Meliadine Gets Scoping Study Go-Ahead

VANCOUVER — After 20 years of work in Canada’s North, Comaplex Minerals (CMF-T, CXMLF-O) has a positive scoping study in hand for a combined open-pit/underground operation at its Meliadine gold project in Nunavut.

The study investigated a 3,000- tonne-per-day operation churning through ore from one main deposit, called Tiriganiaq, and two satellite deposits, named Discovery and F zone. Over a 9.5-year mine life, the project would produce 2.3 million oz. gold.

“It feels good to have it done — it was a long time coming,” says Comaplex president George Fink about the scoping study.

A series of three open pits — one at each deposit — would be mined sequentially, with open-pit mining contributing 500,000 tonnes of ore annually. The Tiriganiaq deposit would also host an underground mine, using blast-hole and cut-and-fill methods. The underground operation would produce 720,000 tonnes each year. The combined mining rates exceed the mill’s processing rate, but the resulting stockpile is meant to ensure a continuous processing rate.

Ore would be crushed and then gold recovered through a gravity-flotation- cyanidation circuit. Metallurgical tests indicate gold recoveries of better than 90%. The study reviews two possible tailings deposition sites, one land-based and the other sub-aqueous.

The project sits 25 km north of Rankin Inlet; Fink does not expect road construction (once approved) to pose much trouble, since there is only one stream crossing and the terrain is mostly gentle. The project would be diesel-powered. Comaplex expects a mine at Meliadine would employ 430 people, with 230 onsite at any given time.

To build the mine is expected to cost $382 million, a number that includes $85 million in sustaining capital that would be financed through operational cash flow. Using a gold price of US$700 per oz. and a Cana- dian-U. S. dollar exchange rate of 85¢, cash operating costs at Meliadine are expected to come in at $378 per oz. gold.

The project carries a net present value of $174 million, using a 7.5% discount rate, and an after-tax internal rate of return of 21.6%. The payback period is estimated at 2.7 years.

Comaplex started the scoping study in mid-2008 and had planned to release results before the end of the year. In the face of the rapidly changing world economy, however, the company recalculated the study in several areas. The delay also gave Comaplex time to calculate the resource at the F zone and include it in the study. Fink says that overall, the delay helped, but it was still a difficult time to conduct economic studies.

“With regard to capex, for example, that’s still inflated with prices from six to twelve months ago,” Fink says. “We certainly think we can do a lot better right now because so many projects have been mothballed, so there’s all kinds of equipment out there now that’s pretty inexpensive. And we have to try and take advantage of this type of window because they do close.”

The Meliadine project is divided between two properties. Comaplex owns 78% of Meliadine West and 50% of Meliadine East; the other portions are owned by Meliadine Resources, a private company owned by Resource Capital Fund. The main deposit, Tiriganiaq, is part of Meliadine West, as is the F zone. Discovery is part of Meliadine East.

Comaplex completed 27,370 metres of drilling at Meliadine last year and is currently updating the resource estimates for Tiriganiaq and Discovery, where resources were last calculated a year ago. At that time, Tiriganiaq’s open-pit zone held 6.1 million indicated tonnes grading 6.4 grams gold per tonne plus 1.6 million inferred tonnes grading 4.1 grams gold. The Tiriganiaq underground resource hosted 1.5 million indicated tonnes grading 10.9 grams gold and 3.3 million inferred tonnes grading 11.1 grams gold.

According to the January 2008 estimate, Discovery’s open-pit resource sits at 697,400 indicated tonnes grading 6.9 grams gold and 322,000 inferred tonnes grading 7 grams gold.

And the initial estimate for the F zone, calculated as part of the scoping study, came in at 692,800 indicated tonnes grading 4.66 grams gold and 775,100 inferred tonnes averaging 3.88 grams gold as an open-pit resource. All three deposits remain open for expansion.

Fink says the company’s near-term focus is “getting the feasibility study done as fast as we can.” The company will also concentrate on advancing the permitting process.

Comaplex has cash and equivalents totalling $21.2 million. In May, the company raised $35.3 million through two financings: a bought deal with BMO Capital Markets involving 4.2 million shares at $5.55 apiece and a flow-through financing led by Haywood Securities for 1.8 million flow-through shares at $6.55 each.

The company also has revenue from producing oil and gas properties, in which it invested specifically to finance its mineral exploration and development.

In the third quarter of 2008, Comaplex saw almost $1 million in revenue from its oil and gas division, bringing oil and gas revenue for the first nine months of the year to $2.65 million. In those nine months, the company spent $26.8 million on exploration at Meliadine.

Comaplex shares got a nice lift from the scoping study news, gaining 19¢ or 5.7% to close at $3.50. The company has a 52-week trading range of $1.07-6.50 and has 52.7 million shares outstanding.