Gibraltar reviewing Mt. Polley

The next new mine in British Columbia could be the Mt. Polley copper-gold deposit in the central part of the province.

A joint venture between Gibraltar Mines (TSE) and Imperial Metals (TSE) involves linking the deposit with the mill at Gibraltar’s open-pit mine at McLeese Lake, 25 miles to the west.

The mill would be used to process ore from Imperial’s wholly owned Mt. Polley deposit. Gibraltar would also provide a tailings pond and heavy mobile mining equipment.

The cost of transporting ore and modifying the mill and tailings facility will be borne by both companies.

In 1990, Fluor Daniel Wright completed a positive feasibility study on Mt. Polley, which outlined an initial pit containing 54 million tons grading 0.38% copper and 0.016 oz. gold per ton with a strip ratio of 1.76-to-1. Geological reserves are estimated at 254 million tons grading 0.26% copper and 0.01 oz. gold.

(Prior to forming the joint venture, Gibraltar will complete a 15-month due diligence review to confirm tonnage, grade and metallurgy.)

The feasibility study was predicated on a 15,000-ton-per-day operation. Annually, 55,000-66,000 tons of concentrate would be produced, grading 25% copper and 1-2 oz. gold based on recoveries of 76.3% for copper and 80.4% for gold.

The study used a long-term forecast of US95 cents per lb. copper, US$425 per oz. gold and an exchange rate of US80 cents per Canadian dollar. The capital cost was estimated at $131.4 million.

The Imperial-Gibraltar venture will study the feasibility of a 22,000-ton-per-day operation, most likely using a conveyor system to transport ore to the mill.

Imperial President Pierre Lebel noted that the use of Gibraltar’s mill and mining equipment will reduce capital and operating costs and cut the lead time to production. He does not expect the project to cost more than $110 million and believes it could be substantially less.

Mining and milling at McLeese Lake were suspended late last year in response to low copper prices. Gibraltar has since been studying the feasibility of expanding mill capacity to 57,000 from 38,000 tons per day in an effort to reduce costs.

That study is now on hold pending a review of both the Mt. Polley proposal and the mining sequence at Gibraltar.

Mt. Polley ore requires a much finer grind than does the Gibraltar mineralization and, as a result, the expanded 57,000-ton-per-day mill would be equivalent to 22,000 tons per day for Mt. Polley material. Gibraltar is well-funded; it has no debt and more than $40 million in working capital, as well as 22.9 million shares outstanding.

For its part, Imperial has about 51.3 million shares outstanding, more than $19 million in working capital, and investments worth in excess of $18 million (including 5.3 million shares of Cathedral Gold). It, too, is free of debt.