SHARE THE DREAM – PLEASE! The two Bobs (Hunter and Dickinson)

The domino theory of geopolics held that when a key country falls to communism in a certain region, neighboring countries would eventually, but inevitably, succumb. What with the events of recent history and the “new world order,” theory and reality have diverged significantly.

But the domino effect can be a potent force in mine-finding. If an exploration project repels investors for whatever reason – be it geological, metallurgical, political, a question of metal prices – properties with similar characteristics suffer the same sceptical reception.

In British Columbia, several juniors are resisting the potential domino effect realted to Mt. Milligan-style mineralization. After enriching original property owner, Continental Gold, its investors to the tune of $255 million for the porphyry copper/gold Mt. Milligan project, Placer Dom Inc. termprarily closed the cash drawer on the project. Development costs of some $500 to $600 million would have wrung rather puny returns out of the mine. That was Placer’s official line. Speculation is also rife that provincial government footdragging on a preliminary go-ahead frustrated Placer’s fast-track deadlines. Public utterances in that vein wouln’t have been well received in Victoria, however. (At press time, Placer was still awaiting a yea or nay from the province.)

Mt. Milligan is one of a family of copper/gold porphyries that includes Fish Lake (Taseko Resources and Cominco), Hushamu (Jordex Resources and BHP-Utah Mines) and Kemess South (El Condor Resources, St. Philips Resources). along with lesser known deposits, such as a billion-tonne copper-molybdenum deposit in northwestern B.C. held by Teck Corp.

Fish Lake and Kemess South have more in common with Mt. Milligan than just geology – all three projects issued from the West Pender offices of promotional team Robert Hunter and Robert Dickinson, popularly known on Howe Steet at the Bobbsey Twins. (Fish Lake and Kemess are controlled by the Hunter-Dickinson group.) Has Mt. Milligan’s uncertain fate soured investors on the two remaining projects?

“Not one bit,” said Hunter, just back from a five-day fund-grazing mission to London, Geneva and Zurich. The Northern Miner Magazine caught up with him by phone in his Vancouver office before his departure for the Boston Gold Show. “It (Mt. Milligan) was mentioned a few times,” he added, but not to the point that a private placement was affected.

“We were looking for $6 million. I know now it (the final subscription) will bring in more than $10 million.” This was the second time this year the dynamic duo (virtually the only dynamism in Canadian exploration currently) tapped Europe for money. In February, they raised $7.4 million for Taseko. Bought in the main by institutional investors, such as mutual funds and banks, this latest private placement was an El Condor issue of a share and half warrant priced at $4.00 per unit.

Jeff Franzen, El Condor’s project director, says Mt. Milligan isn’t a negative factor, because it isn’t dead. “Placer’s engineering and environmental people are working on the project.” This was confirmed by Hugh Leggat, Placer’s public relations chief. “We are continuing to evaluate the grade and we’re looking at the engineering alternatives with a view to reducing capital costs.” He adds: “It’s not on the shelf.” As well, Placer is still awaiting provincial government approval in principle on its preliminary development plans.

But to Franzen, Mt. Milligan’s status is a moot point. Kemess South is different, he points out. The grade at Kemess is higher, the strip ratio is lower and the work index to grind the ore, calculated by Melis Engineering and Lakefield Research, is lower.

Kelly O’Connor, vice-president exploration for Rio Algom Mines, echoed Franzen’s views. “It’s unwise to throw them (Mt. Milligan and South Kemess) into the same basket.”

What are the differences? The metallurgy, for one. “The indications are that mineralogy is amenable to better recoveries and better concentrate grade.” Nothing deleterious, like arsenic or mercury, to penalize the concentrates at the smelter. But like Mt. Milligan, Kemess South will not generate acid to leach heavy metals into the watershed. And no river rafters have emerged from the bush to cry foul, as yet. (Rio Algom owns 30% of St. Philips and another 9.9% of El Condor, the 40/60 Kemess South partners. Rio can escalate its St. Philips holdings in a staged way to just above 50%.)

El Condor, meanwhile, continues to court other majors. Stephen Millen, El Condor’s manager of corporate development, said five major mining concerns have technical packages in hand and are performing a due diligence on South Kemess.

As with Mt. Milligan, Dickinson and Hunter want a major to buy up El COndor and Taseko. Hunter, true to type, is buoyant. “The majors have to stay in business. If we’ve got them (the orebodies) they’re going to want them. It’s only a matter of time.”

Negative commentary doesn’t help, however, For example, a report was issued later this spring by Yorkton Natural Resources Research Group, the research arm of a brokerage outfit that examined Kemess South, Fish Lake and the lesser-known Hushamu. It found Fish Lake the least likely to be developed. Why? Metallurgically complex, Fish Lake has failed in test-milling a concentrate exceeding 18% copper, according to yrokton. Copper smelters can afford to be finicky today, because of under-capacity in world smelting, and Yorkton notes that any concentrates of less than 25% would find a cool reception among world smelters. As well, the concentrates will attract penalties for their arsenic, mercury and lead.

Yorkton also takes Taseko to taks for including, it its mineralized resource, material “beyond the economic depth cutoff for oepn-pit mining,” which, says Yorkton, shouldn’t exceed roughly 1,600 ft. The Fish Lake reserve is 600 million tonnes of 0.016 oz. Au per tonne and 0.32% Cu to a depth of 2,100 – 2,200 ft. There are other criticisms – Cominco owns a peice of the project. It is within the Fraser River catchment area – that bring Yorkton to conclude “there are too many imponderables regarding a positive decision to develop Fish Lake deposit in the current political and economic climate.”

Douglas Forster, a Taseko director and senior vice-president, said the Japanese smelters – Mitsubishi, Sumitomo – had accepted Mt. Milligan’s proposed 18% concentrate grade when Continental Gold wascompiling its specifications. “They said they would indeed buy such concentrates.” Forster recalls. As well the pyrite in the Fish Lake is a bonus, because of its exothermal reaction, as is the 1 oz. per ton gold.

As for the depth of the deposit, that criticism too is irrelevant, Forster noted. The true breadth is as yet unknow. The deposit is open in all directions, but bottoms at a fault 2,100 – 2,200 ft. below surface. Three drills are currently redrilling the entire deposit to define the orebody on 100-m centres. “This is not a skyscraper (deep, but narrow),” Forster said. “It runs vertically a great distance and horizontally a great distance.” (Editor’s Note: As this issue went to press, Taseko’s most recent drilling seemed to corroborate Forster’s view that indeed the deposit dimensions are staggering.)

The Yorkton analysis was more favorably inclined towards South Kemess – “There is little doubt now that (i) the Kemess South deposit will become a mine, and (ii) its likely operator will be Rio Algom.

Yorkton is also keen on Hushamu, largely because the project is only about 25 km. northwest of BHP’s Island Copper concentrator. “The capital development cost of Hushamu will therefore only be a fraction (+/-30%) of that of a totally new mine and ancillary facilities.” concludes Yorkton. Island Copper’s current reserve is expected to be exhausted by 1995 or 1996. Other known areas of porphyry copper/gold mineralization in that same neck of the woods, lend to Hushamu and other area projects a certain “blue-sky” aspect.

In fact, all three projects stand a fighting chance of development. The potential domino effect of Mt. Milligan has not buried them, although there is little doubt fund raising is tougher. On the other hand, Mt. Milligan’s failure might have served a useful purpose. Potential developers are approaching the copper/gold porphyries with extreme caution and real due diligence.