New Canamin advances Huckleberry

A positive feasibility study on the Huckleberry porphyry copper deposit in west-central British Columbia marks the culmination of more than two years of work and $6.6 million in expenditures for owner New Canamin Resources (VSE).

Consultant Kilborn Engineering Pacific completed the study, which estimates that the East and Main zones contain diluted minable reserves of 100.5 million tons grading 0.517% copper, 0.014% molybdenum, 0.09 oz. silver and 0.0019 oz. gold per ton, based on a 0.3% copper cutoff.

Initial production is expected to come from the higher-grade East zone, with the first five years of production expected to average 0.6% copper. The over-all stripping ratio averages 1.23-to-1, but the waste portion includes about 16.5 million tons grading 0.35% copper. This material will be stockpiled and milled in the last three years of the project. As a result, the milling grade during the first 15 years of operation averages 0.55% copper.

The capital cost of a 14,900-ton-per-day milling operation is estimated at $137 million and yearly production is projected at 52.4 million lb. copper, 5,100 oz. gold, 320,000 oz. silver and 760,000 lb. molybdenum. Production estimates are based on recoveries of 93.6% for copper, 51.5% for gold, 77.8% for silver and 50% for molybdenum.

Kilborn projects the net smelter return at $9.69 per ton based on copper at US$1 per lb., gold at US$375 per oz., silver at US$5.00 per oz., molybdenum at US$3.80 per lb. and an exchange rate of US$1.37.

The operating cost is estimated at $5.93 per ton, giving the project a pre-tax cash flow of $220 million over its 18-year life and a net present value of $33 million using a 10% discount rate.

Alan Savage, president of New Canamin, says he may retain a financial adviser to help the company complete a combined debt-equity financing, possibly in combination with a major partner.

New Canamin has signed confidentiality agreements with companies that have expressed an interest in participating in the development. It has also filed a prospectus for a mine development certificate, which will allow for comment from the public. If all goes well, the permitting process will be completed in the first half of 1995, leading to a 21-month construction phase after funding is in place.