Sherwood’s drilling shows Minto’s potential

Vancouver — Stepout drilling around Sherwood Copper’s (SWC-V, SWOPF-O) Minto mine in the Yukon — scheduled to begin production in the third quarter — has returned significant copper-gold mineralization in previously untested areas, as well as a high-grade gold intercept within the Minto pit.

Six of the 11 core holes tested previously unexplored areas between, beneath, and adjacent to the known Minto main and Area 2 deposits, with encouraging results.

One hole (07SWC-176), collared 100 metres east of the Minto resource perimeter, intersected 2.95% copper and 1.07 grams gold per tonne over 11.7 metres, including 6 metres of 3.97% copper and 1.49 grams gold in a horizon starting 292 metres below the surface. Hole 07SWC-171, outside the west perimeter of Area 2, intersected 1.03% copper and 0.75 gram gold over 19.4 metres.

And a series of holes running in a line from Area 2 north to the main deposit confirm the presence of multiple, stacked foliated and mineralized horizons throughout. Three of the four holes intersected significant copper and gold mineralization, including one (07SWC-178) that intersected 2.76% copper, 1.29 grams gold, and 8.7 grams silver over 9.6 metres starting from 150.9 metres down-hole.

The drill results pushed Sherwood’s share price up 5.3%, to US$6.00 from US$5.70.

The other five drill holes were cut within the boundaries of the main deposit to obtain ore for metallurgical testing. Those holes equalled or exceeded grades and thicknesses from the Minto resource model. In particular, one hole (07SWC-169) intersected 1.88% copper, 2.99 grams gold, and 8.3 grams silver over 22.3 metres, including 1.1 metres grading 14.9% copper, 46.2 grams gold, and 72.7 grams silver per tonne.

The core material is now being tested to confirm previous findings that copper recoveries can be maintained at significantly coarser grind size than assumed in the feasibility study, which could allow for increased mill throughput.

Minto, located 240 km north of Whitehorse, Yukon, has already seen significant exploration. The primary deposit has proven and probable reserves of roughly 5.9 million tonnes, grading 2% copper, 0.8 gram gold and 9.1 grams silver. An open-pit mine is more than 90% complete, with the first copper-gold concentrate produced at the end of May, ramping up to full production later in the year.

Minto Explorations, a Sherwood subsidiary, owns the project. Copper was initially discovered in the area in the early 1970s and a feasibility study was conducted in 1995, but the project was suspended in the late 1990s due to depressed metal prices. In 2005, Sherwood acquired MintoEx and immediately began further exploration and mine development.

In 2006, geologists identified an extension south of the main Minto deposit, which became known as Area 2. Area 2 has a measured and indicated resource estimate of 7.6 million tonnes grading 1.26% copper and 0.48 gram gold per tonne, with a 0.5% copper cutoff. This newer discovery is advancing through a prefeasability study; Sherwood hopes to add Area 2 resources to the reserve base by mid-2007.

A second phase of drilling, scheduled to start in June, is aimed at expanding resources in Area 2 and testing a number of other prospective targets. Wide-spaced drilling in the 1970s in several of these targets, returned grades including more than 3% copper over at least 5 metres.

In January, Sherwood struck a deal with Yukon Energy to tap into its power grid by extending a 138-kilovolt transmission line to Minto landing and adding a 35-kilovolt line to the mine site. The feasibility study was completed assuming the need for diesel generators; Sherwood estimates electrical power cost savings of about $3 to $4 million annually.

In addition, Sherwood has pre-sold 41,218 tonnes of copper, 42,200 oz. gold and 467,697 oz. silver for delivery between July 2007 and August 2011, representing about 68% of payable metal sales in the first four years of production and 35% of the overall current reserve. The company has hedged a gold price of US$636.25 per oz., US$11.51 per oz. for silver, and a declining price for copper starting at US$3.14 per lb. and reaching $2 per lb. by 2011.