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Copper North Completes 2012 Feasibility Study Update for Carmacks
Vancouver, British Columbia � Copper North Mining Corp. (�Copper North� or �the Company�) (TSX.V: COL) is pleased to announce results from its National Instrument 43-101 (�NI 43-101�) feasibility study update (�the Feasibility Study�) for the wholly-owned Carmacks Copper Project (�Carmacks�), located in the Yukon Territory, Canada.
The Feasibility Study concludes that development of Carmacks can be achieved with an after-tax internal rate of return (�IRR�) of 15.6%, based on 100% equity financing. The project has an after-tax, net present value (�NPV�) of $55.0 million using an 8% discount rate, the U.S Securities and Exchange Commission (�SEC�) three year historical copper price of US$3.63/lb, and an exchange rate of US$1: C$1.
President and Chief Executive Officer, Dr. Sally Eyre stated �despite significant cost increases across the mining sector, coupled with a stronger Canadian dollar, the 2012 Feasibility Study demonstrates that Carmacks remains economically viable at current copper prices. The completion of the study is another important step towards de-risking the project. However, to further improve project economics, the Company is considering a brownfields exploration program that would focus on developing the known copper oxide resource potential at Carmacks�.
The Feasibility Study was prepared in accordance with the requirements of NI 43-101 by M3 Engineering and Technology Corporation (�M3�) of Tucson, Arizona with resource estimation provided by Tetra Tech WEI Inc. (�Tetra Tech�) (formerly Wardrop Engineering (�Wardrop�)) of Vancouver, British Columbia, and reserve estimation and mine costing by Independent Mining Consultants (�IMC�) of Tucson, Arizona. Geotechnical, water management and water quality studies were conducted by Golder Associates (�Golder�) of Burnaby, British Columbia. Environmental data were collected by Access Consulting Group (�Access�) of Whitehorse, Yukon.
In the Feasibility Study, M3 recommends that the Company proceed with the development of Carmacks, which is planned as a conventional open-pit oxide mine, with acid heap leach and solvent extraction, electrowinning (�SXEW�) process facilities.
Copper North will continue its permitting efforts to secure the required licences, so that it can proceed with project planning, financing and execution. Subject to permitting and financing, the Company plans to initiate basic engineering in late 2013 and commence construction in early 2014.
Over the projected 8 years of operation, the mine is expected to produce a total of 211.5 million pounds of pure copper cathode of grade equal to or exceeding LME Grade A. Production is scheduled to commence in early 2016.
Financial Analysis
Total initial capital is estimated to be $177.6 million (including a $16.67 million contingency and $5.77 million of owner�s costs). Life-of-mine cash operating costs are estimated to be $1.59 per pound of copper produced for the current mineable reserve.
The Feasibility Study includes financial analysis on three copper price scenarios. All three pricing scenarios assume an exchange rate of US$1: C$1:
(1) SEC pricing: three year historical prices, assumes a copper price of US$3.63/lb as of September 30, 2012.
(2) Alternate Case assumes a copper price of US$3.20/lb throughout the mine life (the alternate case copper price approximates the low end of the 10 year copper price forward curve (source - Bloomberg as of August 22, 2012). The Company expects the project to operate during this period; and
(3) Spot Price assumes a price of US$3.75/lb as of September 30, 2012
Table 1. Financial Analysis
| |
SEC Price (1) |
Alternate Case (2) |
Spot Price (3) |
| |
US$3.63 |
US$3.20 |
US$3.75 |
After-tax NPV (0%)
(C$ millions) |
$156.0 |
$98.9 |
$171.7 |
After-tax NPV (5%)
(C$ millions) |
$86.1 |
$40.3 |
$98.7 |
After-tax NPV (8%)
(C$ millions) |
$55.0 |
$14.5 |
$66.2 |
| After-tax IRR % |
15.6% |
10.0% |
17.1% |
| Payback |
4.1 years |
5.3 years |
3.8 years |
Mining and Mineral Processing
Mine plans were developed for the Carmacks copper deposit based on delivering ore to the crusher at the rate of 1.77 million tonnes per year (approximately 4,860 tonnes per day). The peak total material movement rate (ore and waste) is 13.5 million tonnes per year.
Table 2. Production Metrics
| Production and Processing Metrics |
| LOM Average Annual Copper Production (lbs.) |
30M |
| LOM Average Copper Grade (%) |
0.977 |
| LOM Strip Ratio |
5.1:1 |
| Total Recovery |
85% |
Total material is 70 million tonnes for a waste to ore ratio of 5.1 to 1. Pre-production is minimal at 953 ktonnes. The total material movement is 9.5 million tonnes during Year 1.
The overall copper recovery has been estimated at 85% and will be spread out over the life of the heap.
Hydrodynamic characterization tests were conducted in May 2012 by HydroGeoSense of Tucson, Arizona. The hydrodynamic test results (Stacking Tests and Hydrodynamic Columns) further demonstrate that the oxide ore at Carmacks is highly competent and permeable on the leach pad.
Capital Costs
The total initial capital is estimated to be $177.6 million (including a $16.67 million contingency and $5.77 million of owner�s costs). The capital cost represents an increase of approximately 18% from the capital cost estimate in the 2007 Feasibility Study.
The increase in capital cost reflects escalation in costs of equipment, materials and labour as well as $9.7 million in additional capital for the construction of an 11km long, 34.5 kV power line from the existing power grid at McGregor Creek to the main substation at the Carmacks mine site.
Table 3. Initial Capital Cost
| Initial Capital Cost |
C$ |
| Process, Infrastructure, Project Contingency |
$162.1 million |
| Mine Development |
$5.9 million |
| Mine Equipment Lease (during pre-production) |
$3.8 million |
| Owners Cost |
$5.8 million |
| TOTAL |
$177.6 million |
Sustaining capital for the life of mine is estimated at $4.73 million, which includes the expansion of the heap leach pad (inter-lift liners, associated grading, over-liners, geotextiles and pregnant leachate solution (�PLS�) piping).
Operating Costs
Total cash operating costs are estimated at $336.9 million for the life-of-mine (or $1.59 per pound of copper produced) which includes mining, mine equipment lease, processing, general and administration, and shipping costs.
Operating costs were based on an annual ore tonnage of 1.77 million tonnes and copper production of 12,800 to 15,500 tonnes of copper cathode annually. The life-of-mine unit cost per ore tonne is C$29.15.
Table 4. Operating Costs
| Operating Costs |
Total Cost C$ |
C$ per tonne ore |
| Mining |
$183.5 million |
$15.88 |
| Processing |
$112.2 million |
$9.71 |
| General and Administration |
$38 million |
$3.29 |
| Shipping |
$3.2 million |
$0.27 |
| TOTAL |
$336.9 million |
$29.15 |
The mine operating costs are based on owner operation of the mine. Mining equipment is leased. During commercial production (years 1 to 7), the unit costs for mining are $2.66 per total tonne and $15.88 per ore tonne.
Mineral Reserve and Resource
The mine plan proposed by IMC is based on a resource estimate which was prepared by Wardrop (now Tetra Tech). The resource estimate includes historical data plus data from the 2006 exploration campaign (conducted by Western Copper Corp., now Western Copper and Gold Corp.). The following tables (Tables 5 and 6) summarize the mineral resource and reserve estimates.
A mineral resource estimate was prepared in 2007 by Dr. Gilles Arseneau, P.Geo., while employed at Wardrop (now Tetra Tech) and is disclosed in the Company�s 2011 NI 43-101 Compliant Qualifying Report for the Carmacks Copper Deposit, Yukon Territory dated October 17, 2011 (�Qualifying Report�). A summary table of Mineral Resources from this Qualifying Report is reproduced below for convenience. Please refer to the Qualifying Report for complete disclosure of the resource estimation methodology employed and other relevant context.
Table 5. Mineral Resources
MINERAL RESOURCES AT 0.25% TOTAL COPPER CUT-OFF
|
| Zone |
Category |
Tonnage
tonnes (000) |
Total Cu
(%) |
Oxide Cu (%) |
Sulphide Cu (%) |
Au
(g/t) |
Ag
(g/t) |
Zone 1
Oxide |
Measured (ME)
Indicated (IN)
ME+IN
Inferred |
2,985
7,058
10,043
64 |
1.25
1.07
1.13
0.84 |
1.02
0.86
0.91
0.62 |
0.23
0.21
0.22
0.22 |
0.696
0.405
0.492
0.122 |
6.514
4.094
4.813
1.793 |
Zone 4
Oxide |
Measured (ME)
Indicated (IN)
ME+IN
Inferred |
614
257
871
23 |
0.48
0.51
0.50
0.41 |
0.37
0.35
0.36
0.25 |
0.11
0.16
0.15
0.16 |
0.211
0.184
0.192
0.139 |
2.414
2.230
2.285
1.871 |
Zone 7
Oxide |
Measured (ME)
Indicated (IN)
ME+IN
Inferred |
432
634
1,066
3 |
0.97
0.90
0.92
0.81 |
0.82
0.74
0.76
0.64 |
0.15
0.16
0.16
0.18 |
0.376
0.317
0.335
0.179 |
4.430
4.155
4.237
1.665 |
1+4+7
1+4+7
1+4+7
1+4+7 |
Measured (ME)
Indicated (IN)
ME+IN
Inferred |
4,031
7,949
11,980
90 |
1.10
1.04
1.07
0.73 |
0.90
0.83
0.86
0.53 |
0.20
0.20
0.21
0.20 |
0.588
0.391
0.456
0.128 |
5.666
4.039
4.578
1.809 |
Zone 1
Sulphide |
Measured (ME)
Indicated (IN)
ME+IN
Inferred |
695
3,645
4,340
4,031 |
0.80
0.74
0.75
0.71 |
0.02
0.03
0.03
0.01 |
0.77
0.71
0.73
0.70 |
0.261
0.205
0.221
0.179 |
2.542
2.296
2.369
1.900 |
The Measured and Indicated Mineral Resources that form the basis of the mineral reserves below (see Table 6) total 12.0 million tonnes (oxide zones 1,4,7), at 1.07% total copper.
The estimated proven and probable mineral reserves are contained within an engineered pit design based on a floating cone analysis of the resource block model using the measured and indicated mineral resource (oxides).
Total combined proven and probable mineral reserves (oxides) are estimated at 11.6 million tonnes grading 0.977% total copper. The mineral reserve contains 248.9 million pounds of copper, of which it is estimated that approximately 211.5 million pounds is recoverable. Proven and Probable Mineral Reserves were calculated at a long-term copper price of $2.50 per pound.
Table 6. Mineral Reserves
| Reserve Category |
Ktonnes |
Tot Cu (%) |
Sol Cu (%) |
Nonsol Cu (%) |
Gold (g/t) |
Silver (g/t) |
| Proven Mineral Reserve |
4,127 |
1.039 |
0.851 |
0.188 |
0.559 |
5.39 |
| Copper (Mlbs) |
|
94.5 |
|
|
|
|
| Probable Mineral Reserve |
7,424 |
0.943 |
0.78 |
0.163 |
0.365 |
3.76 |
| Copper (Mlbs) |
|
154.3 |
|
|
|
|
| Proven & Probable Reserve |
11,551 |
0.977 |
0.805 |
0.172 |
0.435 |
4.34 |
| Copper (Mlbs) |
|
248.9 |
|
|
|
|
Notes:
- Indicated mineral resources are inclusive of mineral reserves
- Estimate of mineral resources contained within the Feasibility Study conforms to the Canadian Institute of Metallurgy (CIM) Mineral Resource and Mineral Reserve definitions (Dec. 2005) referred to in NI 43 -101
- Mineral reserves are fully diluted and are based on a cut-off grade of 0.18% recoverable copper
Infrastructure
Copper North anticipates that Yukon Energy Corp. will serve the Carmacks mine from the existing Carmacks-Stewart 138 kV transmission line built along the Klondike Highway. A new substation (tap-off) in the vicinity of McGregor Creek would feed an 11 km, 34.5 kV transmission spur-line to the mine�s main substation, terminating on a dead-end structure. Total project load at the mine is estimated to be about 10 megavolt-amperes. The proposed schedule for completion of this extension is Q3, 2015.
Copper North will provide the capital for the design, permitting and construction of the tap-off from the existing grid, and 11 km, 34.5 kV transmission line which is estimated at $9.7 million.
Project Design Changes
The main change to the Project design involves the use of inter-lift liners in the Heap Leach Facility at a maximum of every three lifts (24 m). This feature is common in the heap leaching industry and expedites the transport of PLS through the heap while allowing lower layers to commence drain-down once leaching in those layers is complete.
The water quality model has been upgraded to a dynamic, GoldSim-based model that is integrated with the site wide water balance (also in GoldSim). Integration of water quality and water balance allows the Company to predict how variations in environmental and operating conditions will affect water quality originating from the site and the receiving water quality.
With respect to the Company�s discharge management plan, Copper North is adopting site-specific end-of-pipe effluent quality standards. This end-of-pipe management approach will provide operational certainty for the Company and clearly demonstrates how the Company will protect receiving water quality.
The industry standard reclamation approach for closure of copper heaps, involves surface re-contouring, together with a store and release cap and, storm water management/diversion. Preliminary conceptual designs for all three elements were incorporated into the previous closure plan. However, the concepts have now been further developed on more engineering detail. Neutralization and rinsing of the heap, which was previously proposed, has now been eliminated from the closure approach, in accordance with current industry practice.
Permitting
As a result of the project design changes announced in early March (see the Company�s news release dated March 1, 2012) the Company is required to submit a new project proposal for an environmental and socio-economic assessment which is conducted in accordance with the Yukon Environmental and Socio-Economic Assessment Act and administered by the Yukon Environmental and Socio-Economic Assessment Board (�YESAB�). The Company is preparing to submit a new project proposal to YESAB prior to the end of the year.
Once the environmental assessment phase of permitting is completed, and a positive decision is issued by YESAB, the regulatory phase of permitting can commence. The project design changes along with an updated closure plan will be submitted to Energy Mines and Resources for an amendment of the Company�s existing Quartz Mining Licence. A type A Water Use Licence (�WUL�) is required before construction of water management facilities can commence.
Opportunities
M3 recognizes that substantial opportunities exist to enhance the project economics, which include:
- the potential for additional oxide ore reserves within the present mineral claims, reported additional oxide resources off-property, but within trucking distance, and the potential of processing oxide ore stockpiles from a nearby mine; and
- the opportunity to evaluate contract mining in lieu of self-performance and contract crushing, as well as the evaluation of re-conditioned equipment for haulage and select process equipment.
The Company also recognizes the opportunity to further evaluate known sulphide occurrences within the Carmacks property and to assess the potential for mining and processing the sulphides at a later date.
Qualified Persons
All disclosure of scientific or technical information herein is based on information prepared by or under the supervision of Mr. Conrad Huss, P.E of M3. Mr. Huss is a qualified person as defined by NI 43-101 (�Qualified Person�) and has approved the content of this news release and is also responsible for the preparation of the Feasibility Study.
Mr. Gilles Arseneau, Ph.D., P.Geo. is a Qualified Person and is responsible for the preparation of the mineral resource estimate in the Feasibility Study.
Mr. Michael G. Hester, FAusIMM of IMC is a Qualified Person and is responsible for the preparation of the mineral reserve estimate in the Feasibility Study.
Mr. John Hull, P.Eng. of Golder is a Qualified Person and is responsible for the preparation of the geotechnical, water management and water quality studies in the Feasibility Study.
The NI 43-101 Technical Report, Feasibility Study, Volume 1, Yukon Territory, Canada prepared for Copper North Mining Corp., by M3 Engineering and Technology Corporation, will be filed within the next 45 days and will be available on SEDAR at www.sedar.com.
On behalf of the Board of Directors:
�Sally L. Eyre�
Dr. Sally L. Eyre
President, CEO and Director
For Further Information:
Peter Oates, Manager, Investor Relations
Tel: 604.638.2505
Email: info@coppernorthmining.com
Web: www.coppernorthmining.com
Renmark Financial Communications
Tel: 514.939.3989
Email: info@renmarkfinancial.com Web: www.renmarkfinancial.com
This news release includes certain forward-looking information or forward-looking statements (collectively "Forward-Looking Information") for the purposes of applicable securities laws. Forward-Looking Information includes, but is not limited to, statements with respect to proposed exploration and development activities and their timing and potential mineralization; possible events, conditions or performance that are based on assumptions about future courses of action; the timing and costs of future exploration and development activities on Carmacks; permitting and infrastructure time lines and requirements; requirements for additional water rights; and operating cost estimates. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as "plans", "expects" or "does not expect", "scheduled", "estimates", anticipates", "potential", "recommends" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would" or "will be taken", "occur" or "be achieved". These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company�s expectations include, among others, the timing and success of future exploration and development activities, exploration and development risks, market prices, exploitation and exploration results, availability of capital and financing, general economic, market or business conditions, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment, timeliness of government approvals, unanticipated environmental impacts on operations and other exploration risks detailed herein and from time to time in the filings made by the Company with securities regulators. In making the forward-looking statements, the Company has applied several material assumptions including, but not limited to, the assumptions that the proposed exploration and development of Carmacks will proceed as planned, market fundamentals will result in sustained metals and mineral prices, current exploration and other objectives concerning Carmacks can be achieved and that the Company's other corporate activities will proceed as expected and any additional financing needed will be available on reasonable terms. Although the Company has attempted to identify important factors that could affect the Company and may cause actual actions, events or results to differ materially from those described herein, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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