HudBay Minerals (HBM-T) has boosted its resource estimate by more than 100% to about one million ounces of contained gold at its Back Forty project in the volcano-genic massive sulphide (VMS)-hosting Penokean volcanic belt of Michigan’s Upper Peninsula and Wisconsin.
The new resource reflects updated metal prices, a reinterpretation of mineral domains and additional diamond drilling, the company says.
The updated resource estimate for a combined open-pit and underground operation stands at 18.1 million tonnes in the measured and indicated category grading 1.63 grams gold per tonne, 20.04 grams silver per tonne, 0.19% copper and 2.48% zinc. Inferred resources add 3.1 million tonnes grading 1.38 grams gold, 26.18 grams silver, 0.49% copper and 1.97% zinc.
The cutoff grades are based on metal prices of US85¢ per lb. zinc, US$2.05 per lb. copper, US59¢ per lb. lead, US$866 per troy oz. gold and US$13.95 per troy oz. silver.
Contained gold ounces in the measured and indicated category in the original basic pit shell have increased to more than 750,000 oz. from the 470,000 oz. included in an earlier resource estimate published in January 2009. And the conceptual strip ratio of measured and indicated resource blocks assigned through pit optimization to waste rock is down to roughly 3-to-1 from the 8-to-1 strip ratio outlined in an earlier technical report.
Drill testing of a geophysical anomaly in early 2002 resulted in the discovery of the massive sulphide deposit. Subsequent drilling in 2002-03 and 2006-08 totaling more than 77,000 metres, defined numerous closely spaced zones of significant zinc-gold-copper-silver mineralization.
HudBay exercised its option from Aquila Resources (AQA-T) to earn a 51% joint-venture interest in the exploration project in September. The two companies are evaluating the zinc and gold-rich VMS deposit in Michigan’s Menominee County.
HudBay is the operator of the joint venture and can raise its ownership in the project to 65% by completing a feasibility study and submitting a mine permit application to the state government.
In addition to the updated resource estimate, HudBay has announced drill hole intersections down-plunge of the known resource. Hole LK-479 included 6 metres of 8.14 grams gold, 312.2 grams silver and 7.99% zinc, and 69.7 metres of 1.11 grams gold, 27.0 grams silver and 1.30% zinc, including 6.2 metres of 6.39 grams gold and 94.17 grams silver.
The two companies plan to increase the number of drills operating at the project from one to three and have formed an exploration alliance to look for new deposits in the region.
Under that partnership, HudBay will fund exploration by Aquila with an initial payment of US$250,000, which Aquila will use to identify a minimum of five new exploration targets.
If HudBay decides to continue to fund any of the targets it has agreed to spend up to US$2 million. After that, the two companies would form a 50-50 joint venture. HudBay would then be able to increase its interest to 65% by funding and completing a feasibility study and required mine permit applications.
HudBay has also agreed to invest up to US$2 million in a private placement for Aquila’s shares.
At presstime HudBay was trading at $16.09 per share. Over the last year, the company has traded in a range of $9.86-$17. HudBay has 149 million shares outstanding.
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