Mine life, costs grow at Hard Creek’s Turnagain

Vancouver — An updated preliminary assessment for Hard Creek Nickel’s (HNC-V, HNCKF-O) Turnagain nickel deposit in northern British Columbia points to the economic potential of an open-pit operation with a 29-year mine life.

The revised report by engineering firm AMEC Americas significantly boosts a previously estimated 17-year mine life estimated in mid-2006. A revised and expanded geological interpretation of the main Horsetrail zone was incorporated in the new study, and a peripheral area was also included.

The study examines using a hydrometallurgical process to recover nickel — showing better economics than the inclusion of a flotation circuit to produce a concentrate, considered in the earlier report. Hydrometallurgical processing involves pressure oxidation of finely ground ore in an autoclave; the ore is then leached to produce nickel, cobalt and copper precipitates. A separate copper concentrate would also be produced.

The modelled 50,000-tonne-per-day open-pit operation would mine about 516.6 million tonnes averaging 0.163% nickel sulphide, 0.012% cobalt, plus copper credits over the project’s life with a 0.44:1 strip ratio. The focus would be on a higher-grade starter pit for the first five years of operation to accelerate capital payback. Lower-grade material mined in the initial phase would be stockpiled for later processing.

Using a 0.1% nickel sulphide cutoff grade, Turnagain contains measured and indicated resources of 489 million tonnes averaging 0.163% nickel sulphide and 0.012% cobalt, plus 560 million inferred tonnes grading 0.152% nickel sulphide and 0.011% cobalt.

Metallurgical recoveries for nickel and cobalt are pegged at 73.6% and 6.5%, respectively.

Average annual output is estimated at 20,397 tonnes (45 million lbs.) nickel in nickel hydroxide and 1,301 tonnes (2.9 million lbs.) cobalt in cobalt hydroxide. Additionally, 2,281 tonnes (5 million lbs.) of copper in a sulphide concentrate would be produced annually.

Capital costs are anticipated at $1.38 billion (almost 60% higher than estimated last year) with ongoing operating costs of $9.42 per tonne of ore milled. Payback is anticipated in 6.4 years, along with an internal rate of return of 12.2% and a net present value of $186.9 million using a 10% discount rate.

Metal prices of US$7.50 per lb. nickel, US$11 per lb. cobalt and US$1.40 per lb. copper were used in the base case scenario along with an exchange rate of US95 per Canadian dollar.

“Given recent escalating mine capital cost projections, we are encouraged to find out that even with these increases, the preliminary assessment came out positive with a mine life of twenty-nine years,” said Hard Creek Nickel president Mark Jarvis in a statement.

Data from 32 recent infill and stepout drill holes around the Turnagain deposit is expected soon, with the company planning to incorporate the assays into an updated resource estimate in 2008.

One significant caveat for Turnagain to proceed with development is the availability of power. The planned extension of a provincial power grid along the Highway 37 corridor (to Dease Lake) is now in question following the suspension of development at NovaGold Resources (NG-T, NG-X) and Teck Cominco’s (TCK.B-T, TCK-N) Galore Creek copper-gold project.

Hard Creek Nickel shares perked up 11% on the news — closing up 11 at $1.10 apiece. The company posts a $66-million market capitalization given its 60.2 million shares outstanding, and has traded in a 52-week range of 76-$3.26.