Pacific Comox’s vision for Ryan Lake (November 17, 2008)

SITE VISIT

Matatchewan, Ont. — A big old pile of crushed ore sits outside the mill at Pacific Comox Resources’ (PCM-V, PAOCF-o) past-producing Ryan Lake copper-moly project.

The pile has been here since the mid-1960s, when copper prices fell too low to continue running the operation.

In a last-ditch effort to make money, the former operator tried to recover moly from the ore, but the company wasn’t able to get the metallurgy right.

The mine and mill closed in 1964, after producing nearly 5 million lbs. of copper, 11,400 lbs. moly (from leaching/roasting old tailings) and a few thousand ounces of gold and silver over about 16 years, according to historical records.

In 1970, the mill was converted to process barite, which it still does today, so the pile will likely be here for a while more. But over the last three years, Pacific Comox has been laying out a plan of action that includes producing both copper and molybdenum at Ryan Lake.

Raising money has become tougher for juniors though, so Pacific Comox president Don Empey cuts to the chase.

“Because of the chaos in the financial markets, we envision slowing down work at Ryan Lake,” Empey explains. “(We’re going to) proceed with resource estimate and metallurgy, but by the time that’s done we will have to see what the markets are like.”

Since first optioning 75-hectare property in 2005, Pacific has drilled more than 10,000 metres in 106 holes. The company acquired complete ownership of the project in fall 2007. This spring, Pacific released an indicated resource estimate for a deposit known as the South zone, totalling 5.97 million tonnes grading 0.34% copper, 0.039% molybdenum, 0.09 gram gold and 5 grams silver per tonne.

The South zone is a near-surface deposit located above the old underground mine workings. But Pacific is waiting on the resource estimate from the North and CLT zones, where higher-grade molybdenum veins are visible from surface. Empey expects the estimates by the end of the year.

The adjacent CLT and North deposits are the ones Empey sees going into production first because of the moly grades.

“The North zone is smaller-tonnage, but we’re expecting a higher value per tonne with the moly price where it is,” he says. “But is it going to stay there? That’s the question.”

At presstime, molybdenum had dropped to around US$12.50 per lb. from US$20.

Ryan Lake isn’t Pacific’s only property — the Mabel gold project in Sonora, Mexico, is the company’s current focus because it’s a little closer to production. Empey says he always saw Mabel as the near-term producer that could help finance Ryan Lake.

“Right now we’re expecting that Mabel would go into production first,” Empey says. “It has a good location and good access, good grades and metallurgy results.”

Pacific has completed 7,000 metres of drilling there, and is waiting for a resource estimate that will go towards a prefeasibility study evaluating a 1,100-tonne-per-day heap-leach operation. Pacific’s short- term goal is to confirm about 2 million tonnes grading 1.5 grams gold per tonne and 40 grams silver.

Since acquiring the property, Pacific has drilled a total of 571 holes. Recent drilling from a 119-hole program returned an average grade of 1.6 grams gold per tonne and 60 grams silver over average intervals of 4.4 metres. Mineralization started at an average depth of 5.6 metres.

Cyanide-leach test results on mineralization from the Carmelita area showed recoveries of 86.7% for gold and 86% for silver using a feed size of 2 mm. At 1.2 cm, recoveries were slightly lower at 85.1% for gold and 81.7% for silver.

Metallurgy studies are being done on Ryan Lake ore too, for an eventual feasibility study there.

But before Pacific gets too far ahead, it needs to submit a closure plan for the old mine to the Ministry of Northern Development and Mines. The closure plan must be completed before any mining permits can be issued, which was part of the deal with the previous owner, Extender Minerals of Canada. The closure plan included properly sealing the old mine shaft and hauling away tons of junk that was scattered about the property — much of it rusted parts from the old mill.

Pacific can’t make that much progress without money, however. The company has about $1 million in the bank and Empey says he can make it last as long as he needs to; he just can’t plan any major drill campaigns.

Empey says during the first phase of production, the old mill would be used to process copper and molybdenum.

“The mill would have to be re-jigged totally with more grinding, a ball mill, more crushing and a flotation circuit,” he says.

Empey envisions a 500-tonne-per- day copper-moly operation processing ore from the North and CLT zones for first three years, but because of the location and size of the South zone pit, a new facility would be needed. In the absence of a scoping study, the company suggests a 2,000-tonne-per-day operation lasting at least eight years would be possible.

“Eventually, we would envision building a bigger, higher-capacity new mill because the pit for the South zone would come right up to the edge of the mill,” Empey explains.

In fact, drill-hole markers are noticeable in the gravel parking area, showing just how close mineralization gets to the mill.

During the first phase of production, the company would have no permitted tailings pond. Instead, Empey hopes paste tailings could be used to fill the old underground mine workings, which sit below the proposed pit of the South zone.

“The stopes and drifts have to be backfilled before we mine that,” Empey says of the South zone pit.

He notes that there have been no studies done on the viability of this proposal and says environmental and metallurgy tests will play a big part in that decision.

“If the big open pit didn’t go ahead, the chemistry has to be such that you can leave them there forever,” Empey says of the paste tailings backfill.

For now, it’s a waiting game. Pacific has resource estimates in the works for both projects, plus metallurgy tests for Ryan Lake and a prefeasibility study for Mabel.

“With the scoping study done, we’re expecting that the economics will be sufficiently attractive that Mabel can be financed into production,” Empey says. “(With) Ryan Lake we’ll finish these studies and then reassess where we are at that point.”