Marathon PGM cuts high-grade

The two highest concentrations of precious metals drilled to date in the Coldwell intrusive complex in north-central Ontario have been intersected in recent drilling by Marathon PGM (MAR-T, MRPGF-O).

Marathon, which has been working on the property since 2004, received results from four drill holes on the property’s Malachite Zone, which has produced high-grade numbers in the past. The holes tested northward extensions along the strike of the zone, and all four intersected some disseminated sulphide mineralization.

Hole M07-239 cut the highest-grade intersection, a 2-metre length that ran 67.4 grams palladium, 39.1 grams platinum, 1 gram rhodium and 0.76 gram gold per tonne, with 0.02% copper. It was part of a longer mineralized intersection that averaged 10.2 grams palladium, 5.9 grams platinum, 0.17 gram rhodium and 0.12 gram gold per tonne, plus 0.02% copper, over a 14-metre core length. The true width is estimated at 13.4 metres.

A second hole, M07-237, intersected 18 metres grading 3.9 grams palladium, 3.4 grams platinum, 0.13 gram rhodium and 0.02 gram gold per tonne, plus 0.01% copper and 0.01% nickel. Within that, a 2-metre interval ran 30.7 grams palladium, 27.7 grams platinum, 1 gram rhodium and 0.1 gram gold per tonne, with 0.01% copper and 0.01% nickel.

Hole M07-240 cut a 6-metre core length grading 1.2 grams palladium, 0.5 gram platinum, 0.3 gram gold and 0.13% copper, with rhodium and nickel credits. Hole M07-238 cut two zones, one of 4 metres grading 1.2 grams palladium and 0.5 gram platinum, and another of 6 metres grading 0.7 gram palladium and 0.5 gram platinum per tonne. Both those intersections ran about 0.01% copper and 0.01% nickel.

All four holes carried silver credits at about 1 gram per tonne.

The drilling bears out a trend of increasing grades to the north already observed in the Malachite Zone. The platinum group elements — which often occur along with copper — appear to be high despite relatively low copper grades, which David Good, Marathon’s vice-president, says fits a geochemical model of the Coldwell mineralization the company’s geologists have developed.

More drilling is under way, along with an induced-polarization survey. Two other zones, RD and SG, are being drilled with a second machine.

Marathon also received an update to the 2006 scoping study on the property, which analyzed the economics of an 18,000-tonne-per-day open pit, feeding a conventional flotation mill that would produce a bulk concentrate. Mine life, including a late-stage period where low-grade material stockpiled on surface would be processed, would extend to 13.5 years.

The new scoping study incorporated 21,800 metres of new drilling, which allowed a new resource figure to be calculated.

Annual production in the first four years would average 195,000 oz. combined platinum, palladium and gold, plus 16,500 tonnes copper.

The study estimated a $261-million capital cost for the whole project, and assumed prices at the 18-month average for platinum, palladium and gold (US$1,085, US$293 and US$569 per oz., respectively) and US$4,400 per tonne (US$2 per lb.) for copper, about 25% below its 18-month average.

Based on those prices, with the three precious metals as co-products, the mine would have a cash operating cost of US$144 per oz. over its life and US$107 per oz. in the first four years of production.

The study’s authors, P&E Mining Consultants, also calculated a resource for the project based on 342 drill holes and 261 surface channel samples. Using the 18-month average prices to calculate a net smelter return and cutting off the resource at $7.79 per tonne, P&E estimated a resource of 68 million tonnes grading 0.31% copper, 0.87 gram palladium, 0.24 gram platinum and 0.09 gram gold per tonne in measured and indicated categories. Another 1.8 million tonnes was inferred, at 0.23% copper, 0.87 gram palladium, 0.3 gram platinum and 0.12 gram gold.

The resource was in a pit with a 55 slope and a stripping ratio of 3.5. Mining costs would be around $1.10 per tonne.

P&E calculated a separate low-grade resource, to be stockpiled on surface and processed after the pit is mined out. The measured and indicated low-grade resource is 15 million tonnes at 0.16% copper, 0.35 gram palladium, 0.12 gram platinum and 0.05 gram gold. There is an additional inferred resource of 800,000 tonnes, at 0.15% copper, 0.35 gram palladium, 0.14 gram platinum and 0.06 gram gold.

The proposed mill design is a gyratory crusher, with semi-autogenous and ball mills, feeding flotation cells to produce a single concentrate. Recoveries, based on earlier metallurgical testing, are estimated at 84% of the copper, 80% of the palladium, 76% of the platinum and 60% of the gold. Mill operating costs should be around $7.30 per tonne.

The study also estimated shipping at $18 and smelting at $135 per tonne, and refining at 11.5 per lb. (US$220 or $253 per tonne of copper metal).

A discounted cash flow analysis gave the project a net present value of $239 million at a 7% discount rate, with a pretax internal rate of return at 24%. It would pay back its capital cost in 3.5 years.

A final feasibility study is in the works, looking at a 20,000-tonne-per-day operation that might have lower unit costs. Micon International has been engaged as lead consultant on that study, with P&E remaining as geological consultant.

More metallurgical testing, including studies of nickel, rhodium and silver recovery, was recommended by P&E, and Marathon has a 35,000-metre drill program under way to expand the resource.