Imperial opens Red Chris in BC

VANCOUVER — Imperial Metals (TSX: III; US-OTC: IPMLF) celebrated the first production of copper concentrate on Feb. 17 at its newly built Red Chris copper-gold mine, 80 km south of Dease Lake in northwestern B.C.

Imperial will develop the mine as two open pits that maximize two relatively high-grade deposits named East and Main, which are sub-vertical, pipe-like bodies elongated along northeast-trending faults. Eventually the two pits will merge into one, and get mined to 400 metres deep.

The conventional shovel and truck operation will deliver 30,000 tonnes per day to the standard flotation processing plant and produce 2.1 billion lb. copper and 1.3 million oz. gold over its 28.3-year mine life.

Assuming US$2.20 per lb. copper and US$900 per oz. gold, the after-tax internal rate of return for Red Chris is 15.7%, its net present value at a 5% discount rate is $423.2 million and the projected life-of-mine production cost is US$1.22 per lb. copper. The capital cost is estimated at $443 million, while the payback period is 4.6 years.

BMO analyst Aleksandra Bukacheva forecasts 2015 production of 22,700 tonnes copper and 35,700 oz. gold from Red Chris, contributing $125.6 million free cash flow for Imperial Metals.

Considering the behemoth deposit extends more than a kilometre deep, the 301.5-million-tonne reserve base grading 0.4% copper, 0.359 gram gold per tonne and 0.274 gram silver per tonne only accounts for a fraction of the 8.9 billion lb. copper and 12.9 million oz. gold available in its measured and indicated resource (1.3 billion tonnes at 0.3% copper, 0.319 gram gold and 1.1 grams silver, at a 0.1% copper equivalent cut-off).

Copper-gold mineralization is pervasive through the country rock, but the richest parts are associated with a coarse-hornblende porphyry that extends beneath the historical drill-outs, as well as Imperial’s 2012 feasibility pit design.

Red Chris represents only one major discovery in a belt that is highly prospective for porphyry deposits.

But Red Chris deposit is a big game changer for B.C.’s porphyry exploration models, as it challenges the conventional perception that alkalic and calc-alkalic systems are separate entities.

Red Chris looks to have benefited from the best of both worlds, with high tonnages of a classic calc-alkalic system, as well as the high copper-gold grades more typical of the alkali types. It provides a whole new level of grade and tonnages that B.C. porphyry explorers can watch for.

Other players in the district include Colorado Resources (TSXV: CXO; US-OTC: CLASF), who operate the North Rok property located 15 km northwest of Red Chris. Colorado acquired the property in 2012 and chased down a few geochemical anomalies at its Mabon showing, with preliminary drilling.

The first drill hole into the area returned 333 metres of 0.5% copper and 0.67 gram gold per tonne. Since then, Colorado has extended alkalic-porphyry mineralization over a minimum 900-metre strike length to at least 400 metres depth.

Ten kilometres along strike northeast of Red Chris, Colorado optioned the Eldorado property in 2012 from Sunrise Resources (TSXV: SHI). The property is largely hidden by cover, but Colorado intercepted 71.3 metres of 0.1% copper and 0.34 gram gold, and extended the deposit by 300 metres with a 196.5-metre intercept grading 0.19 gram gold and 0.1% copper.

But Colorado backed out of its option agreement with Sunrise in 2014 so that it could redirect its resources to its other properties.

Last December, Teck Resources (TSX: TCK.B; NYSE: TCK) completed its earn-in agreement with NGEx Resources (TSX: NGQ) and obtained a 51% interest in the GJ project, 30 km west of Red Chris. Mineralization there is hosted in monzonite stocks covering four main areas.

GJ has a National-Instrument 43-101 measured and indicated resources (at a 0.2% copper cut-off) of 153.3 million tonnes, grading 0.3% copper and 0.37 gram gold. Inferred resources include 23 million tonnes grading 0.3% copper and 0.31 gram gold.