Mining and exploration review north of the 60th parallel

Taking A Different Path – Copper North Mining Corp.‘s Carmacks project

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The Carmacks Project is located approximately 30 kilometres northwest of Carmacks on the Klondike Highway. The Carmacks copper deposit was first recognized in 1970, and advanced to feasibility stage with a feasibility study in 1993, and again in 2007, and 2012. Almost all of this work was focused on leaching of the oxide copper to produce cathode copper.

In March 2014, Copper North undertook a strategic review of the Carmacks project to re-engineer the project to enhance project economics. Following the review of the 2012 Feasibility Study, management identified three objectives for improving project economics: reduction of the cash cost of production, reduction of the capital and operating costs, and expanding the mineral resource and mine life.

Production cost reduction

Copper North added gold and silver leach alongside the leaching of copper to increase mine revenues. The addition of a gold and silver leach circuit increased Gross Revenues by 25 per cent and Net Operating Revenues by 48 per cent. The increase in revenues decreased the cash operating cost of copper, after deducting gold and silver credits, from approximately US$1.60 per pound copper, to $US 1.07 per pound. The decrease moved the project to the lower decile of the cost curve.  These reduction in the cost of production, allowed the company to raise additional capital to continue its re-engineering effort.

Re-engineering Carmacks copper

The path to reducing capital and operating revenues began with benchmarking of Carmacks costs compared to similar projects. Good fortune allowed the company to identify the Kounrad SXEW copper leach operation in Kazakhstan as a reasonable proxy: about the same copper output and similar cold weather conditions in the winter. The President of Central Asia Metals PLC, shared with Copper North their experience in the pursuit of reduction of capex for Kounrad, and in effect introduced the company to Beijing General Research Institute of Mining and Metallurgy (BGRIMM) in Beijing. The feasibility by BGRIMM indicated a 40 per cent decrease in capital expenditure for Kounrad – it was built on time, under budget, and performed well.

After discussion with several of the large Chinese engineering firms, Copper North selected BGRIMM to provide detailed engineering and procurement of all metallurgical facilities. BGRIMM will work with JDS Energy and Mining who will take the lead in the new Feasibility Study that is targeted for completion in fall 2015. Both of these groups see potential for significant reduction of capital costs at Carmacks.

The decision to leach gold and silver, led to a review and a significant change in the copper leach plan. Copper North then undertook additional metallurgical test work to confirm the leaching of copper in a series of vats. The recovery times for the vat leach copper are much faster than for heap leaching and the rinsing of the leach materials prior to commencing the cyanide leach.

Recent metallurgical work indicates that leach times are shorter than expected and has triggered additional test work to investigate leach times at a finer crush of the ores. Early results indicate that a finer crush of two to four millimetres will speed up leach times and could allow use of an agitated tank leach for copper and perhaps also for gold and silver recovery. These developments provide an attractive opportunity to simplify operations, reduce environmental impact, and reduction of capital and operating costs. These positive developments would not have realized had it not been for addition of the recovery of gold and silver and efforts to bring those revenues forward in the cash flow plan.

Exploration 

The third objective for expanding mineral resources and extension of mine life has a two-part approach: expansion of oxide mineral resources and confirming the viability of leaching the sulphide ores.

Exploration is focused on expansion of the mineral resource adjacent the proposed open pit area, zones 1, 4, and 7. This past summer, exploration resumed with the southerly expansion of the Zone 2 mineralization. The new discovery extended Zone 2 and closed the gap of the known mineralization; however, a large gap remains between Zones 1 and 2 and is a prime exploration target. Recent drilling also indicated the potential to expand the oxide mineral resource to the south. Exploration adjacent to the proposed open pit area and in the various other zones has the potential to double current oxide copper resources, as well as expand sulphide resources.

The other opportunity for extending mine life is to demonstrate the leachability of the sulphide resources. The current sulphide inventory includes 4.3M tonnes Measured and Indicated resources grading 0.75 per cent copper, 0.22 g/t gold and 2.45 g/t silver and an Inferred resource of 4.03M tonnes grading 0.71 per cent copper, 0.19 g/t gold and 1.9 g/t silver. Test work is in progress to determine leach parameters. The leach fluids from a sulphide leach can use the same SXEW plant for making copper cathode.

Copper North has made good progress on its three objectives towards re-engineering the Carmacks project, to make it a low cost producer and attractive for project financing. In the review and amend process, many of the risks associated with the previous project plan have been eliminated and potential environmental impact reduced. Exploration success would extend mine life and bring economic and social benefits to the Yukon for many years.

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