Schulich hikes Starfield stake (April 18, 2008)

Famed mining entrepreneur Seymour Schulich has increased his holdings in Starfield Resources (SRU-T).

In a news release dated March 26 Schulich disclosed that he had purchased a further 2 million shares in Starfield through his holding company Seytan Investment Management. At the time of the news release, Schulich owned or exercised control and direction over 32 million shares in Starfield, representing 10.6% of the issued and outstanding shares in the company.

When asked for the reasons why he has decided to take a major stake in Starfield, Schulich says that he believes that Starfield’s Ferguson Lake project has a world-class nickel-copper and possibly also platinum group metals deposit despite its remote location in Nunavut. The recoverable gross value at today’s metal prices is $500 per tonne, and the deposit can be mined as an open pit for the first few years, states Schulich. He also believes that there is a potential to increase the resource with further drilling. There is also a zone of ore with platinum group metals below the main zone, which could prove significant when it is explored.

Starfield’s President and CEO Andre Douchane says that according to a scoping study, a 285 km pipeline could be built between Ferguson Lake and Rankin Inlet. The ore will be sent to Rankin Inlet in the pipeline, and will be processed there.

Starfield’s website has an investor presentation citing a NI 43-101 compliant report completed in 2007. The report outlines an indicated resource of 15.3 million tonnes in the west zone, grading 1.75% copper and nickel, and an inferred resources of 28.9 million tonnes in all zones, grading 1.68% copper and nickel. The scoping study in the investor presentation estimates the capital costs at $1.35 billion. The study is based on the 285 km pipeline with an electric power line along the same corridor. The scoping study calculates internal rate of return (IRR) at 27% pre-tax, and a net present value (NPV) of $1.94 billion pre-tax at a 10% discount rate.

The investor presentation outlines plans for drilling of 20,000 metres in 2008 in 2 phases.On April 10 Starfield announced a private placement of 15 million flow-through shares at $1, and 5.5 million shares at $0.90, for a total of $20 million. At the time of writing, the private placement has not yet closed.