Imperial updates Red Chris feasibility study (December 13, 2010)

VANCOUVER — An updated feasibility study for Imperial Metals’ (III-T) Red Chris project in northwest British Columbia says a $443-million investment would build a mine able to produce 74 million lbs. copper and 47,000 oz. gold annually for 28 years.

The new Red Chris assessment updates the previous feasibility study, completed in 2005. And even though the update is significant, the new study will not be the last feasibility study at Red Chris because the new report did not consider the current deep drilling program results. Instead, the study is intended to guide the project through the provincial and federal permitting processes, while Imperial also continues to explore.

The assessment found that an open-pit mine at Red Chris churning through 30,000 tonnes of ore daily could operate for 28 years, producing a total of 2.08 billion lbs. copper and 1.3 million oz. gold. The cost to produce a pound of copper would average US$1.22 over the mine’s lifespan, net of gold credits.

Using metal prices of US$2.20 per lb. copper and US$900 per oz. gold, a mine at Red Chris could generate a 15.7% after-tax internal rate of return (IRR), enabling pay back in 4.6 years. When using October’s average metal prices of US$3.76 per lb. copper and US$1,342.60 per oz. gold, the project’s IRR jumps to 37.9% and payback is achieved in less than two years.

Plans call for a standard open-pit mining and milling operation at Red Chris, with copper and gold recovered into a concentrate using flotation. The pit is essentially as designed in 2005, with some minor smoothing and the addition of detailed ramps.

An existing road would have to be upgraded and extended to provide access to the project, which is near Tatogga Lake. Imperial also says the project is “dependent” on the completion of the Northern Transmission Line, a 335-km long, 287-kilovolt transmission line being built under a joint provincial and federal government initiative that will bring power as far north along highway 37 as Bob Quinn. The Red Chris capital cost estimate includes funding to build an additional 115-km-long power line from Bob Quinn farther up the highway and then along the access road into the mine.

The mine would employ 300 workers and would operate as a fly-in, fly-out operation.

Red Chris boasts an impressive reserve: 301.5 million tonnes grading 0.359% copper and 0.274 gram gold per tonne. And the project’s resources dwarf its reserves — Red Chris is home to 619 million measured and indicated tonnes grading 0.38% copper and 0.36 gram gold, plus 619 million inferred tonnes averaging 0.3% copper and 0.32 gram gold. The resource count includes some of the results from the deep drilling effort at Red Chris, which has returned such results as 1,024 metres grading 1.01% copper and 1.26 grams gold.

The project was granted a provincial environmental assessment certificate in 2005, which was extended this year, and the federal government approved the project in 2006. That approval was subjected to a legal challenge, but the Supreme Court of Canada upheld the environmental permit earlier this year. Now Imperial is working to obtain a Mines Act permit and an effluent discharge permit.

Imperial’s share price rose 7¢ on the Red Chris updated study news to close at $24.36. The company has a 52-week trading range of $8.72-$26.27 and 37 million shares outstanding.