Williams Lake, B.C. — The discovery of a highly mineralized breccia body on the past-producing Mount Polley copper-gold property, 56 km northeast of here, has reinvigorated
Less than two years ago, low gold and copper prices forced Imperial to file for protection from creditors. The debt-ridden producer then restructured by splitting its assets into two distinct businesses: energy and mining. Stakeholders were offered a 10-for-1 share consolidation, and for each Imperial share, received one share of IEI Energy, which held the oil and gas assets, and one share of the “new” Imperial Metals. IEI subsequently merged into
The restructuring greatly improved Imperial’s balance sheet, as $10.7 million in debt was settled for $1 million and 77.1 million pre-consolidated shares. Imperial retained a $6.3-million non-interest-bearing debt owed to Japan-based
At the end of the day, Imperial held only one producing asset, a non-recourse half-interest in the Huckleberry mine some 123-km southwest of Houston in west-central British Columbia. The company’s second-quarter earnings from Huckleberry amounted to $1.3 million, including a $4.4-million foreign-exchange gain on long-term debt.
During the quarter, the operation squeezed out 17 million lbs. copper and 66,800 lbs. molybdenum from the 1.7 million tonnes of ore milled, well short of year-earlier figures.
In terms of exploration, the newly structured company held sole ownership of two British Columbian projects, Mount Polley and the newly acquired Nak base metal property near Atlin, as well as the past-producing Sterling gold property in Nevada.
Having spent most of 2002 working through the corporate restructuring, which left it with 15.8 million outstanding shares, Imperial got back into the exploration game in August 2003 by placing 3 million flow-through shares priced at 50 apiece. Imperial’s largest shareholder, Murray Edwards, stepped up picked up half the financing. At the end of the deal, Edwards controlled 8.1 million shares for a 39.9% equity stake in the company.
Armed with the $1.5 million, Imperial went back to its exploration roots and resumed focus on Mount Polley.
History
Copper mineralization was discovered on the property in 1964, when a group explored a regional magnetic geophysical anomaly. Between 1966 and 1972, some 215 holes were drilled, intersecting generally low-grade copper porphyry mineralization in the Cariboo and Bell areas. Imperial entered the scene in 1988, and by the following year, it had sunk an additional 238 holes. In total, 528 holes totalling 61,884 metres were drilled on the property.
The Vancouver-based junior gained sole ownership of the property in 1994 and, with reserves of 82 million tonnes grading 0.3% copper and 0.42 gram gold per tonne, began development.
In 1995, a subsidiary of Sumitomo joined the fold by acquiring a 45% interest in the project in return for agreeing to lend $54 million for development. Construction of the mine was completed on budget in June 1997 at a cost of $123.5 million.
From the onset of production, the operation was plagued by low copper and gold prices, and in July 1999, Imperial sold another 2.5% interest to Sumitomo for US$875,000 to meet ongoing financial obligations. By 2000, with no commodity price relief in sight, Imperial managed to reacquire the 47.5% interest it had sold to Sumitomo for $4.5 million in cash.
After four and a half years of operation and the production of 370,700 oz. gold and 133.9 million lbs. copper, the struggling Mount Polley mine was finally shut down in September 2001. In total, 27.7 million tonnes of ore grading 0.56 gram gold and 0.33% copper had been processed from the Cariboo and Bell pits. In its last full year of production, the operation cranked out 34.2 million lbs. copper and 83,000 oz. gold.
“We went from a seventeen-thousand-tonne-per-day operation to twenty-thousand tonnes per day, but every time we made an advance, the price of copper and gold would go down,” recalls Imperial Metals President Brian Kynoch. “So the shutdown was probably the right thing to do, because when prices get that low, why waste a resource?”
The remaining probable reserves in the Springer and Bell pits at the end of September 2001 amounted to 31.9 million tonnes grading 0.36% copper and 0.34 gram gold. There were also 2.7 million tonnes grading 0.22% copper and 0.31 gram gold, plus 200,000 tonnes grading 0.29% copper and 0.42 gram gold sitting in a stockpile for future processing.
Geology
Situated on the eastern margin of British Columbia’s Intermontane belt, the Mount Polley property hosts a cluster of classic “alkalic” porphyry copper-gold deposits. Previous exploration defined three significant zones of mineralization in the silica-saturated Mount Polley intrusive complex. The Cariboo, Bell and Springer zones are all related to the complex, which intruded volcanic rocks of the Nicola group.
The deposits are characterized by multiple intrusions that vary from diorite to crowded porphyry through to monzonite. Hydrothermal breccias occur on the margins and above plagioclase porphyry intrusions. These breccias, which are sub-divided into four distinct types based on the dominant hydrothermal mineral in the matrix, provide the main host for the mineralization. Actinolite breccia is developed in an elongated zone in the core of the Cariboo and Bell zones, grading laterally and vertically into biotite breccia. Magnetite breccia hosts the highest copper grades at the Cariboo deposit, whereas albite, k-spar and magnetite are the key alteration minerals at Springer.
Pervasive and vein-related alteration correlates with the breccia types. Generally, the core of the hydrothermal system is divided into three zones: actinolite, biotite and K-feldspar-albite. The margins of the core zone are overprinted by a discontinuous zone of calc-silicate minerals. The intermediate zone passes outward into propylitic alteration.
Mineralization occurs in the hydrothermal breccias as disseminations and blebs in the matrix, and in abundant veins. Chalcopyrite-magnetite-bornite mark the core of the deposit, passing out into magnetite-pyrite-chalcopyrite. Relatively constant copper-to-gold ratios indicate that both metals were precipitated at the same time.
The hydrothermal breccias appear to be related to the emplacement of the crowded plagioclase porphyry melt. The crystallization of the melt probably accompanied a volatile-aqueous exsolution, forming a water saturated carapace. Decompression of the chamber in response to magma withdrawal resulted in extensive fracturing, and fault movement allowed hydrothermal brecciation to occur at the apex and margins of the porphyry intrusive.
Finally, by June of this year, Imperial was ready to look for the additional reserves needed to reinvigorate the mill at Mount Polley. The company sent a field crew out to evalute several prospective targets for drill-testing, and the work quickly led the team to an area 1.5 km northeast of the Bell pit.
Trenching at the Northeast zone (known locally as the Wishbone target) outlined a 140-by-70-metre area of high-grade copper-gold mineralization. With trench values returning up to 1.03% copper and 0.42 gram gold over 54 metres, Imperial intesified its exploration efforts.
“We stepped on to the discovery outcrop on August nineteenth, and since then have completed twenty trenches and a drill program,” says Patrick McAndless, Imperial Metals’ vice-president of exploration. “We’re moving at a wicked pace.”
So far, Imperial has drilled 15 holes into the newly discovered zone and, in combination with surface work, outlined the high-grade find over a 200-by-150-metre area down to depths of around 150 metres.
Says McAndless: “The geology is similar to Cariboo and Bell except for two things: the grade is higher and the alteration assemblage is different.”
New Zone
The new zone is hosted in the same type of hydrothermal breccia as the other deposits, but magnetite is lacking, actinolite is sporadic, and secondary biotite appears to be the dominant alteration mineral associated with the higher-grade values. The mineralization is dominantly sulphide comprising bornite and chalcopyrite, with oxides dissappearing after only a few metres of depth.
“Pyrite doesn’t seem to be a player until we get down to depth,” says McAndless.
As with many copper-bearing porphyries, late-stage plagioclase porphyry dykes disrupt the continuity of the mineralization in the zone.
“In the Cariboo deposit, typically the dykes were not mineralized, but here they are . . . at least in part,” says McAndless. “Structural preparation paved the way for the original protolith to crackle, and the dykes broke along the edges, bringing in mineralization. Ascending fluids came up against the dykes, which acted as a dam, producing a pooling effect.”
Initial drill results have been impressive, with hole 1 yielding 57 metres grading 2.54% copper, plus 1.15 grams gold and 17.4 grams silver per tonne, from a down-hole depth of 3 metres. The hot hole was drilled vertically to a depth of 184.7 metres.
“After sixty metres, the high-grade breccia disappears, cut by a north-northwest high-angle structure,” says McAndless.
Based on surface work, the late-stage structure is a strike slip fault, which may have displaced the mineralization to the north.
The second hole was collared from the same site and drilled at a 60 angle in the southwesterly direction. This hole returned 76.5 metres grading 0.74% copper, 0.34 gram gold and 5 grams silver.
Moving 25 metres north-northwest, hole 3 was also drilled in the southwesterly direction and angled at 60. It returned 193.5 metres grading 1.33% copper, 0.44 gram gold and 10.6 grams silver.
Says McAndless: “Based on the Cariboo deposit, we are generally drilling at two-hundred and forty degrees to cut across the fabric of the lithologies, and, as it turns out, we’re pretty close.”
The mineralization is exceptionally uniform in some holes, notably those with fewer dykes. The holes drilled to the southeast have hit fewer dykes, indicating that this area may be closer to the core of the system.
Unlike the other deposits on the property, where the silver grade is less than the gold values, the new find holds appreciable silver.
“We have all sorts of surprises here and are trying to get a handle on things,” states McAndless. “Right now, we’re having trouble getting out of the breccia and the mineralization.”
Because the new discovery does not show up using magnetic geophysics and holds no geochemical expression on surface, Imperial will try three-dimensional induced polarization to obtain a signature. The lack of traditional exploration readings over the discovery opens up the well-healed property to new geological models.
“Surprisingly, for a place that had a mine operating for four years, there are a lot of high-quality exploration targets,” says Steve Robertson, Imperial’s senior geologist. “We had intended to explore all of them this year, but now we are focused on the Northeast zone.”
Imperial plans to move the drill rig from the Northeast zone over to what was originally thought to be the most promising targets, expanding the resources below the Springer and Bell zones. The junior will sink three holes below the Bell pit, which holds probable reserves of 3.4 million tonnes grading 0.36% copper and 0.36 gram gold.
“Hole 190 returned 79.2 metres grading 1.05% copper and 0.84 gram gold starting at the bottom of the pit, and the last bench we mined yielded 0.8% copper and 0.84 gram gold,” explains Robertson. “So we have higher grades than our model is showing.”
The new holes will be fanned down to the west and drilled until barren diorite is hit, expected at 170 metres down-hole.
Meanwhile, at the essentially unmined Springer zone, which holds 15.3 million tonnes of probable reserves grading 0.4% copper and 0.39 gram gold, Imperial intends to drill four holes in the current program.
“The zone is open at depth,” adds Roberston, “so we need to explore underneath.”
Two of the planned holes will be drilled in a westerly direction; one scissor hole will be drilled in the easterly direction, and the last is slated to be drilled vertically in the middle.
Since the closure of Mount Polley, mineralization at Springer has been considered key to restarting the operation. However, with 24.8% of the reserve tied up in hard-to-recover copper oxide material (only 11% recovery using the existing floatation plant), the economics originally looked bleak.
Last year, Imperial began to research leaching techniques that could recover copper oxide mineralization in alkalic host rocks. Initial testing of highly oxidized material from the Springer pit indicated that up to 78% of the acid-soluble copper can be recovered in about 110 days of leaching, when it is crushed to half an inch. The results prompted Imperial to re-evaluate the copper oxide resources at Mount Polley, as well as re-assess some of the outside exploration targets that had been abandoned because of high copper oxide content.
“I want to find a million tonnes of 0.5% copper . . . all oxide,” says Kynoch. “We have 15 million tonnes in Springer, so we can’t justify a large-capital, solvent-extraction electrowinning plant, but I think another million tonnes will put us over the hump.”
As things stand, Imperial could have the mill up and running within three to four months at a respectable capital cost of $15 million — $10 million of which, Kynoch adds, is for development of Springer.
In northern British Columbia, near Atlin, Imperial recently completed a 1,511-metre drill program on its Joss’alun massive sulphide property.
The program tested the Jennusty showing, where highly oxidized pods of massive sulphide are hosted in gabbro. The mineralized zone is bound within a vertical fault zone, which has a width of about 17 metres. A second showing, which might be an extension of the Jennusty mineralization, lies 200 metres to the east. Grab samples at this second showing averaged up to 4.49% copper.
The Joss’alun showing, where mineralization is hosted in a mafic volcanic unit of pillows and lesser agglomerate, was also tested. It measures about 40 metres thick in the main showing area, and mineralization appears to be both syngenetic (occurring as interstitial rinds of the pillows and fracture fillings) and epigenetic (occurring as structurally hosted veins).
Imperial can earn a 100% interest on the property by issuing 100,000 shares over one year plus an additional 100,000 shares after $2.5 million has been spent on the property.
Imperial’s sole pure gold play, the Sterling property in Nevada, has been put on the back burner. The latest, 17-hole drilling campaign over the 12.5-sq.-km property was completed in July; it lengthened the targeted 114 zone by 107 metres to about 230 metres.
The 144 zone lies 100 metres below the deepest underground workings at the past-producing Sterling mine. The zone is centred along the Tertiary-aged, high-angle Reudy fault. The discovery hole intersected 11 grams over 6.1 metres.
Mineralization is hosted in north-dipping, brecciated, silicified, silty carbonates 210-250 metres below the surface at the contact between the Bonanza King dolomite and underlying Carrara limestone.
The highest grades are associated with steep, iron-oxide-rich gouge zones and an altered dyke contact. Quartz latite dykes intersect the Reudy fault and may be related to a hydrothermal event.
Between 1980 and 2000, an open-pit and underground operation at Sterling churned out 194,996 oz. gold from 854,200 tonnes of ore with an average grade of 7.4 grams gold.
Imperial, with 19.7 million shares outstanding and 24.2 million fully diluted, has seen its stock rise to a high of $3.35 from 30 over the past year.
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