re always shopping around.”

While copper is the target mineral initially, he said other circuits can be added to the mill to process smaller quantities of other minerals.

Harper said Canada is the fourth- largest copper producer in the world, with British Columbia producing about 350,000 tonnes of the 800,000-tonne national output. Of the five largest British Columbia copper mines, Harper said at least three are due to close in the next few years.

Falconbridge Ltd. discovered Windy Craggy in 1958 and did preliminary work, including a few drill holes. But nickel was that company’s first love.

It wasn’t until the late 1970s that Geddes Webster approached Falconbridge for a deal. Webster, founder of Geddes Resources, was looking for a major project.

The deal was done — Geddes could earn 49% of the deposit by spending about $1.3 million, which was completed in 1983.

A 1984 re-negotiation saw Geddes being able to earn 100% with Falconbridge, retaining a 22% net profits interest and the approximately $2.5 million it has spent on it. Those monies won’t be paid until after production begins and Geddes recovers its exploration and production costs, interest on debt, management charges and reserves for working capital.

“Potentially there’s going to be several deposits in there which are going to get discovered,” Harper said.

“There is a very good chance that Windy Craggy is not the only mine that will go into production there.”

]]>