BASE METALS SPECIAL — Princeton’s Huckleberry takes shape in B.C.

With full government approval and most of its financing in place, Princeton Mining (PMC-T) is proceeding with construction of the Huckleberry copper project, near Houston, B.C.

The decision to proceed with construction follows the closing in escrow of Princeton’s previously announced agreement with a consortium of Japanese partners for the joint development of the project.

The consortium is acquiring a 40% interest in the mine by providing a US$60-million loan toward the estimated US$100-million capital cost.

The government of British Columbia is providing US$11 million through an infrastructure loan, leaving US$29 million of equity funding for the joint venture to cover.

As part of the agreement, the Japanese are paying Princeton US$6 million, which will go toward its 60% share of the remaining US$29 million of the capital cost.

The US$12-million balance of Princeton’s equity share is being raised through a combined unit and convertible debenture issue.

James O’Rourke, chairman and chief executive officer, said the company is working to raise about $20 million to cover the US$12-million equity requirement, as well as fund planned work on other company projects in 1996.

About half of the $20 million in financing is in place through a 5-year convertible debenture, which carries a 7% coupon and is convertible at 50 cents per share.

The balance of the $20 million will likely include a combination of additional debentures on the same terms, plus a unit offering of shares and warrants. The units are priced at 50 cents each and include one share plus half a warrant, with one whole warrant exercisable at 60 cents for five years.

As of Dec. 31, 1995 (before the aforementioned financings), Princeton had 87.2 million shares outstanding. Shareholders previously approved a 5-for-1 consolidation of the stock, but O’Rourke has no immediate plans to proceed with the rollback.

Princeton already operates an open-pit copper mining and milling operation at its Similco mine near Princeton, B.C.

Construction of the Huckleberry mine is expected to last 16 months, with startup projected for the third quarter of 1997.

Road-building and logging operations are under way and Princeton has ordered the major components for the mill.

Minable reserves at Huckleberry are estimated at 90.9 million tons grading 0.512% copper and 0.014% molybdenum at a stripping ratio of 1.1-to-1.

The reserve is hosted in two deposits, the Main and East zones, situated roughly 1,000 metres apart.

Excellent metallurgy is a boon to the project. Copper recoveries are estimated at 94% using standard flotation techniques.

Princeton acquired Huckleberry through a merger with New Canamin Resources, and due diligence work at the time included large-diameter drilling on both zones. Metallurgical work confirmed high copper recoveries consistently throughout the vertical section.

O’Rourke adds that the ore and waste rock do not generate acid.

Based on a 16,500-tonne-per-day, open-pit mining and milling operation, yearly output from Huckleberry is projected at 65 million lb. of copper plus 1.26 million lb. of molybdenum at a cash cost (net of byproduct credits) of about 69 cents per lb. over the mine life (US65 cents per lb. during the first five years). Byproducts include 5,800 oz. gold and 302,000 oz. silver per year.

Two concentrates will be produced, including a copper concentrate (containing the silver and gold credits) and a molybdenum concentrate.

The concentrates will be trucked 600 km to port facilities in Prince Rupert.

First-quarter toll

At Princeton’s Similco operation, a drop in the realized price of copper took its toll on first-quarter results.

Princeton reported a loss of $3.7 million in the quarter ended March 31, citing a drop in the copper price to US$1.07 from US$1.22 per lb. in the same period in 1995, as well as high costs associated with mining in the Ingerbelle pit.

Similco produced 8.4 million lb. of copper in the quarter, compared with the 8.6 million lb. in the same period last year. For 1995, the mine produced 37.7 million lb. of the red metal, milling 9 million tonnes grading 0.27% copper for a copper recovery of 77.9%.

The first phase of mining at the Ingerbelle pit will be completed in November; the second phase will entail expanding the pit.

It is estimated that minable reserves during the second phase would be 39.3 million tonnes grading 0.33% copper at a 1.74-to-1 stripping ratio.

O’Rourke says the company has excellent exploration targets, one of which is the open-ended western extension of the Alabama deposit. Previous drilling there outlined a geological resource of 26 million tonnes grading 0.35% copper.

The most westerly hole at Alabama returned a 79-metre intersection grading 0.42% copper, and a large, induced-polarization anomaly extends in the open direction to the west.

The company is also reviewing the underground potential at Similco. The property was originally operated as an underground mine, from 1927 through to 1957, during which time roughly 30 million tonnes grading more than 1% copper were mined.

The pattern of underground mining followed the Main fault structure, which passes through several existing pits on the property.

Drilling below the Ingerbelle pit has returned intercepts of up to 47 metres grading 1.25% copper, while drilling below the bottom of Pit 3 cut values of up to 3.38% copper over 30 metres.

Princeton’s other assets include its Elenita copper project in Chile, where a diluted minable resource of 7.7 million tonnes grading 1.25% copper has been outlined.

The company plans to use a portion of its current financing to fund drilling at Elenita in an attempt to expand the resource.