Northisle’s new gold resource may boost Vancouver Island project’s economics

Northisle Copper and Gold (TSXV: NCX) says its first resource estimate for the Northwest Expo deposit at its North Island project in British Columbia beat expectations and bodes well for rapid development.

Northwest Expo holds 40.3 million indicated tonnes grading 0.1% copper and 0.7 gram gold per tonne for 100 million lb. copper and 871,000 oz. of gold, Northisle said on Wednesday. The deposit holds 30.6 million inferred tonnes at 0.1% copper and 0.6 gram gold for 62.8 million lb. copper and 558,000 oz. gold, the company said.

“Today’s new resource estimate at Northwest Expo has exceeded our expectations of defining a 40-to-50-million-tonne resource within the gold enriched Zone 1,” Northisle president and CEO Sam Lee said in a release. “This sets a strong basis for the rapid advancement of a potential high margin, near surface deposit.”

Shares in Northisle rose more than 11% to 44¢ apiece in Toronto on Wednesday afternoon, valuing the company at $99.2 million. They’ve ranged from 12¢ to 49¢ over the past 52 weeks.

Northisle is working on a prefeasibility study for North Island and is considering a staged approach with lower capital spending than the $1.4 billion estimate in a preliminary economic assessment (PEA) in 2021. The project, near BHP’s (NYSE: BHP; LSE: BHP; ASX: BHP) former Island copper mine in Vancouver Island’s far north, holds about 8 million oz. gold in resources.

The entire project holds 567.7 million indicated tonnes grading 0.2% copper, 0.3 gram gold per tonne and 0.007% molybdenum for 2.4 billion lb. copper, 4.9 million oz. gold and 88.2 million lb. molybdenum. It has 447.9 million inferred tonnes at 0.2% copper, 0.2 gram gold and 0.006% molybdenum for 1.4 billion lb. copper, 3 million oz. gold and 54.9 million lb. molybdenum.

Higher-grade areas

A staged development would prioritize the higher-grade areas of the Northwest Expo, Red Dog and Hushamu targets. Studying the concept is expected to be completed by July and form the basis for advanced economic and technical studies, it said.

Northisle is planning to drill after March to increase the indicated resource and to step out south of Zone 1 in Northwest Expo and at the West Goodspeed discovery.

The Northwest Expo target has a net smelter revenue value of $55 per tonne for the indicated resource as a whole and $67 per tonne for a higher-grade zone in it, which is more than twice the net smelter value in the project’s PEA, the company said. The project also has 88% gold and 76% copper recoveries and a strip ratio of 2.5:1 waste vs ore, it said.

North Island has an after-tax net present value of $1.1 billion with an 8% discount rate and a 19% internal rate of return, according to the PEA. The study assumed metal prices of US$3.25 per lb. copper, US$1,650 per oz. gold and US$10 per lb. molybdenum.

The project lies on a 340-sq.-km property stretching 50 km northwest from the now closed Island copper mine. BHP produced copper and molybdenum concentrates there, as well as gold, silver and rhenium as by–products, from 1971 to 1995.