Sherwood Making Time on Minto

Vancouver — Sherwood Copper (SWC-V, SWOPF-O) reports construction at its Minto copper-gold mine in the central Yukon is about 50% complete.

The aspiring producer has also prestripped about 60% of the waste rock in preparation for open-pit operations.

The SAG (semi-autogenous grinding) and ball mills have been set in their foundations and all circuits within the mill complex are in place for the beginning of commercial operations by mid-year.

Three 1.4-megawatt diesel generators are also onsite and operational. However, Sherwood has recently negotiated terms to tap into the Yukon Energy electrical grid to power operation at Minto.

The deal would see extension of a 138-kilovolt transmission line to Minto landing and a 35-kilovolt line to the mine site.

Sherwood president and CEO Stephen Quinn described the deal as a “win-win situation” for all stakeholders.

“Grid power, provided from Yukon Energy’s Whitehorse hydroelectric grid, could significantly reduce the electrical power costs for the Minto project versus on-site diesel generation,” Quinn said.

By tapping into the Yukon grid, the company estimates electrical power cost savings in the order of about $3-$4 million annually over the life of the mine. Savings would equal 7-10 per lb. of copper produced, based on an average annual production rate of about 41 million lbs. copper over the first six years.

Electrical power rates tabled in the term sheet come in at about 10 per kilowatt hour, providing Sherwood a level of certainty. The operation would also have the option to lower its usage during the peak winter season for savings of about a half-cent per kilowatt hour. Additional terms would allow the miner to purchase interruptible power for the processing of its low-grade ore at rates estimated at 6 per kilowatt hour without priority and 7.6 per kilowatt hour with priority, enhancing the economic viability of the lower-grade material.

Sherwood will also spend about $3.8 million to put in the transmission spur to the Minto mine site and is to kick in $7.2 million for the 138-kilovolt transmission line extension.

Development at Minto first began in the 1990s by a previous operator, but ceased due to poor metal prices. Sherwood expects to spend $86.7 million on capital costs at the mine, plus about $11.5 million in contingencies.

The targeted deposit has proven and probable reserves of about 5.9 million tonnes grading 2% copper, 0.8 gram gold per tonne and 9.1 grams silver. Open-pit operations are expected to produce 41 million lbs. copper, 17,295 oz. gold and 250,000 oz. silver annually over the first six years.

Production costs are expected to come in around US57 per lb. of copper, net of byproduct credits. The company has an $85-million project loan and subordinated loan from Macquarie Bank in place to complete construction6

Sherwood has a $161-million market capitalization based on its 40.7 million shares outstanding and recent $3.95 share price. The stock has a 52-week trading range of $1.27-$4.04.