Duluth Complex projects build up resources

The extensive drilling programs in the Duluth Complex of northeastern Minnesota are now paying off, with two of the major players in the camp outlining significant new resources on their properties.

PolyMet Mining (POM-T, PLM-X) recently announced an increase in the mineral resource at its NorthMet project near Babbitt, where development plans for a 30,000-tonne-per-day open pit mine are advancing.

The new estimate shows a measured and indicated resource of 579 million tonnes grading 0.27% copper, 0.08% nickel, and 0.007% cobalt. Another 228 million tonnes is in inferred resources, at grades of 0.28% copper, 0.08% nickel and 0.006% cobalt. PolyMet did not publish separate grades for platinum, palladium and gold but the estimate puts the total precious metal grade at 0.3 gram per tonne in both the indicated and inferred resources. Earlier resource estimates imply that about 70% of that is palladium, about 20% platinum and about 10% gold.

The previous measured and indicated resource figure, used in a final feasibility study for the deposit last October, was 383 million tonnes at about the same grades as the new resource; in that older estimate, the average palladium grade was 0.24 gram per tonne, with 0.07 gram platinum and 0.04 gram gold. Another 109 million tonnes was inferred, with grades of 0.25% copper, 0.07% nickel, and 0.007% cobalt, plus 0.24 gram palladium, 0.07 gram platinum and 0.03 gram gold per tonne.

Both new and old estimates used an identical cutoff grade, a total of US$8.18 per tonne net metal, based on a copper price of US$1.25 per lb. (US$2,750 per tonne) and a nickel price of US$5.60 per lb. (US$12,320 per lb.).

The new resource adds about 135 million tonnes from the main mineralized zone, whose continuity was confirmed by the past winter’s drilling program, and from the Magenta zone, structurally above the hanging wall of the main zone, which had not been included in earlier estimates. Another 61 million tonnes was brought in by extending the main zone to about 490 metres vertical depth from the previous 335 metres. Cross-sections show the mineralized zone’s dip flattens below the resource limit, suggesting that mineralization could be added to the open pit at depth without a correspondingly large increase in the stripping ratio.

Magenta, a zone about 1,500 metres by 600 metres, averaging 40 metres thick, was defined by 60 drill holes and is described as “very predictable” by PolyMet’s chief geologist, Richard Patelke. The size of the zone implies that it adds about 100 million tonnes to the resource on its own. Copper and palladium grades are known to be higher in the Magenta mineralization than in the main zone material.

The new resources imply that development of the NorthMet deposit could either stand a higher mining rate, with possibly a lower cutoff grade, or that mine life could be extended. A definitive feasibility study released in October of last year found an open pit mining 29,000 tonnes per day, and processing in a hydrometallurgical plant, would produce 32,700 tonnes copper, 7,000 tonnes nickel, 330 tonnes cobalt and 106,000 oz. precious metals. Economic models, using 3-year average metal prices, showed a 27% internal rate of return and a net present value of US$595 million at a 7.5% discount rate.

The other recent addition to the Duluth Complex’s considerable mineral inventory was from the northeastern end of the complex. Duluth Metals (DM.U-T, DULMF-O) is planning a full feasibility study to start next year after outlining an initial resource, larger than had been expected, on its Maturi Extension project near Ely, Minn.

A calculation by consulting firm Scott Wilson Roscoe Postle showed an indicated resource of 347 million tonnes grading 0.62% copper, 0.2% nickel, 0.01% cobalt, 0.31 gram palladium, 0.14 gram platinum and 0.08 gram gold per tonne.

Additional inferred resources clocked in at 108 million tonnes, with average grades of 0.65% copper, 0.18% nickel, 0.01% cobalt, 0.41 gram palladium, 0.19 gram platinum and 0.1 gram gold per tonne. The resources go to a depth of about 410 metres, and are based on 45 drill holes.

Resource grades showed the precious metal content was about 60% palladium, 26% platinum, and 14% gold.

The estimate was based on a cutoff grade equivalent to 0.8% copper, based on copper prices at US$4,400 per tonne (US$2 per lb.), nickel prices at US$13,200 per tonne (US$6 per lb.), cobalt prices at US$10 per lb., US$950 per oz. for platinum, US$350 per oz. for palladium, and US$600 per oz. for gold.

Duluth’s program has so far concentrated on the western part of the property, with only nine holes in the centre and east. It has defined about a 2.3-km strike length in the western half of the property, with about two-thirds of the property still outside the resource envelope.

The resource calculation was preceded by a series of drill holes that cut low-grade mineralization over some spectacular lengths. Among the best were MEX-23 and MEX-24, both near the northern boundary of the property. MEX-23 intersected 170.7 metres that graded 0.64% copper, 0.19% nickel, and 0.34 gram total precious metals (implying a palladium grade around 0.2 gram per tonne). MEX-24 cut 165.8 metres at average grades of 0.57% copper, 0.17% nickel, and 0.26 gram precious metals per tonne (probably breaking out to around 0.16 gram palladium, 0.07 gram platinum and 0.4 gram gold per tonne).

Hole MEX-34, near the west end of the property, intersected 58 metres grading 0.84% copper, 0.26% nickel, and 0.75 gram total precious metals per tonne (with about 0.45 gram palladium per tonne). Another hole, MEX-36, cut 80.8 metres that averaged 0.64% copper, 0.21% nickel, and 0.49 gram total precious metals per tonne (probably about 0.29 gram palladium).

Two earlier holes also intersected unusually long mineralized intervals: MEX-30, which averaged 0.68% copper, 0.21% nickel, and 0.4 gram total precious metals over 82.6 metres, and MEX-31, which ran 0.61% copper, 0.2% nickel, and 0.72 gram total precious metals per tonne over an 86.6-metre core length.

The intervals probably represented true thicknesses of about 90% of the drilled lengths.

Teck Cominco (TCK-T, TCK-N), like most majors, releases little news about its early stage projects, but was planning further drilling to evaluate the Mesaba deposit’s economics with a $3-million budget. Teck has announced a 2002-vintage resource estimate on Mesaba that makes it the granddaddy of all the Duluth Complex deposits: 1 billion tonnes at grades of 0.43% copper and 0.09% nickel, plus unspecified values in the platinum group elements.

Along strike from Polymet and Mesaba, and up-dip from Duluth Metals, Franconia Minerals (FRA-V, FRALF-O) has spent much of the summer firming up geological data on its Birch Lake deposit. The drilling campaign has consisted largely of single pilot holes with multiple wedge holes off them, in the southern and central parts of the Birch Lake resource.

The mineralization being drilled is deep: mostly 600 metres to 650 metres down-hole in the southern part of the area and anywhere from 700 to 850 metres in the central part.

The drill results have supported, or sometimes exceeded, the resource grade at Birch, which has an inferred resource of 100 million tonnes grading 0.59% copper, 0.19% nickel, 0.08% cobalt, 0.32 gram platinum, 0.65 gram palladium and 0.14 gram gold per tonne.

Franconia’s newest results are from pilot hole BL07-03 and four wedges off that hole, all drilled near the middle of the Birch Lake resource outline. The first hole intersected 44.3 metres grading 0.65% copper, 0.19% nickel, 0.28 gram platinum, 0.59 gram palladium and 0.12 gram gold per tonne, near the resource grade. The first wedge hole off it intersected 55.2 metres of mineralization, with grades of 0.73% copper, 0.17% nickel, 0.26 gram platinum, 0.58 gram palladium and 0.12 gram gold per tonne.

Two other wedge holes intersected about 35 metres of mineralization, again at grades near the resource grades, while a
fourth wedge hole cut multiple mineralized zones — 6 metres, 22 metres, and 6 metres — at grades somewhat above the resource grades.

One of the longer intersections came in pilot hole BL07-02, which cut 83.4 metres at grades of 0.48% copper, 0.14% nickel, 0.26 gram platinum, 0.56 gram palladium and 0.11 gram gold per tonne. Wedge holes off BL07-02 cut intervals in the 40-metre range, mainly at slightly higher grades than the main hole.

In the southern part of the Birch Lake deposit, pilot hole BL06-06 cut 14.8 metres of sulphide mineralization grading 0.52% copper, 0.2% nickel, 0.54 gram platinum, 0.85 gram palladium and 0.25 gram gold per tonne. Wedge holes off BL06-06 intersected 8.2 to 12.5 metres of mineralization at comparable grades.

True widths at Birch Lake, like those at the Maturi Extension, are about 90% of the drilled lengths.

Another 4,200 metres of drilling is planned for Birch Lake, which Franconia expects to have done by the end of September. The two contracted drills will move over to the Maturi project for similar infill drilling. Maturi’s inferred resource, based on a cutoff grade corresponding to a US$30-per-tonne net smelter return, is 83 million tonnes averaging 0.7% copper, 0.26% nickel, 0.02% cobalt, 0.1 gram platinum, 0.26 gram palladium and 0.05 gram gold per tonne.

Franconia has about US$21 million in its treasury thanks to private placements, a $6-million equity financing, and warrant exercises. It plans to start a feasibility study on Birch and Maturi using that cash.